Looks like we’re getting some follow-through this morning on Friday’s technical rally. But, this doesn’t appear to be one worth chasing unless it can push up strongly through 1560.
The dollar pushed above the TL from the prior highs as well as its .618 Fib of the Apr 4 high. This bodes well for a run to at least the purple midline — probably at the .786 or .886 (83.258 or 83.446.)
Got a pullback to the neckline of the small http://pebblewriter.com/inverted-head-shoulders-pattern/ (in yellow, below) completed on the opening.
UPDATE: 9:50 AM
I’m going to allow a little more wiggle room on the stop, as this setup is too good for the bulls to waste. Hanging in there for 1574.
The existing home sales won’t make it any easier for more upside, here.
But, getting SPX up to 1474 would be a coup for the bulls. At that point, it would have formed 2/3 of another larger IH&S that targets 1610. So, don’t expect them to give up this seemingly insignificant pattern easily.
UPDATE: 11:55 AM
It’s questionable whether can push through 1558.74 — the .886 of this morning’s decline. I’d have to classify it as corrective unless it can break out of the falling white channel.
Just reached 1558.53, pushed above the channel upper bound for about 3 1/2 seconds, and retreated. I’ll hold on to the long, but raise stops to 1556ish. The bulls really need a breakout here.
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UPDATE: 12:40 PM
SPX just burst through our channel line mentioned above. This puts the red .786 at 1566.94 on the table — a Gartley Pattern. Note that this is also roughly the level of the .500 retracement of the 1597 – 1536 decline.
Assuming SPX will push through 1560 this time (the RSI chart below suggests it will) we’ll look for signs of weakness between 1567 – 1574.
UPDATE: 2:35 PM
SPX making nice headway toward our interim target range of 1567-1574. I’ve had a chance to fine tune some of the charts; and, this move is shaping up pretty much as expected.
Recall that we shorted at 1597 back on Apr 11, and held went long again at 1541 last Thursday. SPX is coming up on the .500 retracement (in white, below) of that decline, which is a common enough corrective wave move.
Note also that the red .786 and light blue 1.618 are very close to that same price level. While the coincident Fib levels concur on the importance of 1566-1567, it’s the chart patterns that will likely determine the next 100-point move.
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