On Friday, SPX closed at 1999.99. This led The Artist Formerly Known as "The Artist Formerly Known as Prince," to re-release his classic hit single over the weekend, with a slightly modified chorus ("Tonight we're gonna party like it's nineteen ninety-nine point ninety-nine." (keyboard solo)). Dennis Gartman then announced that he would be shorting any years ending in 99, which immediately caused those years to rocket past the century mark.
In other news, last update speculated that Friday had the potential to mark a high; today we're going to discuss a couple signals to watch. We'll start with the 1-minute SPX chart below:
As we can see, Friday's high was followed by an apparently-impulsive decline. This is only the second time this has happened since the rally began at 1810. The last impulsive decline came at 1946, and was followed by another impulse down, but proved to only be an ABC. If SPX breaks 1993, then bears do need to stay alert to the possibility that one more wave down (for an ABC) might be all the market wants. An attempt to answer that question in advance led me to look deeper, which led me to BKX (below):
On BXK, we can see potential for a breakdown to lead to at least a bit deeper retrace (even in the event of an ABC decline). This suggests that bulls should be cautious in the event of a breakdown of the noted levels.
In the event we continue higher immediately, there is (theoretically) overhead resistance in the SPX 2015-2020 +/- zone, so that would be the next area to watch.
The 60-minute SPX chart is shown below:
In conclusion, trade below 1993 would at least give bears a shot to get something going, although 1960+/- is the first truly meaningful support zone. To the upside, 2015-2020 +/- is the next potential resistance zone. Trade safe.
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