Channels and Patterns

Well That Escalated Quickly

2026-09-04T08:25:39.645-04:00

In my post on Tuesday 4th August I was looking at the ambiguous setup on US indices and the Nikkei after the strong rally into the beginning of August, noting the three good quality topping patterns that were still intact on the Philadelphia Semiconductor Index (SOX), QQQ and Nikkei. Since then the Nikkei pattern has failed with a target at a retest of the all time high.

I also noted that SPX was close to the daily 3sd upper band, and said that I was looking for a short term consolidation of a week or so, to allow time for the daily middle bands to go higher, and for the daily outer bands to expand, opening up further possible upside. We have since seen that consolidation last for four weeks so far, the daily middle bands turned up, and the outer bands expanded, but then contracted again before the lower bands were hit again this week.

In my last post on Wednesday I was looking at the case for making a short term low and perhaps retesting some all time highs. I was looking for a rally, then a low retest, and then ideally retesting the all time high in a three day strongly bullish leaning series of days Wednesday to Friday next week.

So far that has been going faster than I expected and the odds of a low retest have dropped. On the SPX the very nice bull flag channel I was looking at on Wednesday SPX returned to flag resistance and broke it slightly at yesterday’s high. That’s not encouraging for a low retest and and is suggesting a strong break up towards a retest of the all time high in the near future.

SPX 15min chart:

On the daily chart SPX broke back with conviction over the daily middle band yesterday. This might fail, and if it is going to fail that would likely be today or perhaps Tuesday. Another close above today would confirm the break.

SPX daily chart:

On the daily chart DIA broke back with conviction over the daily middle band yesterday. This might fail, and if it is going to fail that would likely be today or Tuesday. Another close above today would confirm the break.

SPX and DIA were the star performers yesterday and QQQ was significantly weaker, though it did manage to close at resistance on the daily middle band. Considered with the breaks above on SPX and DIA, the odds are decent that we will see a break back above soon.

QQQ daily chart:

Bringing up the rear on the US indices was IWM, struggling to rally and not managing to get anywhere close to a daily middle band retest. This is the US index traditionally most affected by rising interest rates of course and led the way down on this retracement.

IWM daily chart:

Lastly on the Philadelphia Semiconductors Index (SOX) there has barely been a rally, underlying the the weakness in Tech here and with a strong H&S target in the 9150 area still open.

SOX daily chart:

If we are going to see some high retests and then a larger retrace as the SOX chart is suggesting, then I’d note that we already have decent topping patterns that have already broken down on QQQ and SOX, and that a good quality double top has already formed on IWM. The two indices that look most in need of high retests to set up topping patterns are SPX and DIA, which are the two indices that look most likely to see those all time high retests next week. This may be a solid overall topping setup forming.

In the short term the historical stats lean neutral today and Tuesday, and then significantly bullish Wednesday through Friday next week. That would be an ideal window to see those high retests. The odds to retesting this week’s low directly don’t look great, though we may see some retracement today before likely heading to those high retests.

What could change that outlook? Hard breaks back below the daily middle bands today on SPX and DIA. Everyone have a great weekend. :-)

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The Air Is Feeling Thick Here

2026-09-02T14:32:23.351-04:00

In my last post on Friday 28th August before the Warsh Speech I was looking at three IHS patterns that had formed on the 15min charts on SPX, QQQ and DIA, and all three broke up on the Warsh speech before failing with targets at retests of their recent lows. The IHS patterns on SPX and QQQ failed on Friday, with DIA failing on Monday. At the same time an H&S broke down on IWM with a target in the 288.80 area.

That gave these four US equity indices downside targets as follows:

SPX target at 7638.17 - TARGET REACHED
QQQ target at 702.70 - current low 704.66
DIA target at 526.76 - current low 526.84
IWM target at 288.80 - current low 289.97

QQQ, DIA and IWM all came close to their targets this week but those targets were not quite reached. I would generally expect these targets to be hit so my working assumption is that those will be reached before this move completes.

In my (paying subscriber) premarket video this morning I was looking at the hourly buy signals fixed or brewing on ES, NQ, RTY, YM, DAX and ESTX50. These are generally a good indicator for a rally or full reversal and it is that rally that we have seen this morning. That may be topping out at the monthly pivot on ES at 7693, and the ES, RTY and YM hourly buy signals have now all reached their target or possible near miss target.

At this point I am wondering about a low retest that should hit the remaining downside targets and might set up possible double bottoms for a larger rally or full reversal.

Why am I thinking that the current retracement may well be bottoming out here? Well the downside targets I listed above are the only strong current downside targets I have on US equity indices. That is unusual if this retracement is going to get much further and has me wondering about high retests to set up the larger possible retracement patterns that I’m not seeing here yet, apart from a possible double top setup on IWM, and an existing but possibly failing diamond top on QQQ.

There is also this perfect bull flag channel on the SPX 15min chart below. If this channel holds, and there is a matching perfect bull flag channel on ES, then further downside is limited, and the bull flag will likely resolve in due course into a retest of the all time high at 7816.70.

SPX 15min chart:

On the bigger picture the SOX chart is still discouraging for bulls. The H&S on SOX is still intact and looking for 9150. That is a good indicator that it is reasonable to be looking for more downside soon, even if we reverse into high retests in the short term:

SPX reached the daily lower band and has so far formed a bull flag channel from the all time high.

SPX daily chart:

QQQ also reached the daily lower band and still has an overall diamond top target fixed at 642. A retest of the recent high at 734.58 from here could set up a smaller double top that would look for the 668 area. There is an argument that if that double top formed and broke down, and then the 642 target was reached, that might all be part of a larger bull flag forming on QQQ that would then look for an all time high retest.

QQQ daily chart:

DIA also reached the daily lower band and looks like a bull flag forming from the high so far. The bull flag quality would improve considerably with a retest of the 526.76 low and target, and in the short term a decent quality double bottom has formed that on a break up would look for a retest of the all time high:

DIA daily chart:

IWM was leading on the way down and looks somewhat different though this could still be a bull flag forming from the all time high. It wouldn’t be a decent quality flag though and a possible larger double top has already formed.

Against that IWM came very close to a test of the daily 3sd lower band yesterday and that tends to be a good place to see a multi-day rally.

IWM daily chart:

Ideally I would like to see a retest of yesterday’s low on SPX, QQQ, DIA and IWM and then a strong multi-day rally that may look for a retest of the all time highs on SPX, DIA and IWM before a larger pullback.

There is a possible news issue of course with the Iran War heating up as the US and Iran fight for control over the Strait of Hormuz. That has potential to get a lot worse very fast, particularly if Iran takes the obvious step of mounting a major attack on the Omani port of Fujairah, the linchpin of the US route through Hormuz and the primary transit point of the majority of the oil that is still being exported from the Persian Gulf. If that happens and serious damage is caused there, all upside bets on US equities may be off.

Iran issued a red line a few weeks ago where they said that if the US attacked Iranian power or oil infrastructure then they would widen their targets to any and all oil infrastructure in US allies in the Persian Gulf. The US attacked two power plants in Iran on Sunday and two Iranian tankers yesterday. We are still waiting to see if this escalation will elicit that response. If Iran do respond then the obvious target will be Fujairah.

My post on the bigger picture outlook for bonds was delayed but I’m expecting to publish that before the open tomorrow on my The Bigger Picture substack, so watch out for that. I’m planning another on oil in the next few days but am giving the current situation until the weekend to clarify.

Waiting on the Jackson Hole Speech

2026-08-28T08:18:41.028-04:00

I also noted that SPX was close to the daily 3sd upper band, and said that I was looking for a short term consolidation of a week or so, to allow time for the daily middle bands to go higher, and for the daily outer bands to expand, opening up further possible upside. We have since seen that consolidation last for three weeks so far, the daily middle bands have turned up, and the outer bands expanded, but have since started to contract again.

Of those three topping patterns the high quality H&S on Nikkei has since failed with a target at a retest of the all time high but the but the topping patterns on SOX and QQQ remain intact. The H&S right shoulder high on SOX is at 13,249.07 and if that fails to hold as resistance the target would be an all time high retest, but so far that has not been in danger of failing, with a thorough backtest of the 50dma marking the high so far.

In my last post on Wednesday I was looking at the importance of the daily middle bands as trend support and since then we have seen good NVDA earnings on Wednesday night and a modest rally. We are still clearly in this inflection point though and it seems very possible we will see a break up or down on the Fed statement at Jackson Hole expected at 10am EST this morning.

In the meantime the Philadelphia Semiconductor Index (SOX) has rallied back to test daily middle band support from below. This is an index I am watching very carefully as, in the absence of a rejection higher, it is likely in the process of retracing 50% of the huge move up from the April 2025 low:

SOX daily chart:

IWM has also closed under the daily middle band every day this week including yesterday. There is currently no obvious reversal pattern setting up a retest of the all time high.

IWM daily chart:

Of the other indices SPX had a decent, though still modest, move up from the daily middle band yesterday, closing ~0.4% above it, QQQ and DAX did a bit better, closing ~0.7% above it, and both DIA and NIKK closed marginally above their daily middle bands. This is a promising start for possible high retests, but we are still clearly in the inflection point.

Are there any reversal patterns forming that might deliver those high retests? Yes. The best is on DIA, with a decent quality IHS formed that on a sustained break up would look for a retest of the all time high made in early August.

DIA 15min chart:

A possible IHS is forming on SPX and on a sustained break up would look for a retest of the all time high made in mid August.

SPX 15min chart:

A small IHS may be forming on QQQ as well, and on a sustained break up would look for a retest of the short term high made in mid August. That pattern wouldn’t be looking for a retest of the all time high, but wouldn’t need to go a lot further to deliver that.

QQQ 15min chart:

What are my expectations of the Jackson Hole Speech? Well any talk of a cut in the Fed Funds Rate seems unlikely, as there is still a lot of upwards pressure on prices, and the new trade war with Canada and talk of increased tariffs elsewhere will definitely not be helping with that. We should really see a rise in the Fed Funds Rate, but the consensus view seems to be that Warsh will try to delay further rises until after the midterm vote on November 3rd, by which time it is possible that inflationary pressures may have moderated. If we don’t see any shift in rates then the tone of the speech today will be watched carefully. We’ll see how that goes.

I am writing a big post on the outlook for bonds that I’m planning to publish later today or over the weekend on my The Bigger Picture substack, so watch out for that.

The Importance of the Daily Middle Bands

2026-08-26T10:54:32.496-04:00

I also noted that SPX was close to the daily 3sd upper band, and said that I was looking for a short term consolidation of a week or so, to allow time for the daily middle bands to go higher, and for the daily outer bands to expand, opening up further possible upside. We have since seen that consolidation last for three weeks so far, the daily middle bands have turned up, and the outer bands expanded, but have since started to contract again.

Moving on to this week there is a very good example here of something I talk about on a very regular basis, and that is the importance of the daily middle bands as support. We have seen some promising smallish topping patterns break down last week, but for the last few days almost all the stock indices that I follow have been fighting to hold their daily middle bands as support. So far these have been holding for the most part, and if that continues to be the case I’d expect to see some high retests starting soon.

On SPX the daily middle band has been holding as support for five days and SPX closed yesterday nine handles above the daily middle band, in effect a close on daily middle band support:

SPX daily chart:

On IWM the daily middle band has been holding as support for five days with a couple of closes slightly below, and IWM closed yesterday 0.08 handles above the daily middle band, a close almost exactly on daily middle band support:

IWM daily chart:

On DIA the daily middle band was broken for two days last week with DIA trading entirely below it on Thursday and Friday, but DIA broke back over it on Monday and closed well above it yesterday:

DIA daily chart:

Of the two non-US stock indices that I follow closely DAX has been testing the daily middle band as support for a week but again closed comfortably above it yesterday.

DAX daily chart:

On NIKK the daily middle band has been holding as support for five days with a couple of closes slightly below, and NIKK gapped below it at yesterday’s open below and then rallied to close back above it.

NIKK daily chart:

That brings me to the weakest looking indices on Tech, and if we are going to see some high retests then ideally Tech would be leading that move back up.

On QQQ the daily middle band has been tested as support over the last four days and both closes this week were visibly below it. That’s not a break down with much conviction yet, but it is a confirmed break down, with yesterday’s close confirming Monday’s break below the daily middle band:

QQQ daily chart:

Last and weakest is the Philadelphia Semiconductors Index (SOX) which broke below the daily middle band last Wednesday and has closed below it every day since. This failed hard at a double test of the 50dma as resistance over the previous week and of course still has an H&S which has broken down with a target a lot lower in the 9150 area.

SOX daily chart:

Which way will this go? Well it looks like markets may be waiting for NVDA earnings, which will be out after the RTH closes in the US tonight. NVDA is currently about 10% off the May highs and is also currently below the daily middle band. Earnings are likely to be strong and it will be very interesting to see how much attention is paid to those against NVDA’s exposure to an AI boom that doesn’t seem likely to deliver anything resembling a profit in the easily foreseeable future.

Warsh will also be delivering his keynote remarks at Jackson Hole on Friday morning and that too could be interesting.

Bottom line, this is an important support test for equities almost across the board, a failure to break down will likely deliver high retests, and a sustained support break here could take prices significantly lower. The direction of that break may well be delivered by the news over the rest of this week.

Still A Tale of Two Markets

2026-08-18T22:55:19.581-04:00

In my last post on Tuesday 4th August I was looking at the ambiguous setup on US indices and the Nikkei after the strong rally into the beginning of August, noting the three good quality topping patterns that were still intact on the Philadelphia Semiconductor Index (SOX), QQQ and Nikkei.

I also noted that SPX was close to the daily 3sd upper band and said that I was looking for a short term consolidation of a week or so to allow time for the daily middle bands to go higher, and for the daily outer bands to expand, opening up further possible upside. We have since seen that consolidation, the daily middle bands have turned up and the outer bands have expanded.

Of those three topping patterns the high quality H&S on Nikkei failed on Friday but the topping patterns on SOX and QQQ remain intact. If we are going to see US indices go higher the obvious driver for that move would be AI & Tech generally so I have been watching SOX with particular interest, and there we have seen a thorough backtest of the 50dma which has held so far. The H&S right shoulder high is at 13,249.07 and if that fails to hold as resistance the target would be an all time high retest but so far that has not been in danger of failing:

The QQQ diamond top would only fail on the retest of the all time high and has not come that close to that yet. This isn’t as important though as a retest of the all time high would initially just set up a possible alternate double top.

QQQ daily chart:

It is DIA, SPX and IWM that are particularly interesting here in terms of a possible further leg up in this seemingly endless bull market. All of these have significant and decent quality resistance trendlines from the April 2025 low that would need to be broken to open up a serious move higher.

Looking at SPX I have a strong rising wedge resistance trendline currently in the 7860-70 area. If that isn’t going to break then the next obvious target within the rising wedge would be wedge support, currently in the 6930 area.

In the short term a daily RSI 5 sell signal fixed last night, I’m wondering about a possible backtest of the daily middle band currently at 7610, and a small double top is trying to break down with a target in the 7580-7603 range.

SPX daily chart:

Looking at DIA I have a strong rising megaphone resistance trendline which was actually hit at the latest all time high. If that isn’t going to break then the next obvious target within the rising megaphone would be megaphone support, currently in the 483 area.

In the short term I have support at the daily middle band at 530.65, close to being backtested today, at rising support from the March low, currently at 524, and the 50dma, currently at 523.71.

DIA daily chart:

Looking at IWM I have a strong rising megaphone resistance trendline currently in the 312 area. If that isn’t going to break then the next obvious target within the rising megaphone would be megaphone support, currently in the 264 area.

In the short term I’m wondering about a possible backtest of the daily middle band currently at 297-8, and a possible double top has formed with support at 287.83 and, in the event that double top breaks down, a target in the 270.5 to 273 area.

IWM daily chart:

I remain skeptical about another big move up on equities here as Tech has been faltering in recent months for very good reasons, and there are strong and well established resistance trendlines above on all of SPX, DIA & IWM. If we do see that move it would likely be because we were seeing another big leg up on Tech that would drag the other indices higher.

If we are to see that big leg up on Tech, the first real confirmation would be a failure of the H&S on SOX with a move over 13,249.07. That would open a retest of the all time high at 14,655.29, setting up a possible larger double top and another inflection point. If we were to see a strong break up from there then that would likely break all my other resistance trendlines with confidence.

Until we see that, SOX is still pointing firmly down and in the short term there is a decent case that more downside is coming across the board. If we see the US indices go lower I’ll be watching the 7580 to 7620 area on SPX as the next obvious strong support level.

A Tale Of Two Markets

2026-08-04T12:46:34.667-04:00

In my last post on Thursday 30th July I was looking at the downside targets on all the topping patterns on the main US indices and since then we have seen a very strong reversal back up, with those downside patterns failing into new all time highs on SPX and DIA, and failing today on IWM. This is now another big inflection point where US equity indices could turn down hard or continue higher, and I’ll be looking at that today.

Part of the reason for this has been the Iran War news where yet another imminent deal was announced on Sunday, though yesterday Iran denied any imminent deal or current ceasefire and underlined that by attacking the US base in Kuwait last night.

This morning Trump is back to issuing bloodcurdling threats to force Iran back to the negotiating table, and talking about a deal that might be concluded tomorrow, but unless he is now threatening a nuclear strike it’s hard to see that being any more successful than the previous ten or eleven times this has happened since March. Even in that case Iran would clearly appeal to their allies China and Russia and I suspect China at least would intervene to deter any use of nuclear weapons in this war.

I wrote in early May that both the US and Iran had been waiting for the other to concede defeat since March. That remains the case and it seems a long shot to think that Iran will now concede their control of the Strait of Hormuz as that has been a very clear red line for them since the start of the war. We’ll see what happens next but at the moment this looks like a Mexican standoff with the US threatening to devastate Iran, while Iran promises to respond by devastating oil and gas infrastructure in the rest of the Persian Gulf. The short term options for the US appear to be to resume the hot war on a similar limited basis to previous unsuccessful bombing campaigns, or to concede that Iran controls the Strait of Hormuz and try to spin that as a win.

Looking at the US equity markets SPX made a new high today and could go higher. I’ll be doing another post in a day or two looking at that. Short term though SPX is close to the daily 3sd upper band and at minimum I’d be looking for a consolidation in this area for a week or so to allow the daily middle band to turn up more, and for the daily bands to expand to allow more room under the daily 3sd upper band.

On the bear side there is now a high quality double top setup on SPX.

SPX daily chart:

The H&S on DIA failed yesterday and DIA made a new all time high today. DIA was hitting the daily 3sd upper band as I capped the chart below and this also likely needs another week or so to consolidate if DIA is heading higher. Again I have a possible upside target and that is getting close in the 547 area.

On the bear side there is now a high quality double top setup on DIA.

DIA daily chart:

The H&S on IWM failed today and that gives IWM a possible target at a retest of the all time high.

On the bear side there is also a possible alternate H&S right shoulder forming so that ATH retest need not necessarily be seen.

While the three indices above all had their topping patterns fail, the three remaining topping patterns on the charts below still look just fine and are the key to the current inflection point.

On the Philadelphia Semiconductor Index (SOX) an H&S has broken down with a target in the 9510 area and that currently looks fine. SOX is testing the daily middle band and on a break above I’d be watching for a possible move over the right shoulder high in the 13,249.07 to invalidate the H&S. If we see that, and Tech stops lagging the rest of the market, we might see a genuine break up. That test isn’t close yet though.

SOX daily chart:

Looking at QQQ we saw a decent break back over the daily middle band this morning into a backtest of the 50dma. A diamond top has broken down with a target in the 642 area and that topping pattern still looks fine. As with SOX, if Tech stops lagging the rest of the market, we might see a genuine break up, so we will see what happens next.

QQQ daily chart:

The last chart of the day is the Nikkei 225, looking beyond US markets but it’s worth looking further afield, particularly as DAX and ESTX50 both just retested their all time highs and formed decent quality possible double tops.

On NIKK an H&S broke down last week with a target in the 52000 area. That H&S still looks just fine as well, with NIKK still well below the daily middle band and 50dma. All of these three charts on SOX, QQQ & NIKK still lean bearish and that may well not change.

NIKK daily chart:

So that is the inflection point here. On the bull side we would likely see a consolidation in the current area on SPX and DIA for a week or two, to give room for the daily 3sd upper bands to rise, and then go higher, likely sustained by a Tech sector returning to retest the current all time highs.

On the bear side the downside patterns on SOX, QQQ and NIKK are just seeing a rally here, and the topping patterns on SPX, DIA and IWM have all been improved by the move up since last Wednesday, backed up by new double top setups on DAX and ESTX50 that have now also now formed and might start playing out.

We will see which way this goes and I’m planning another post for tomorrow looking at possible upside targets on SPX, DIA and IWM in the event that US equity markets go higher.

I have very real doubts about that move higher, as the Iran War for now appears to be an insoluble quagmire, the Tech sector is having genuine issues with Chinese innovations and massive capex plans causing serious market concerns, and US bond yields are on a very clear and sustained bullish track that may go a lot further. As always time will tell.

Downside Targets

2026-07-30T08:06:44.101-04:00

In my post yesterday I was looking at the diamond top on the SPX daily chart which was starting to break down, and then went on to close the day with a clear break below it. The falling and possible bull flag channel on TSLA also broke down by the end of the day. There are now a lot of fixed downside targets on equity indices so today I’m going to lay out all the main ones that I am watching.

This decline is led by Tech, so the first target is the one the H&S that I have been posting on the Philadelphia Semiconductor Index (SOX). That target is in the 9,150 area, and I can’t see any reason to think that target won’t be reached.

SOX daily chart:

The other main Tech index is NDX if course and on QQQ, the NDX ETF, the diamond top target there is in the 642 area. That’s getting close, and if SOX, SPX and so on are to reach their targets I’d expect QQQ to go lower. The obvious next target would be the rising support trendline from the April 2025 low, currently on the 607 area.

QQQ daily chart:

On SPX, with a large Tech component, the diamond top target is in the 6980 area.

SPX daily chart:

The downside targets on IWM and DIA are more modest, as the Tech component is lower, and I’m showing these on the 15min charts relative to the move up from the late March low.

On IWM an H&S has broken down with a target in the 279 area.

IWM 15min chart:

On DIA a small H&S has already broken down with a target in 510 area. A larger H&S has now also formed and was testing the neckline at the low yesterday. On a sustained break below that neckline the larger H&S target would be in the 495.5 area.

DIA 15min chart:

My last chart today is the Nikkei 225, which has broken down this week with a target in the 52,000 area, close to a 50% retracement of the move up from the April 2025 low.

NIKK daily chart:

Diamonds in the Rough

2026-07-29T12:04:39.623-04:00

In my post on Thursday last week, among other things, I was looking at the strong rally on the Philadelphia Semiconductor Index (SOX) and looking at the very binary setup there where was (and is) likely either to head down to the fixed H&S target in the 9,150 area or, on a break back over the right shoulder high at 13,249.07, to reject back up to a retest of the all time high.

Since then SOX has given back all of that rally and made lower lows, which is favoring the move to the H&S target in the 9150 area. I would add that this H&S target is also close to the 200dma, currently at 9186.52, a very attractive target area.

SOX daily chart:

In my post yesterday I was looking at various patterns and noting that equity indices might break down from this area. One chart I didn’t post for space reasons mainly, but I have been looking at most days for subscribers, was the possible bullish leaning triangle on my SPX hourly chart. That triangle support trendline is starting to break down this morning.

SPX 60min chart #1:

What does this mean? Well it means that it is likely no longer a bullish triangle and after reading a comment yesterday that I saw on the platform formerly known as twitter, I redrew this as a possible diamond top and it looked pretty good.

SPX 60min chart #2:

Now on the hourly chart there is already a small H&S that has broken down with a target at a retest of 7294.18, but if this is a diamond top breaking down then that top has a target in the 6980 area, in effect a backtest of the 200dma, currently at 7015.85. That is a pretty obvious target area to backtest even in an ongoing uptrend.

SPX daily chart:

So is there any support for this diamond top thesis? Well the suggestion I saw yesterday was actually talking about NDX, so I had a look on QQQ and there is an even nicer version there, which had already broken down and is well on the way to the target in the 642 area, also close to the 200dma, currently at 642.95. If we see an extension lower from there the obvious target would be rising support from the April 2025 low, currently in the 608 area.

QQQ daily chart:

Backtests of the 200dma or key support trendlines are just retracements and if a larger top is forming here I’d be seeing this as part of the topping process, but we may be seeing the start of a break down to really get that ball rolling.

Is there an important support level I’m watching that has not yet broken? Not on an index but I’m watching TSLA closely here.

On the TSLA daily chart an asymmetric double top broke down in March with a target in the 265-290 range and TSLA is currently testing 300, but the very interesting thing that happened on the way down is that a perfect falling channel formed that could be a bull flag. That falling channel support is being tested now and as these don’t tend to under or over throw, a clear break below channel support would kill the channel. Until then though TSLA could hold this support and reverse back up towards falling channel resistance, currently in the 428 area.

TSLA daily chart:

There are a lot of issues with equity markets here. The Iran War certainly isn’t improving confidence and is pushing up both inflation and uncertainty. There is serious talk that the Fed might raise interest rates at FOMC today in response to rising inflation, but the biggest issue short term is the weakness in Tech that I was illustrating with the SOX chart last Thursday. SOX has now more than given back all of last week’s rally and that H&S target is looking good. If that delivers then Tech will likely drag SPX down with it, and deliver some weakness on IWM and DIA too.

Mixed Feelings about Equity Indices

2026-07-28T08:11:44.685-04:00

In my last post on Thursday I was looking at the solitary break back over the daily middle band on SPX and considering the possibility that SPX might go higher. SPX then broke back below the daily middle band again.

I was also looking at the strong rally on the Philadelphia Semiconductor Index (SOX) and looking at the very binary setup there where it is likely either to head down to the fixed H&S target in the 9,150 area or, on a break back over the right shoulder high at 13,249.07, to reject back up to a retest of the all time high.

SOX has since given back most of that rally, but is still in that same inflection point, as it may currently be forming a double bottom to go higher. A double bottom setup that forms at the current low at 11,194.60 could deliver a bigger rally or full rejection higher. A sustained break below would look for that 9,150 target.

SOX daily chart:

So as we stand after the failed rally yesterday, with all of SO, SPX, QQQ, DIA & IWM still below their daily middle bands, and all also on fixed daily RSI 14 sell signals, there is a clear opportunity to break lower here, and I’ll be watching for that today and tomorrow. Tomorrow leans bearish and is also FOMC, where the Fed may of course have bad news about inflation and interest rates.

So what are the other pattern targets looking lower here? Aside from on SOX there’s nothing that dramatic to see. On SPX a small H&S has broken down with a target at a retest of the late July low at 7294.18.

SPX 15min chart:

On IWM there is a larger H&S now that has broken down with a target in the 279 area.

IWM 15min chart:

On DIA a small H&S has broken down with a target in the 510 area, though a larger H&S may also be forming.

DIA 15min chart:

Is there a bull scenario here? Yes, though the Iran War news isn’t great and may well get worse. All of these H&S patterns, as with the H&S on SOX, are of course potentially bullish patterns if they fail on a break back over the H&S right shoulders.

There is a good quality daily RSI 5 buy signal that fixed yesterday on DIA, though it is the only one across these five indices and DIA tested but failed to break back over the daily middle band yesterday.

DIA daily chart:

There is also a potentially bullish setup on QQQ here, with what looks like a bull flag formed from the all time high, and possible RSI 14 and RSI 5 buy signals brewing on the hourly chart:

Overall equities are still in the same inflection area that they were in last Thursday but have moved back down to the bottom of that area. There is an opportunity to break lower here and, if we are going to see that happen, a decent timing opportunity to do that this week. This isn’t yet a strongly directional setup, but as long as all five of these equity indices remain below their daily middle bands, the odds lean towards continuation down. If we were to see a strong move higher though, these setups could all turn bullish with targets at retests of their all time highs.

A Battle of a Band

2026-07-23T08:14:44.113-04:00

In my post on Friday 12th June I was looking at an inflection point on multiple US equity indices where I was expecting to see a number of H&S patterns to fail with targets at retests of the all time highs (ATH). The H&S patterns failed, and we saw ATH retests on DIA and IWM, but never saw those ATH retests on SPX or QQQ.

The main reason we never saw those retests was the weakness on the Philadelphia Semiconductor Index (SOX) which dropped over 20% from the June high into the low last week.

There too we see another H&S, which has broken down with a target in the 9150 area and the main reason we have seen a decent rally attempt on SPX and QQQ this week is that we have been seeing a strong rally on SOX, with a possible target at the daily middle band, currently at 12,785.

SOX too is in an inflection point here, where either that H&S continues down towards the target, or rejects back up to the high. The dividing line for that is at the H&S right shoulder high at 13249.07.

SOX daily chart:

What are the chances that SOX is starting to reject back to the all time highs? Well there is a decent setup on the hourly chart, with a possible alternate bull flag falling wedge formed from the high. On the pattern setup I’d give this 70% odds of continuing down, and 30% odds of rejecting back up to the highs.

SOX 60min chart:

On SPX we saw a break back over the daily middle band on Tuesday, with a confirming close above yesterday. This could be the start of a break up towards towards an ATH retest, but we need to see more evidence of strength from SPX and from the other US indices, as all of DIA, IWM and QQQ are still closing below their daily middle bands.

SPX daily chart:

DIA has been testing the daily middle band over the last two days but has closed both days below:

DIA daily chart:

IWM has been testing the daily middle band over the last two days but has closed both days below:

IWM daily chart:

QQQ has been trailing the others over the last month, in significant part due to the weakness on SOX, and I was talking in my The Bigger Picture webinar on Sunday for paying subscribers on my The Bigger Picture substack (circa 5min mark) about QQQ hitting the 3sd daily lower band on Friday as that is a good level to see a decent rally. We’ve seen that rally but, as with SOX, QQQ is still well below the daily middle band and would need a strong break above it to open a retest of the ATH.

QQQ daily chart:

Is there a setup for SPX to fail here? Yes. On the 5min chart I drew in an ideal bear flag channel resistance trendline on Tuesday and as you can see, that trendline turned out to be the rally high so far. If we don’t see a break up on SPX I’d expect to see a retest of Friday morning’s low soon.

SPX 5min chart:

I’m keeping an open mind here as I still have those targets at retests of the all time highs on SPX and QQQ, and that looks like unfinished business. Overall though I think this setup is still leaning towards seeing a retest of last Friday’s lows next. A stronger and wider break up on US indices could change that, so we’ll see today or tomorrow whether that can be done.

Oil Update, Market Killing$ & Warning Shots

2026-07-17T15:30:20.311-04:00

In my post on Tuesday 7th July I was looking at the setup for a strong rally on Oil starting and we have seen that strong rally since.

In my last post on Tuesday 14th July I was looking at the targets and resistance levels on Brent Crude (Brent) and West Texas Intermediate Crude (WTIC) and noting that both were getting close to their 3sd upper bands, and that the 89-90 area on Brent and 84-5 area on WTIC might well hold on those this week to allow the daily middle bands on both to start turning up, and for the daily bands to start expanding. Both peaked that day, spent two days forming bull flags, and have made higher highs today.

So what now?

Well I would mention that there has been a strong pattern during this war of ‘peace negotiations’ being announced on Sundays just before futures markets reopen. I don’t think that seems a big risk this weekend , as Trump appears to be wanting to escalate the war, and Iran seems disinclined to engage with the US at all, but there do seem to be strong incentives for some in the US administration to conduct talks regularly:

That said, now that Brent and WTIC have had some time for the daily bands to turn and expand, and with more data points from the bull flag lows, it’s time to look at upside targets and resistance levels again.

On the Brent daily chart the middle band has turned up and the bands are now expanding. Brent is close to a test of the 50dma at 89.41, and the 3sd upper band is now at 92.46, up from 89.18 at my post on Tuesday. As the bands expand the 3sd upper band can get to a stage of rising several dollars per day.

BRENT daily chart:

On the Brent hourly chart an RSI 14 sell signal fixed but didn’t make target at the flag low. That’s worth bearing in mind but these regularly fail in strong uptrends. As I mentioned on Tuesday there is some established (potential support turned) resistance in the 89.5 to 90 area, an open IHS target in the 91.6 area and a rising channel has been established from the right shoulder low with channel resistance currently in the 93.25 area.

There are two possible IHS necklines that might be the next big target, with my preferred option in the 98.99 area, and a less good option in the 96.36 area.

BRENT 60min chart:

On the WTIC daily chart the middle band has turned up and the bands are now expanding. WTIC is close to a test of the 50dma at 85.21, and the 3sd upper band is now at 86.03, up from 84.36 at my post on Tuesday. As the bands expand the 3sd upper band can get to a stage of rising several dollars per day.

WTIC daily chart:

On the WTIC hourly chart an RSI 14 sell signal fixed but didn’t make target at the flag low. That’s worth bearing in mind but these regularly fail in strong uptrends. As I mentioned on Tuesday there is some established (potential support turned) resistance in the 86 area, an open IHS target also in the 86 area and a likely rising wedge has been established from the right shoulder low with wedge resistance currently also in the 86 area.

There are two possible IHS necklines that might be the next big target, with my preferred option in the 96.98 area, and a less good option in the 93.65 area.

WTIC 60min chart:

In terms of how far all this goes, that is to a large extent dependent short term on the status of the Iran War, though I think enough supply chain damage has already been done that even if the war was to end this weekend, oil might well be impressively volatile for another year or two.

In terms of how the war goes it could get a whole lot worse. I’ve been mentioning the worst scenarios regularly in recent months, and mentioned it again in my equities post this morning on my main substack. On the less bad scenario Iran may attack oil and gas infrastructure in Gulf neighbours and extensive damage could be done that might take years to repair. On the disaster scenario Iran attacks water desalinisation infrastructure in Gulf neighbours and all the Gulf states apart from Iran and Iraq might become semi to mostly uninhabitable until that infrastructure was rebuilt.

Iran has been clear that they won’t do that unless the US starts attacking their civilian infrastructure and this week the US has started attacking their civilian infrastructure. In response Iran attacked oil infrastructure in Bahrain yesterday and a water desalinisation plant in Kuwait overnight in what appear to be warning shots to the US to change direction. We’ll see how that develops this weekend but further escalation has the potential to send oil prices into uncharted territory, which would be over $225 per barrel on both Brent and WTIC, adjusted for inflation.

Are the Trump administration insane enough to risk this disaster scenario in the Persian Gulf? Yes, in that they have already started down that road this week despite clear warnings from Iran. We may find out whether they are prepared to continue risking that this weekend. I’ll be watching with interest & everyone have a great weekend. :-)

If you like my analysis and would like to see more, please take a free subscription at my thebiggerpicture substack, where I publish these posts first and for members (from next week) also bi-weekly videos looking at equity indices, bonds, currencies and commodities. Those videos are posted on my Youtube channel after a seven day delay. Links to all my posts from my charting substacks are also always posted on my twitter.

Washing the Windows

2026-07-17T08:17:24.743-04:00

It has been a few weeks since I wrote a post about the US equity markets and in large part that has been because while the short term patterns and setups are still important, and I’ve still been looking at those in detail in my daily premarket videos for subscribers, the background to this market, while generally ignored, has been becoming increasingly obvious and divergent from what we are watching on the surface.

I was talking to a friend about this yesterday and compared it to washing the windows on a house that was burning down. I said that as this happened the person washing the windows would either be unaware that the house is burning down, or didn’t yet see why that might be important. Only when that perception changed would he/she stop washing the windows.

Donald Trump signed the MOU with Iran at Versailles twenty nine days ago, and said then that he had to sign it as the world was three or four weeks away from a major economic crisis if the Strait of Hormuz was not reopened. I thought that assessment was reasonable. The peace lasted two or three weeks, a lot of oil cleared through the Strait, but not enough to change more than the timing of that major economic crisis. Since then the war resumed ten days ago, the Strait is closed again, and the war is escalating.

World oil stocks are at low levels not seen in decades, the US has started bombing civilian targets in Iran and Iran is starting in response to bomb civilian targets in the territory of US allies in the Gulf, who have themselves started to get more involved directly in this war. This is a huge powder keg, the fuse is lit, and the world economy is sitting on top of it. If Iran starts large scale attack on oil infrastructure in the Gulf or, worse, water infrastructure, that powder keg will explode, and the effect on the world economy may be devastating.

So I’m going to be looking at the surface of the markets while this continues, but also this background to this market that may at any point become much more prominent in market sentiment.

In terms of the surface of the markets I was writing in my last post on 12th June that I was looking for new highs on US equities and we saw those on IWM and DIA. We didn’t see those on SPX or QQQ, mainly because Tech has been lagging other US indices for several weeks now and dragged SPX down with it. That’s not because of the Iran War and may well continue and get worse. I would still very much like to see an all time high retest on SPX and on the daily chart SPX is holding up well and came within 40 handles of an all time high retest this week.

SPX daily chart:

The picture on QQQ is not encouraging though, with QQQ failing to hold above the daily middle band in recent weeks, though an overall bull flag may be forming here.

QQQ daily chart:

IWM has also lost the daily middle band in recent days, and has also broken down yesterday below the rising support from the late March low.

IWM daily chart:

I’ve been watching possible topping patterns on the hourly futures charts this week and overnight ES broke down from a high quality double top with a target in the 7430 area.

ES Sep 60min chart:

If this break down on ES is sustained today then I have two other topping patterns that I have been watching form on US indices this week.

The first of those is on RTY, where a good quality possible H&S has been forming that on a sustained break down would look for the 2820 area.

RTY Sep 60min chart:

The second of those is on YM, where a decent quality possible H&S has formed that on a sustained break down would look for the 50,500 area.

YM Sep 60min chart:

This is a fragile market, and if confidence cracks we could see a fast move downwards. Is today the day that starts? Possibly, we’ll see. Everyone have a great weekend. :-)

Oil Targets and Resistance Levels

2026-07-14T08:22:31.197-04:00

In my last post on Tuesday 7th July I was looking at the setup for a strong rally on Oil starting and at the time of writing today Brent Crude is up about $11 and West Texas Intermediate Crude (WTIC) is up about $8 since then. So what now?

On the daily chart the highs last week were at the daily middle bands on both, and in my The Bigger Picture webinar on Sunday I was talking about the importance of those middle bands being broken with confidence to open further upside. That was done yesterday, so today I’m looking at upside targets and resistance levels for this move.

On Brent Crude a decent quality IHS has broken up with a target in the 91.60 area. That looks credible as a target, though I would note that there is an area in the 89.50 to 90.00 range that was important on the way down. That could now be resistance. Above that there are significant broken support areas at 96 and 98/9.

BRENT 60min chart:

On the Brent Crude daily chart, price is currently over the daily 2sd upper band, with the 3sd upper band not far above at 89.18. The daily middle band is still turning up and the bands have not started expanding yet so I’m thinking that (subject to news), the 89 - 90 area may well hold as resistance this week. The daily RSI 5 buy signal I was looking at last week reached target and the weak RSI 14 buy signal fixed. There is no current negative divergence on the daily RSI 5.

BRENT daily chart:

On the WTIC hourly chart a decent quality IHS has broken up with a target in the 86.00 area. That looks credible as a target though I would note that there is an open breakaway gap area just above in the 82.20 to 83.00 area (the equivalent gap on Brent Crude was filled overnight), and an area in the 86.00 to 86.30 range that was important on the way down. Either of those could now be resistance.

WTIC 60min chart:

On the WTIC daily chart price is currently testing the daily 2sd upper band at 80.59, with the 3sd upper band currently at 84.36. The daily middle band is still starting to turn up and the bands have not started expanding yet so I’m thinking that (subject to news), the 84-5 area may well hold as resistance this week. The daily RSI 5 buy signal I was looking at last week reached target and the weak RSI 14 buy signal fixed. There is no current negative divergence on the daily RSI 5.

WTIC daily chart:

The last chart for today is the Heating Oil daily chart where is good quality bull flag formed from the March high and broke up this week. This flag has a target at a retest of the March high at 4.71.

HOIL daily chart:

There is an obvious caveat I need to make here, in that all of this is very subject to news, and if another peace process were to start seriously then that might send the oil markets down again. There is however no current sign of any peace process starting and both sides seem to be getting more entrenched into their positions.

Is there a disaster scenario here we should be aware of? Definitely if Iran are pushed to a stage where they felt desperate, and the Persian Gulf allies of the US were to look more directly involved in the war against Iran, rather than just hosting the bases of the US while the US and Israel wage war against Iran. I would note that this is increasingly the case with Bahrain, Kuwait and UAE directly and also Saudi Arabia against the Houthis. This might lead to Iran attacking oil and gas infrastructure in those countries, which would be very bad, or perhaps even their water desalinisation infrastructure, which could make much of the Middle East uninhabitable for an indefinite period. I am hoping that there are enough sane people on both sides to avoid this scenario.

Decent Oil Bounce Likely Starting Here

2026-07-07T17:33:17.017-04:00

On the 2nd of June I wrote a post looking at the bullish looking setup on oil, but that then fell apart in the days before the Memorandum of Understanding (MOU) was signed by President Trump at Versailles on 17th June. In the three weeks since then the Brent and West Texas Intermediate (WTIC) crudes have fallen almost to pre-war levels before the most recent low last week.

Now after any steep decline there will generally be a low found and a bounce will start that should at least retrace a sizable proportion of the preceding decline, usually in the 38.2% to 61.8% range. I’ve been watching for that bounce and I think that has now likely started, though that doesn’t mean we won’t see retests of last week’s lows as part of that process.

So what’s the setup so far?

On the daily chart there are initial targets that might hold a first bounce and on WTIC those obvious resistance levels are the 200dma, currently at 74.00, and the daily middle band, currently at 76.46. Possible daily RSI 14 (weak) and RSI5 (full) buy signals are also brewing and will likely fix at the close today.

WTIC daily chart:

On the BRENT daily chart there are initial targets that might hold a first bounce and those obvious resistance levels are the 200dma, currently at 78.59, and the daily middle band, currently at 79.61. Possible daily RSI 14 (weak) and RSI5 (full) buy signals are also brewing and will likely fix at the close today.

BRENT daily chart:

I was looking at the short term IHS setups on Brent Crude and WTIC in my premarket video for subscribers this morning and they have both since made target and somewhat more.

On WTIC an IHS broke up overnight with a target in the 71.35 area, and I drew in two possible larger IHS necklines at 71.56 and 72.53. At the time of writing WTIC has reached 72.47, so almost at the higher of those two. If both are broken then I’d either be looking for a larger double bottom setup involving another low retest, or the two higher possible H&S necklines in the 79 to 80 area.

WTIC 5min chart:

On BRENT an IHS broke up yesterday with a target in the 74.90 area, and I drew in two possible larger IHS necklines at 74.83 and 75.80. At the time of writing WTIC has reached 76.33, so above both of those but possibly still able to use the higher neckline if we see a retracement from that high. If both are broken hard then I’d either be looking for a larger double bottom setup involving another low retest, or the two higher possible H&S necklines in the 82 to 83 area.

BRENT 5min chart:

Is there much reason to think that oil might go up much further short term? Well the US has been trying to set up a route through the Strait of Hormuz independent of Iran since the MOU was signed, despite one of the explicit conditions agreed in the MOU being that the Strait would remain under Iranian control. Iran isn’t prepared to concede this point and have hit five tankers using the US route in the last 24 hours. The last time Iran started doing this on 25th June the US responded with retaliatory strikes, so we’ll see what happens in the next day or two.

While I’ve been writing this there have been more updates:

I’m going to be writing a follow up post later this week talking about where I think oil prices will be heading over the rest of the year, with an update on this short term bottoming setup.

The Bumpy Road To Peace With Iran

2026-06-18T16:53:41.146-04:00

This is another rare post without charts from me, but I want to write some important posts about the prospects for US equities and oil prices over the summer and need to write a post first about the Iran peace process to refer back to as I write those.

Just to be clear, I am not talking in the title about the bumpy road behind us in the road to peace with Iran, I am talking about the bumpy road ahead as the peace process hopefully evolves from the Memorandum of Understanding (MOU) signed yesterday to a more permanent peace.

In my post on 8th April I listed Iran’s ten point proposal for ending the war as follows. This was in essence the same plan they presented a few days into the war as a precondition for talks:

A guarantee that Iran will not be attacked again.
A permanent end to the war, not just a ceasefire.
An end to Israeli strikes in Lebanon and against Iranian allies.
Lifting of all US sanctions in Iran.
Reopening of the Strait of Hormuz with a transit fee of $2 million per ship.
Continuation of Iran’s control over the Strait of Hormuz.
Acceptance of Iran’s right to enrich uranium for its nuclear program.
Compensation for war damages to Iran.
Withdrawal of US combat forces from the region.
End to all UN and IAEA resolutions targeting Iran.

This was the agreement signed yesterday which, with minor tweaks was in essence that same initial proposal from Iran, fleshed out in more detail:

In essence therefore the US has ultimately accepted all Iran’s demands to end this war after a long period of trying to sweeten this bitter pill with negotiation and threats.

In terms of the war the US showed up with aircraft carriers and fighter jets to a war fought with cheap drones and supply chains. Iran blocked the Strait of Hormuz and were prepared to do whatever it took to hold it until the shortage of oil inflicted major damage on the world economy. The US has the most impressive military and naval forces on the planet but the only way to open the Strait by force would have involved a ground invasion that would likely have resulted in large numbers of US casualties. That wasn’t a realistic option & so there was no viable way forward for the US in this war.

Trump has returned from Versailles to a firestorm of disapproval from Republican lawmakers, but I think Trump took the least bad option here to avoid a far worse outcome. That can’t have been easy but the key was what he said at Versailles yesterday which was that the deal needed to be done to avoid a potential economic meltdown from a shortage of available oil. In my view he was right, and to make this agreement took courage. I am surprised that he did this now but I had clearly underestimated him.

Starting this train wreck of a war was the mistake made here, and there was no way to undo that mistake. Trump was very poorly advised before this war started, mainly by Netanyahu and Hegseth, and Netanyahu has now likely lost much of his influence with Trump as a result. I suspect that both Netanyahu and Hegseth may be exploring alternative employment opportunities in the easily foreseeable future. JD Vance appears to have been a lonely voice in the Administration opposing the war before it started, but it appears he may be the scapegoat for making this agreement regardless.

So what now?

Now this MOU has some serious obstacles to negotiate on the path to a more permanent peace and, as I mentioned, getting past those obstacles may be a bumpy ride.

The first big obstacle is the US Congress, and the Iran Nuclear Agreement Review Act of 2015. Now it might be argued that this law only applied to Obama’s JCPOA, which the US withdrew from in 2016, but if it still applies, and I am reading that it does still apply, then Congress will need to review any agreement for up 30 or 60 days before deciding whether any sanctions on Iran can be removed.

Judging by the furore among legislators since the MOU text was agreed, that congressional approval might be hard to secure.

Regardless of whether this law applies it is hard to see how a more permanent agreement can be made without congressional approval.

The second big obstacle is Israel which has made no secret that it is unhappy with this agreement and has also made clear that it will not be withdrawing from Lebanon. It has been violating the ceasefire that explicitly includes both Israel and Lebanon, even though the MOU was only signed last night. Without Israel behaving, Iran has been very clear that it will consider any agreement void, and will re-impose the blockade on the Strait of Hormuz:

Are the Iranians prepared to exclude Israel from the peace deal? Likely not as with good reason they view Israel as heavily dependent on the US and therefore within their control. Does the US possess either the ability or the will to force Israel to comply with the peace process? Maybe, we’ll see.

There are numerous other smaller but significant issues which include:

There is a backlash among US legislators who seem to have picked up the impression from somewhere that the US had won this war, and are outraged about a peace deal that leaves the US in a demonstrably much weaker position in the Middle East than it was in before the war started.

The US seems to have agreed to the Iranian demand that it withdraw from all US bases in the Persian Gulf states, which reduces US influence in the region and leaves Israel looking increasingly isolated. If the US becomes just another big power in the Middle East that potentially threatens longer term the dominance of the US Dollar as the world’s reserve currency, and potentially also the continued existence of Israel unless Israel is prepared to make peace with their neighbours.

There is also the fact that world oil stocks are low after several months of the Strait of Hormuz being closed, and that even with the Strait reopened it will take up to ten weeks for those tankers passing through the Strait to reach their destinations. Even if the Strait stays open there may be a serious shortage of oil across the world in coming weeks, and I’ve seen estimates that it may take a year or two for the oil supply & demand equilibrium to be re-established and settle down again.

Overall the road to a more permanent agreement will be bumpy, may take several months to agree, and may face very serious opposition from US legislators and Israel.

In terms of oil supplies the Strait of Hormuz may be closed again at various points during the negotiations and, even if that doesn’t happen, low oil stocks in the world may still deliver some wild price spikes on oil before oil supply and demand reach a new equilibrium.

If you like my analysis and would like to see more, please take a free subscription at my thebiggerpicture substack, where I publish these posts first and for members also bi-weekly videos looking at equity indices, bonds, currencies and commodities. Those videos are posted on my Youtube channel after a seven day delay. Links to all my posts from my charting substacks are also always posted on my twitter.

Another Inflection Point Here

2026-06-12T12:28:05.432-04:00

In my post on Wednesday I was looking at the H&S patterns that had broken down on SPX, QQQ and DIA and saying that, for a variety of reasons I explained then, I didn’t think any of those H&S patterns were likely to reach their targets, and would likely instead fail into retests of their all time highs. Since then we have seen the start of rally I expected and equity indices have reached another inflection point where they can either break up towards retests of the all time highs, or fail down into those H&S targets.

On DIA the H&S failed this morning on the break back over the H&S right shoulder, and that now has a target at a retest of the all time high, but the big dogs here are SPX and QQQ, so I’ll mainly be looking at those today.

DIA 15min chart:

On SPX the key level for the H&S is the right shoulder high at 7483.15, and if we see that or the QQQ right shoulder high break then retests of the all time highs become very likely, and I’d expect to see those next week.

SPX 15min chart:

On QQQ the key level for the H&S is the right shoulder high at 725.66, and if we see that or the QQQ right shoulder high break then retests of the all time highs become very likely, and I’d expect to see those next week.

QQQ 15min chart:

These breaks of the H&S right shoulders are the key resistance levels here. If they break then the all time high retests are very much the next obvious targets across the board, though I’d note that the ATH has already been retested and broken on IWM this morning.

The daily middle bands are still important though and at the time of writing SPX is close to backtesting the daily middle band in the 7466 area. If SPX is returning to the all time high that needs to be broken and converted back to support.

An hourly RSI 14 buy signal has fixed since Wednesday and is a decent signal supporting the bull case here.

SPX daily chart:

At the time of writing QQQ is backtesting the daily middle band in the 721.60 area. If QQQ is returning to the all time high that needs to be broken and converted back to support.

A daily RSI 5 buy signal and an hourly RSI 14 buy signal have fixed since Wednesday and both are decent signals supporting the bull case here.

QQQ daily chart:

So is there a bear case here? Yes, though it looked stronger at the open, and is weakening with ES at the time of writing this up about 60. There is still a good quality bear flag on the SPX 5min chart, and the current break above may be a bearish overthrow, but if the bear flag is breaking higher, the target for that break would also be close to a retest of the all time high.

SPX 5min chart:

I was talking on Wednesday about the daily historical leans on SPX that I look at every week, the unusual continuous run of significant leans either way both last week and this week, and the 100% hit rate on those leans since the start of last week. That hit rate was at 7/7 on Wednesday and is at 9/9 now. Today and Monday lean bullish, the lean is neutral Tuesday through Thursday and Friday next week is a holiday, with holiday weeks having a general overall bullish lean. This is an ideal time window to see retests of the all time highs. On a pure technical basis I would give 80% odds to seeing those all time high retests next, though this is obviously also a very dense news environment.

Fifteen weeks into this two to four week war against Iran, that may now finally be ending, I am still expecting to see an oil squeeze starting in coming weeks when world oil stocks fall to critical levels, and I think that last Friday’s decline on QQQ was a warning that the AI bubble might also be heading into trouble. I am watching the upcoming IPOs on SpaceX, OpenAI and Anthropic with great interest and also the cash calls to shareholders from Google and Facebook for their AI investment plans. These are putting strain on an already stretched market.

I am still looking for a significant high on equities soon and after this equities high is made I think the months after that high lean strongly bullish for oil, food and inflation, and bearish for equities and US treasuries.

I’ll be following this up with as look at the longer term structure in a post early next week and I’ll be posting an updated look at oil markets on my The Bigger Picture substack later today.

In my post on 30th April I made some predictions for oil, equity and bond markets over the rest of this year. Nothing has happened since to change this longer term view though it might take an extra month for US inflation to reach 5%. US CPI hit 4.2% this week.

Oil - I think it is now very likely that Brent Crude and West Texas Intermediate Crude will hit new all time highs over $150 within weeks, and that we may well see prices in the $200 to $250 range within months. Gas at the US pump will likely rise into the $6 to $9 range and oil will likely be over $100 on a monthly average basis for the rest of this year.
Bonds - US Inflation will likely go back over 5% within two months and may go over 7% by the end of the year. Ten year and thirty year Treasury yields will likely go over a key psychological level at 6% over the summer and may reach 9% before the next big high on yields is made.
Equities - Looking at SPX I’ll be looking for at least a decline into the rising support trendline from the October 2022 low, currently in the 5400 area. On a break below I would be looking for a retest of the April 2025 low at 4835.04.

Obviously this is a bearish take, but I have not felt this bearish about equities since summer 2008 and February 2020. There is good reason to be bearish here. When will all this happen? We’ll have to find out the usual way, by waiting to see, but I like the odds. Could I be wrong? Always, but I still like the odds. :-)

Topping Really Is A Process

2026-06-12T12:26:01.765-04:00

In my post on 20th May I was looking at the four high quality topping patterns forming on SPX, QQQ, DIA and IWM. As is often the case these didn’t deliver and the indices rejected back into higher highs. We are now looking at a new candidate high forming here but for a number of reasons these highs tend to take a while to form. This one does not look ready yet for much more downside unless there is some really bad news today.

I watch the historical stats for each day carefully as they often deliver, and last week and this week have been unusual for two reasons. Firstly every day has had a significant bullish or bearish lean, which is rare, as the majority of trading days in any year lean neutral. Secondly, the historical lean towards a red or green close has delivered every day since the start of last week, and I’m thinking the odds are decent that will continue to be the case into the end of this week.

On Friday I was talking about this in my premarket video, and was talking about the possibility that we would see a trend down day, which delivered and gave us a strong signal that another possible topping process might have started. So far this week the lean was bullish on Monday and bearish yesterday, which both delivered and the H&S patterns that had formed on SPX, QQQ and DIA all broke down towards lower targets.

I don’t think that any of those H&S patterns are likely to reach their targets, and I’ll explain why that is, but first let’s have a look at those patterns. I would note first that whenever an H&S breaks down there are in effect two targets. One of these two targets is highly likely (over 85%) to be reached. The first target is the H&S downside target, and the second is the fail target in the event that the trading instrument breaks back over the right shoulder high, in which case the target is the retest of the prior high at the top of the head, which in this case would be a retest of the all time highs on SPX, QQQ and DIA.

On SPX a decent quality H&S broke down with a target in the 7100 area. The H&S would fail on a move back over the right shoulder high at 7483.15.

SPX 15min chart:

On QQQ a decent quality H&S broke down with a target in the 657 area. The H&S would fail on a move back over the right shoulder high at 725.66.

QQQ 15min chart:

On DIA a fair quality H&S broke down with a target in the 498.30 area. The H&S would fail on a move back over the right shoulder high at 513.54.

DIA 15min chart:

Why do I think that all these H&S patterns are likely to fail back into high retests? Well one reason is that the second and last historically bearish leaning day this week is today, and reaching those targets either today or tomorrow morning looks very ambitious unless there is some really bad and market moving news. The impressive decline on SPX last Friday from high to low was about 230 points. At the time of writing this SPX is at 7360 and to hit the H&S target would therefore require a decline of 260 points. That looks ambitious.

There’s more though, the low on SPX yesterday was a visual hit of the 3sd lower band. Unless there is really bad news that tends to be a strong buy level on SPX, as it was yesterday. It takes time for daily middle bands to turn down and for the outer bands to expand and SPX just isn’t there yet. This is a key reason that topping tends to take a while. The daily 3sd lower band on SPX is in the same area today and a more than 100 point punch below it today historically looks like a long shot. In the unlikely event that was to be reached today or tomorrow morning, it would likely be a strong buy.

SPX daily chart:

QQQ didn’t quite reach the daily 3sd lower band yesterday though it came close. For today that is strong support in the 676.50 area, supported by the 50dma now at 676.39. I’d be surprised to see that broken significantly today.

One other thing I would note is that a possible daily RSI 5 buy signal is brewing on QQQ. There are also possible hourly RSI 14 buy signals brewing on both QQQ and SPX and all of these are suggesting a reversal back up to rested the all time highs from here. QQQ and SPX have been driving the downside bus over the last few days, and it’s likely they would be driving the upside bus too.

Lastly I should add that the low on DIA yesterday was a test of the daily middle band, which tends to be decent support, and the close on IWM yesterday was slightly over the daily middle band. Both of those have been stronger than QQQ and SPX over the last few days.

QQQ daily chart:

So what are the historical stats from here? Well today leans bearish as I mentioned. After today the next three trading days through Monday lean bullish, Tuesday through Thursday next week lean neutral into the Juneteenth holiday on Friday. Obviously this would be an attractive window to see some all time high retests.

Does this change my longer term outlook? No. I still think a significant high is forming on equity indices here and we are watching the process of finding that high. Each time a candidate high area is reached however the topping process has to start again from scratch and can take a while.

Fifteen weeks into this two to four week war against Iran I am still expecting to see an oil squeeze soon when world oil stocks fall to critical levels, and I think that last week’s decline on QQQ was a warning that the AI bubble might also be heading into trouble. I am watching the upcoming IPOs on SpaceX, OpenAI and Anthropic with great interest and also the cash calls to shareholders from Google and Facebook for their AI investment plans. These are putting strain on an already stretched market.

After this equities high is made I think the months after that high lean strongly bullish for oil, food and inflation, and bearish for equities and US treasuries.

I’ve been looking at the short term prospects for US equity indices today and I’ll be following this up with as look at the longer term structure in a post tomorrow.

Oil - I think it is now very likely that Brent Crude and West Texas Intermediate Crude will hit new all time highs over $150 within weeks, and that we may well see prices in the $200 to $250 range within months. Gas at the US pump will likely rise into the $6 to $9 range and oil will likely be over $100 on a monthly average basis for the rest of this year.
Bonds - US Inflation will likely go back over 5% within two months and may go over 7% by the end of the year. Ten year and thirty year Treasury yields will likely go over a key psychological level at 6% over the summer and may reach 9% before the next big high on yields is made.
Equities - Looking at SPX I’ll be looking for at least a decline into the rising support trendline from the October 2022 low, currently in the 5400 area. On a break below I would be looking for a retest of the April 2025 low at 4835.04.

Oil Inventories Hitting Critical Levels

2026-06-02T06:44:21.065-04:00

I wrote a post on 23rd April arguing that from an economic point of view the ongoing war between the US, Israel and Iran was largely irrelevant as the only thing that really mattered was how long the Strait of Hormuz would stay closed, and the risk that the Bab al-Mandab Strait might also be closed.

That was almost six weeks ago, and we’ve had a lot of announcements and briefings about peace talks since then, at least some of which appear to have been real, and it looked for a while last week as though there might actually be a chance of an interim agreement, but that has foundered for two strong reasons, firstly that both sides badly wanted a deal they could present as an unambiguous victory for themselves, and secondly that Israel didn’t want any peace agreement, and weren’t willing to restrict their actions in any way to get such any agreement.

On Saturday 23rd May, after a week of talk about active hostilities resuming, as the Polymarket odds of the Strait of Hormuz opening by the end of June fell to 25%, there were announcement that a peace agreement was close, and over the coming week those odds rose and peaked at 59%, and oil fell over 15%. By yesterday morning those odds had fallen back into the 20s and at the time of writing are at 22%. At the high yesterday oil had rallied back 50% of last week’s decline.

Announcements I saw from Iran yesterday included them leaving the negotiations because Israel were not allowing a ceasefire in Lebanon, or observing the ceasefire in Gaza, then Iran cutting off all diplomatic communications with the US, and saying that they were also about to close the Bab al-Mandab Strait for the first time in this conflict. It appears that peace talks have collapsed and will not be easy to resume.

So what now?

Well as I was saying in my post on 23rd April, the main issue was always whether the Strait of Hormuz stayed closed, and traffic through the Strait has now been at very low levels for over three months.

The consensus view is that oil supply is currently falling short of demand by about 6 million barrels per day, and that has been the case for over three months now. In that time global working and reserve stocks of oil have been declining and Exxon warned last week that these are reaching critical levels, and that within two or three weeks we might see a supply crunch that could see oil prices hit the $150 to $160 area. Chevron agreed and said that June and July would be very difficult months for oil markets.

It is likely that a major supply crunch on oil is coming in June or latest in July and prices would then need to reach a level where enough demand was destroyed to balance demand with this restricted supply. That might of course require prices going a lot higher than $150, and staying there potentially for months.

So what are the charts telling us?

The Brent Crude and Light Crude oil charts are telling similar stories here so I’ll just be looking at the Light Crude (WTIC) charts today.

On the bigger picture WTIC broke up from a falling wedge in February, and from a double bottom at the beginning of March. That made target within a couple of days. That falling wedge was also a decent quality bull flag and that flag has a target at a retest of the 2022 high at 126.42 which has not yet been reached.

There is also an older double bottom from before the 2022 high with an extended target at a retest of the all time high at 147.27. If Exxon and Chevron are right then both of those targets may well be hit in the next few weeks. That would involve WTIC rising $57 in that time from the level at the time of writing.

WTIC monthly chart:

On the daily chart a rough triangle has been forming from the March high and this would generally be a bullish consolidation pattern that should in due course deliver a retest of that March high at 119.48.

If we see last week’s low retested, though that isn’t the obvious scenario here, that should set up positive RSI 5 divergence and set a possible daily buy signal brewing.

WTIC daily chart:

On the hourly chart a falling megaphone from the 109.44 high formed last week and broke up on Sunday. The rally peaked almost exactly at a possible IHS neckline and there may well be an IHS forming here. If so a sustained break back up over the neckline at 94.67 would look for a target in the 103.10 area. That seems an obvious target area with my rough triangle resistance currently in the 106.8 area.

WTIC 60min chart:

Has the IHS right shoulder bottomed out? Very possibly, as there is an encouragingly high quality falling wedge that has formed on the 1min chart from yesterday’s high. If that holds then the right shoulder low is either made or close. As I have been writing this post this falling wedge has started to break up.

WTIC 1min chart:

Do I think that Brent & WTIC have a real shot at reaching Exxon’s $150 to $160 area? Well the projection I gave weeks ago in the event of a supply crunch was in the $150 to $300 range, so that would be at the low end of my range.

In the event that the Strait of Hormuz magically opened tomorrow I’m thinking we would likely see those new all time highs in any case. I understand that big oil tankers travel at a fast walking pace, so any resumed supply wouldn’t likely be important for a few weeks afterwards in any case.

The oil long from here has potential to be the trade of the year in my view.

Four Beautiful Topping Patterns

2026-05-20T15:55:57.046-04:00

In my post on 6th May I was looking at the resistance trendline on the SPX weekly chart and that rising trendline was being close to being hit in the 7385 to 7400 area. It was then hit and exceeded in what might have been a bearish overthrow, but I had by then also drawn in an alternate high quality resistance trendline that was hit perfectly at the high on Friday. SPX could go a bit higher, but the ideal upside trendline target has been hit. Look at the chart below and admire this beautiful rising megaphone from the 2022 low. :-)

SPX daily chart:

In my last post on Friday 14th May I was putting the case that further upside was likely to be limited, and a decent looking candidate high was made that day, with a modest decline into yesterday’s lows.

So what now?

Well, now I am looking for topping patterns, first some smaller ones for the next leg down, and after that some larger ones for the much larger retracement that I think will likely follow.

In terms of these first topping patterns I was hoping for high retests on SPX and QQQ, and we could still see those, with newsbomb potential here high with the Iran talks apparently in progress again, and NVDA earnings out after the close tonight.

I remain doubtful that there are any serious talks with Iran happening, as it is clear that previous talks were mostly imaginary, and as it is already clear that the resumption of US attacks planned for yesterday were delayed, not by talks, but by an ultimatum to the US from Gulf States that unless they first consented, any further attacks on Iran would have to be done without any support from Gulf States or US bases on their territory. Subject to that though, there are four high quality H&S patterns forming on SPX, QQQ, DIA and IWM, and they are as follows.

On SPX there is a high quality H&S forming, the ideal right shoulder high area has been reached today, and on a sustained break below 7330 would look for a target in the 7140 area.

SPX 15min chart:

On QQQ there is also a high quality H&S forming, the ideal right shoulder high area has been reached today, and on a sustained break below 694 would look for a target in the 688 area.

QQQ 15min chart:

On DIA there is also a high quality H&S forming, though in this case it can also be read as a double top that has already broken down. On a sustained break below 492 the double top target would be in the 483 area.

Read as an H&S, the ideal right shoulder high area has been reached today, and on a sustained break below 692 would look for a target in the 687 area.

DIA 15min chart:

On IWM there is also a high quality H&S forming, the ideal right shoulder high area has been reached today, and on a sustained break below 271 would look for a target in the 254 area.

IWM 15min chart:

Will these patterns play out? Well there are fixed daily sell signals on all four of these indices and the newsbomb part of the day may be over, with CL already having dropped $8.50 from the last highs on the news that the talks with Iran were ‘in the final stages’. As ever the first part of that decline happened before the news so we can at least be confident that US Administration insiders had a solid trading day.

As for NVDA? Well a classic move at or near the end of a big bull run would be to get good news that the market responded to by dropping. Well see how that goes tonight.

If markets rally much further I’d be looking for all time high retests on SPX and QQQ, and we might then see the all time high retest on DIA that I was looking for last week and didn’t see.

Either way further upside looks limited, and at most I think that this bull run from the late February low is likely to be over by the end of May.

After this equities high is made I think the months after that high lean strongly bullish for oil, food and inflation, and bearish for equities and US treasuries.

Oil - I think it is now very likely that Brent Crude and West Texas Intermediate Crude will hit new all time highs over $150 within weeks, and that we may well see prices in the $200 to $250 range within months. Gas at the US pump will likely rise into the $6 to $9 range and oil will likely be over $100 on a monthly average basis for the rest of this year.
Bonds - US Inflation will likely go back over 5% within two months and may go over 7% by the end of the year. Ten year and thirty year Treasury yields will likely go over a key psychological level at 6% over the summer and may reach 9% before the next big high on yields is made.
Equities - Looking at SPX I’ll be looking for at least a decline into the rising support trendline from the October 2022 low, currently in the 5400 area. On a break below I would be looking for a retest of the April 2025 low at 4835.04.

Obviously this is a bearish take, but I have not felt this bearish about equities since summer 2008 and February 2020. There is good reason to be bearish here.

Wild Thing

2026-05-14T15:48:01.013-04:00

In my post on 28th April I was talking about the Hormuz crisis but noting that when SPX made a new all time high on 19th February 2020, well after it was so obvious that COVID-19 was going to be a big problem that panic hoarders had caused a worldwide shortage of toilet paper, it reached a major resistance trendline and I was speculating that we might see that again here, giving a trendline target 200 handles higher in the 7360 area.

In my last post on 6th May I was looking at the resistance trendline again on the SPX weekly chart and that rising trendline was being close to being hit in the 7385 to 7400 area. It has since been hit and exceeded in what might be a bearish overthrow, but a have also since drawn in an alternate high quality resistance trendline that is being hit today. SPX could go a bit higher, but the obvious upside trendline targets have now been hit.

SPX weekly chart:

On QQQ I was looking for a trendline target in the 695 area at the time of my last post and that has also been hit and exceeded, with QQQ in the 720 area at the time of writing.

I don’t have any higher targets on that weekly chart from the 2022 low but I do have a very nice possible trendline target on the daily chart from the April 2025 low. If that is hit this week it would be in the 730 area.

QQQ daily chart:

On DIA I was just looking for a retest of the all time high at 503.37 and that hasn’t quite happened, though the high so far today at 502.16 is very close. I’m leaning towards seeing that hit before the high for this move, ideally tomorrow or early next week.

DIA daily chart:

On IWM I drew two possible trendline targets that have not been hit but have since drawn in a third possibility that has. IWM doesn’t need to go any higher but I am at least expecting this high at 287.58 to be retested, as I have a nice looking bull flag on the RTY hourly chart which has broken up with a target there.

IWM daily chart:

What kind of high might we see at the end of this wild run? Well this is looking very like a parabolic ending move. That would suggest a significant high:

How are things looking under the surface? Well the Strait of Hormuz has now been closed for 11 weeks and doesn’t look likely to reopen at anything like pre-war levels anytime soon. There is a likely big supply shock coming soon.

Both sides in the Iran War have been waiting for the other side to concede defeat since early April, but neither looks likely to do so. A resumption of hostilities is looking increasingly likely. Regardless of that the big supply shock from the closure of the Strait is likely coming soon.

In the US inflation is rising rapidly, there is increasing evidence that US consumers are cutting back on non-gasoline expenses and the yawning chasm between the current all time highs on the S&P 500 and all time low in consumer confidence is awe-inspiring. Consumer confidence historically is a leading indicator of market declines as you can see on the chart below:

In the short term US equity indices look very stretched on many measures, but the one that caught my eye today was the number of days of SPX 1% gains without a 1% loss . That hit eight yesterday, equalling eight previous runs like this since 1950. It may hit nine today, with two previous instances since 1950. Above there are just one instance of ten and two instances of eleven. Upside from here looks limited:

At the end of April I was arguing for higher equity prices using the analog of February 2020, high quality target trendlines above, and (on my webinars) that the short term structure looked incomplete in a way that generally suggested that the move was not close to finishing.

At this point equities have hit the trendlines I was looking for and I am almost out of upside targets. I think the high for this move is close, and I think the months after that high lean strongly bullish for oil, food and inflation, and bearish for equities and US treasuries.

Oil - I think it is now very likely that Brent Crude and West Texas Intermediate Crude will hit new all time highs over $150 within weeks, and that we may well see prices in the $200 to $250 range within months. Gas at the US pump will likely rise into the $6 to $9 range and oil will likely be over $100 on a monthly average basis for the rest of this year.
Bonds - US Inflation will likely go back over 5% within two months and may go over 7% by the end of the year. Ten year and thirty year Treasury yields will likely go over a key psychological level at 6% over the summer and may reach 9% before the next big high on yields is made.
Equities - Looking at SPX I’ll be looking for at least a decline into the rising support trendline from the October 2022 low, currently in the 5400 area. On a break below I would be looking for a retest of the April 2025 low at 4835.04.

Obviously this is a bearish take, but I have not felt this bearish about equities since summer 2008 and February 2020. There is good reason to be bearish here.

Crisis? What Crisis?

2026-05-06T18:36:00.006-04:00

In my post on 23rd April on my The Bigger Picture substack I was looking at why in my view the Iran War was, and is, largely irrelevant in the context of the economic shock being created by the closure of the Strait of Hormuz. The Strait has now been closed for almost ten weeks, and seems very likely to be closed for at least another three weeks. I’ll be writing a follow up post tomorrow about oil, and the oil shock that I’m expecting to become very important when the oil and equity markets come out of their current wishful thinking daze in one to three weeks. If you’d like to see that, it will be published on my The Bigger Picture substack and at theslopeofhope.com.

In my post on 28th April I was talking about the brewing oil crisis as well but noting that when SPX made a new all time high on 19th February 2020, well after it was so obvious that COVID-19 was going to be a big problem that panic hoarders had caused a worldwide shortage of toilet paper, it reached a major resistance trendline and I was speculating that we might see that again here, giving an ambitious trendline target 200 handles higher in the 7360 area.

That trendline is rising of course, and is now in the 7385-7400 area, with SPX at 7365 at the close tonight. It would not be unusual to go a bit higher than that in a bearish overthrow before this move tops out.

SPX weekly chart:

I’ve been talking for the last couple of weeks in my daily premarket webinars and bi-weekly The Bigger Picture webinars about having a continued long bias on equities because decent quality patterns had not yet formed on SPX or QQQ from the late March low. These webinars are all posted on my YouTube channel of course. When the pattern looks incomplete on SPX in particular it usually means that the move has further to go and so it has proved here.

That has now been fixed on SPX with a clear rising channel established from the late March low. These often evolve into rising wedges and I have drawn the most likely three possible wedge resistance trendline options on the chart below. The best match with the trendline on the weekly chart would be the lower trendline, currently in the 7390 area, and the highest quality option would be the middle dotted trendline, currently in the 7425 area.

SPX 15min chart:

On QQQ I mistakenly said on 28th April that the target trendline was in the 680 area. It was in fact in the 690 area and was hit this afternoon in the 695 area. As with SPX we could see a bearish overthrow of that trendline.

QQQ weekly chart:

On the QQQ 15min chart I have a clear rising support trendline from the late March low, and four obvious possible resistance trendlines. The two best quality trendlines are the lowest, with QQQ already above it, and the middle of the higher three trendlines, currently in the 703 area.

QQQ 15min chart:

I’m ignoring DIA today, as my only target there was a retest of the all time high at 503.37. DIA is close but lagging the others so badly that I’m wondering whether it will even manage that. I’m provisionally assuming it will though.

On the IWM daily chart the pattern I’m watching is from the April 2025 low, and there are two obvious resistance trendlines above. The first is possible channel resistance, currently in the 292 area, and possible rising megaphone resistance, currently in the 296 area.

IWM daily chart:

On the IWM 15min chart there is another clear rising channel from the late March low, but as with SPX this channel may well evolve into a rising wedge, and the obvious rising wedge resistance trendline is currently in the 289 area.

IWM 15min chart:

In broad terms I have all of SPX, QQQ, DIA & IWM close to their target areas and I’m looking for those all to be hit and then to start a topping process for this move that doesn’t seem likely to take more than one to three weeks before equity markets are on the way down again. I think this high on equities may well last the rest of this year and perhaps next year as well.

In my post on 30th April I made some predictions for oil, equity and bond markets over the rest of this year. Nothing has happened since to change this longer term view.

Oil - I think it is now very likely that Brent Crude and West Texas Intermediate Crude will hit new all time highs over $150 within weeks, and that we may well see prices in the $200 to $250 range within months. Gas at the US pump will likely rise into the $6 to $9 range and oil will likely be over $100 on a monthly average basis for the rest of this year.
Bonds - US Inflation will likely go back over 5% within two months and may go over 7% by the end of the year. Ten year and thirty year Treasury yields will likely go over a key psychological level at 6% over the summer and may reach 9% before the next big high on yields is made.
Equities - Looking at SPX I’ll be looking for at least a decline into the rising support trendline from the October 2022 low, currently in the 5400 area. On a break below I would be looking for a retest of the April 2025 low at 4835.04.

Sell in May ..........

2026-04-30T13:09:00.004-04:00

The old market saw goes that you should sell in May and go away, and rarely if ever in my view has that been more true than it is this year.

That isn’t to say that equity indices can’t go higher in the short term. I wrote a post on Tuesday looking at possible upside targets on SPX and QQQ that I would like to see hit, and have more modest upside targets on DIA and IWM that I’ll also look at today.

When we see the high for this move made, whether at those targets or lower, I think the prospects for equities over the summer look bleak. I covered some of the reasons for that in a post last Thursday on my The Bigger Picture substack looking at why the Iran War was largely irrelevant in the context of the economic shock being created by the closure of the Strait of Hormuz. If you haven’t already read that I’d suggest that you do that.

Before I get onto the markets today I’m going to make some predictions for oil, equity and bond markets over the rest of this year.

Oil - I think it is now very likely that Brent Crude and West Texas Intermediate Crude will hit new all time highs over $150 within weeks, and that we may well see prices in the $200 to $250 range within months. Gas at the US pump will likely rise into the $6 to $9 range and oil will likely be over $100 on a monthly average basis for the rest of this year.
Bonds - US Inflation will likely go back over 5% within two months and may go over 7% by the end of the year. Ten year and thirty year Treasury yields will likely go over a key psychological level at 6% over the summer and may reach 9% before the next big high on yields is made.
Equities - Looking at SPX I’ll be looking for at least a decline into the rising support trendline from the October 2022 low, currently in the 5400 area. On a break below I would be looking for a retest of the April 2025 low at 4835.04.

There will be other problems of course, a recession in the US and across much of the rest of the developed world now looks likely, food prices across the world are likely to spike up hard due to fertiliser prices and shortages, and helium shortages may well restrict world semiconductor production. Will the Fed ride in to the rescue? I think they may try, but their options look limited.

On to the shorter term markets which are at or close to all time highs:

There is increasing negative divergence on US equity indices. On SPX a weak daily RSI 14 sell signal fixed at the close yesterday and a full daily RSI 5 sell signal fixed earlier this week. That’s not encouraging for more upside but the structure is suggesting at least some more upside, the first trading day of May tomorrow is solidly bullish and there isn’t a historically strongly bearish day until 13th May. With global surpluses of oil estimated to be exhausted by 10th May that still gives markets a couple of weeks for continued wishful thinking.

If SPX does turn down directly from here there is still a decent quality double top setup. We will see.

SPX daily chart:

On QQQ a weak daily RSI 5 sell signal has fixed, and on the high retest today a possible full RSI 5 buy signal is brewing. If QQQ turns here there is still a decent quality double top setup.

QQQ daily chart:

One of the reasons I am expecting to see at least some more upside is that there are clear short term bull flags on both IWM and DIA from the highs made at the start of last week.

On IWM there is no current negative divergence on the daily chart but on a retest of the last high (and all time high) at 279.79, a full daily RSI 14 sell signal would likely start brewing. If IWM turns here, or there, there is still a decent quality double top setup.

IWM daily chart:

DIA is more interesting because there is no decent quality double top setup there, and for that reason I’d generally expect to see a retest of the all time high at 503.37 made in February. If we don’t see that there is a possible medium to low quality H&S setup but the left and right shoulders are very unbalanced. A weak RSI 5 sell signal has fixed.

DIA daily chart:

I won’t show the nice bull flag channel on IWM that is close to testing flag resistance at the time of writing, but instead I’ll show the decent quality bull flag falling wedge on DIA that broke up this morning with a target at a retest of the last high at 498.38.

DIA 15min chart:

Why am I so pessimistic about prospects for the world economy and markets here? Simple, the world is in the early stages of a major oil shock with oil prices likely in my view to hit unprecedented levels and very possibly stay there for several months. As energy is used to make pretty much everything, we are now very likely to see a serious hit to economic activity, inflation and stock prices across the world.

As an illustration of that the chart below shows what is essentially a perfect correlation between energy use and income per person across the world. Normally that energy is free flowing and uninterrupted but for the next few months at least, that flow is going to be seriously disrupted.

Deja Vu All Over Again

2026-04-28T07:13:00.010-04:00

In my post at the start of last week I was looking at the escalating economic shock that is the closure of the Strait of Hormuz, but also noting that the lack of patterns on equity indices from the late March lows were nonetheless looking higher.

US equity indices haven’t gone up a lot since then, with the exception of an impressive performance on QQQ, but I’m still thinking that SPX and QQQ in particular may go higher still and have some trendline targets to put forward in the event that turns out to be the case.

First though I’d like to look quickly at the current status of the Iran War and then take you on a walk down memory lane looking at the weeks before the last really big crisis in equities, which was of course the early weeks of the pandemic in 2020.

On Iran I wrote a post last Thursday on my The Bigger Picture substack looking at why the Iran War was largely irrelevant in the context of the economic shock being created by the closure of the Strait of Hormuz. If you haven’t already read that I’d suggest that you do that.

Further to that post there are two important dates coming up. The first is at the start of May, when the US Constitution requires the administration to go to Congress to authorise this war. That may or may not happen of course and the US administration may just argue that the war was never really a war and is in any case already over, but in the event that they don’t receive that authorisation the war needs to be wrapped up within the following thirty days.

I don’t know how seriously this administration will take this constitutional obligation but at the least this suggests that any active hostilities and the current embargo may be over by the end of May.

The second date is more important and is the consensus view I’ve been reading that the released strategic reserves and all the oil in transit after the closure of the Strait of Hormuz are likely to be exhausted by May 10th. That could be delayed a bit further, perhaps by the release of more strategic reserves, but as and when any surpluses have been used up, we will start a process of price discovery / demand destruction on oil.

The shortfall of the reduced supply vs demand looks to be in the region of ten million barrels per day or more. There is a decent analysis of how that is comprised here if you are interested. In the absence of other sources the price of oil will need to rise until it reaches a level where that ten million barrels per day shortfall is eliminated by demand destruction, because those ten million barrels per day are no longer wanted at that much higher price.

In that process I think we would likely see oil prices reach new all time highs in the $150 area, and may well see then reach new all time highs adjusted for inflation, which for Brent and West Texas Intermediate Crude would be in the $225 area. This would be a major worldwide economic shock, and as you can see looking at the chart below would likely put much of the world, including the US, into recession.

The best comparisons for this oil shock would likely be the mid-1970s and 1990 oil shocks:

So to summarise, we are looking at a major economic shock to the world, starting in a couple of weeks or so, that will likely happen to a significant degree even if the Strait of Hormuz were to be fully opened to commercial shipping today, as it takes a while for oil tankers to reach their destinations even when they can pass freely.

So why are equity indices still rising? Well let’s have a look at the last major shock to the world economy in 2020. The COVID shock was predictable. I remember talking to my brother in late January 2020 discussing the WHO not imposing flight controls and speculating as to whether that was because it was already too late to stop the coming pandemic. Many people saw the problem coming. Analysts were cautious about predicting a problem that people didn’t want to see, and markets hoped it would all just go away until it became undeniable that it wouldn’t.

I wrote a post on 19th February about the nascent pandemic and talking about the risks to world markets, and one thing I was watching but didn’t mention was that by the time I wrote that post there had already for several days been growing shortages of toilet paper in shops across the world including the US. That toilet paper shortage was created by people who could see what was coming and were hoarding essential supplies.

Those hoarders were all ahead of equity markets, which rose 5.5% from the start of February 2020 into a new all time high on 19th February, at which point reality finally started to bite and equities started to fall.

I wrote another post on 24th February looking at the start of the decline from the high, and SPX went on to decline 35.4% over the next month into the crash low at 2191.86 on 24th March 2020.

Where SPX topped out in February was interesting however, with the move up in February hitting a high quality resistance trendline for the rising wedge from the late 2018 low. This entire wedge would then be fully retraced over the following month.

SPX daily chart from 24th February 2020:

The question is whether we might see a similar move here. We still have a couple of weeks before reality becomes really hard to ignore and I do have a couple of high quality trendlines that might be hit in that time.

On SPX I have a decent looking rising megaphone from the late 2022 low, and at the time of writing I have the resistance trendline in the 7360 area.

SPX weekly chart:

On QQQ I also have a decent looking rising megaphone from the late 2022 low, and at the time of writing I have the resistance trendline in the 680 area.

QQQ weekly chart:

These trendlines don’t need to be hit, and rationally they really shouldn’t be hit, but I’ll be watching these, and if reached, they should both be a solid sell there in my view.

I’ll be doing a post later this week with a shorter term view, but I was having a careful look at equity indices over the weekend, and wanted to share these as possible upside targets.

In the meantime we are in the early stages of a major economic shock to the world that may well be comparable to the pandemic in 2020, and when we make the high for the current move, I’m thinking that high may last the rest of this year and perhaps next year as well. Be careful out there.

So Far, So Good in The Strait of Hormuz

2026-04-23T08:44:00.002-04:00

I’ve written well over two thousand posts over the last sixteen years, and this will be the first that doesn’t include any charts that I drew myself. That feels a bit strange but I’m writing this post to draw everyone’s attention to what is really important about this Iran War.

The war itself is largely irrelevant. Whether the US, Israel or Iran are bombing, or blockading, or blustering doesn’t really matter. All that is really important on the bigger picture are the Strait of Hormuz and, to a slightly lesser extent, the Bab al-Mandab Strait, the two key chokepoints for world trade routes in the Middle East:

What is important here is that the amount of tankers and trade volume through these Straits, and that traffic through the Strait of Hormuz dropped over 90% at the start of this war and has on average remained at or below that level since then.

To put that in perspective the last oil tanker that passed through the Strait of Hormuz before this war started delivered that cargo on Monday 20th April. After the war started there was a grace period while the tankers still on the sea delivered their cargoes. That grace period has now ended and the Strait is still closed.

There are still oil reserves that have been released to work through, but once they are used up this supply shock will be fully on, and prices will rise to destroy demand until supply and demand for oil balance again. That is what an oil shock is really about.

There are two previous oil supply shocks historically to compare this crisis with, the first in the 1970s and the second when Iraq invaded Kuwait in 1990. In terms of the percentage of world oil supply disrupted both were smaller, and this disruption is already close to lasting longer than in 1990 and may yet last longer than the five months in 1973.

The summary below looks at what happened in these two previous supply shocks to oil prices, equity valuations, GDP and inflation and it is grim reading:

It isn’t just about oil of course, 30% of helium worldwide comes from Qatar and and much of that capacity has been damaged in this war and will be offline for years. That capacity is not obviously even possible to replace, as it is produced as a byproduct of Natural Gas, and prices have already risen over 50% in the demand destruction cycle to balance supply and demand. Helium is vital to semiconductor manufacturing among other uses.

Other major disruptions include aluminium and urea, which is very important for fertilisers. The chart below is Urea prices from the start of 2022, rising rapidly back towards the 2022 highs. This will restrict world food production and deliver higher food prices that will feed though (no pun intended) over the next few months:

In terms of the impact on equity prices, the milder outcome was in 1990 when stocks were slightly overvalued and stocks dropped 21% peak to trough. In 1973 stocks were somewhat more overvalued and markets dropped 52% peak to trough over the next two years, only recovering to the previous highs after seven years.

So are stocks overvalued now? Well the chart below is the Schiller P/E ratio since 1870. The current level is 20% higher than the high in 1929, and about 10% lower than the all time high in 2000. For comparison the Schiller P/E ratio was at about 18 in 1973, and 17 in 1990 against a historical mean (before 1990) in the 14% to 15% area. It is currently over 40. There is a strong argument that stocks are extremely overvalued here.

How fragile is the market? Are market expectations diverging from the real economy? The chart below is a look at the S&P and Consumer Sentiment since the start of 2007. It is a thought-provoking chart:

The bottom line here is that all that really matters here is the supply shock to the world from this war in the Middle East. Nothing else is of global importance. Until commerce is flowing freely through these Straits, whether or not Iran is charging a toll, the world is exposed to a severe economic shock , stagnation and inflation. The US is a large oil exporter and is more insulated from this crisis than many, but is a long long long way from immune.

Once this supply shock ends we can see how bad this shock is likely to be as the effects feed through over the next few months and years. So far the speed of international trade has insulated the world from this supply shock but that won’t be the case going forward.

We have yet to see the real effects of this Iran War, and it is important to remember that the news about the war that we see every day is mostly just noise, of no real importance on the bigger picture here.

Overall this situation reminds me of a joke my father used to tell. A man jumps off the top of the Empire State Building and halfway down the building is heard to say ‘so far, so good’. It isn’t the fall that kills you, it’s the landing. That is the thing to focus on.

The Four Horsemen - Cotton, Wheat, Corn and Soybeans

2026-04-21T08:13:00.003-04:00

There were four big setups, each covering multiple tickers, that I was looking in my bi-weekly The Bigger Picture webinars last year and at the start of this year that looked very strong, but I was struggling to come up with any decent fundamental reasons why they might play out.

That changed when the US attacked Iran on 28th February, and since then I have been looking at these four big setups as follows:

War - I looked at the oil setups in my posts on 3rd and 13th March. Those setups have made the first targets but haven’t yet made the extension targets at retests of the 2022 highs on $BRENT, $WTIC and $GASO.

Pestilence - In my last The Four Horsemen post on Friday 27th March I was looking at the US Dollar, and that hasn’t changed much since as we are currently waiting to see if attempts to end the Iran War might be successful.

Famine - Today I am looking at the third series of setups, on $COTTON, $WHEAT, $CORN, and $SOYB.

Death - This will be the next and last in this series looking at bonds, and will give a preview of what might happen if the current US experiment in ever rising deficits and debt ends really really badly.

In term of the current ceasefire and the Strait of Hormuz almost everything about the ceasefire is obscured by a fog of confusion, but what does seem clear is that the Strait of Hormuz remains under Iranian control, that when it is open at all they are charging a stiff toll on all vessels passing through the Strait, and are insisting on payment in either Yuan or Cryptocurrency. In case you were wondering, they are welcoming payment in Trump Coins:

The main focus on the trade disruptions from the Iran War has been on oil, but there are other important goods which have been severely disrupted including Liquefied Natural Gas (LNG), Helium (vital for semiconductor manufacturing), and fertiliser, as the Persian Gulf is a very large source of Urea. It is the fertiliser disruption that concerns us today.

That disruption has been serious, prices are well up and there are serious shortages and price spikes that have already had a serious impact on the Spring planting season for both Wheat and Corn. Enough disruption may already have been caused to deliver the squeeze in supply that I am looking at in the charts below, and all four of the crops I am looking at below use a lot of these disrupted fertilisers.

The first on the list is Cotton, which broke up on 13th March from a double bottom looking for a target in the 88.64 to 89.13 range. This is a big move but looking at Cotton from the high in 2022 after the invasion of Ukraine this is still less than a 38.2% retracement of the falling wedge from that high into the lows made last year. This could potentially further deliver a move higher into a retest of the 2022 high, in which case I’d be watching the possible IHS neckline or asymmetric double bottom resistance at 107.25, close to the 50% retracement of that rising wedge.

COTTON weekly chart:

The second on the list is Wheat, which broke up very slightly from a double bottom looking for a target in the 739 to 742 range. This is a big move but looking at Wheat from the high in 2022 after the invasion of Ukraine this is still less than a 38.2% retracement of the falling wedge from that high into the lows made in 2024 and 2025. This could potentially further deliver a move even high, in which case I’d be watching the possible IHS neckline or asymmetric double bottom resistance at 720. There’s nothing here currently to suggest a move that might exceed at 61.8% retracement of that rising wedge.

WHEAT weekly chart:

The third on the list is Corn, where a double bottom setup has formed that on a sustained break over 504.50 would look for a target in the 624 to 640.25 range. This would be just under a 61.8% retracement of the falling wedge from the 2022 high to the lows in 2024 and 2025. There’s no obvious path higher at the moment unless a right shoulder forms near the possible IHS neckline in the 564.50 area.

CORN weekly chart:

Soybeans are the only one of these crops that had not formed a double bottom by the start of this year. I had been expecting one as a clear bear flag channel was forming for over a year from the low in 2024. That bear flag broke up though, came close to a retest of the possible IHS neckline at 1257.94, and has since been pulling back in what may well be an IHS right shoulder. A sustained break over 1235 would look for a target in the 1560 area, close to a 76.4% retracement of the falling wedge from the 2022 high into the low in 2024. There is no obvious path higher from there.

SOYB weekly chart:

To a large extent these setups are just routine retracements of their big moves down from the major highs made in 2022, and they are very possibly not dependent on a further escalation of the Iran War. These moves may already be baked in from the disruption of the last few weeks affecting the crops to be harvested over the next few months.

I’m planning a post over the next few days looking at possible options trades to take advantage of these moves.

The next post in this series will be looking at the bullish setups on bond yields. These are by far the scariest looking setups here and I’m aiming to get that out by the end of April.