Note, we closed our long position just before the close yesterday at 1574 [CIW: Apr 16 – 3:45 in the members’ section.]
DX is signaling a rebound with the tag we expected of an important channel line.
For SPX, the test will come at 1555.57. We’ll look for a bounce there at the bottom of the rising purple channel and the 1.618 of the 1474 – 1343 plunge last Fall. This Crab Pattern completion produced barely any correction at all back in March — quite a bullish sign.
Was the push beyond 1555 to 1597 merely a throwover that will produce a delayed reaction, or — as bulls are betting — will we successfully backtest it and move higher?
As we discussed yesterday, the rather complicated big picture has become fairly simple. SPX has levitated higher since 1343 on Nov 16 within a (now) fairly well-defined channel (below in purple.)
As long as it remains in that channel, the overall trend will remain positive. But, if the channel breaks down, we enter a new phase which will be different from the past five months. Working against higher prices, however, are two important trend lines that stopped SPX’s advances at 1597:
- the TL drawn from the two previous 2000 and 2007 highs (red dashed line below)
- the TL drawn from the 1994 and 2003 lows (yellow, dashed)
It’s a battle between a rock and a hard place.
We went long at 1345 [Charts I’m Watching: Nov 16] with the expectation of retracing 61.8 — 88.6% (1424 – 1459) of the decline from 1474 before continuing lower.
Then came the fiscal cliff solution over the New Year holiday. The overnight ramp job that followed was a thing of beauty, coming as it did while no one was looking — or was too hung over to care. That was the first of many overnight ramp jobs in the futures market that have propelled this market higher.
UPDATE: 10:22 AM
Targets in a few.
continued for members…
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