We got the spike. Extended trading ranges are ripe for false breakouts. Tonight the blogs are alive with the sound of music.
Cash did not hit the 10,608 where I had my orders. However, in the final 30 minutes all of the indices went into triangles. The breakout occurred after cash closing. The good news is that this points to the end of the spike. Triangles are end-of-move patterns. I covered my DJ futures at 10,522. I got back short at 10,550 with a stop at 10,571. Why would I fight a new DJI high, especially a DJI closing above a prior intraday high? Apart from expecting a spike to clear the remaining bears from the field, the SPX provides my answer.
The SPX and SP futures both held at the 4-day and 3-month trendline off of their highs. In fact SPX closed beneath the prior hourly high and Monday's and Wednesday's hourly highs as well. Here is the SP futures trendline, which was hit and slightly exceeded after the cash closing:
The cash equivalents of the above data points are:
June SPX high: 1131.33
DJI short point: 10,615 is cash equivalent of 10,550 DJ futures
It is important for futures to peak and decline overnight in order to bring cash DJI back within range.