Charts I’m Watching: Aug 27, 2013

I ended yesterday’s post without the usual admonishment to not hold overnight unless you are capable of hedging and effecting stops overnight.  Last night’s futures action is ample proof of why.

War jitters have sent the futures tumbling overnight — but right to the .886 retrace of the latest move up.

I’m assuming that SPX will do the same when it opens, dropping 15 points to the red .886 at 1642.91 and testing the bottom of the purple channel again.  I’d close any longs asap and play the downside to as low as 1640ish, and look for a bounce there.

The dollar is taking it all in stride…

And, the USDJPY is near support at intersecting channels as well as its own .886.

UPDATE: 9:34 AM

SPX just dipped below 1641 and should get a bounce within the next point or so.  I’ll switch to a long position here with stops at 1638.

We’re well into the red channel again, so this should resolve one of two ways: a reversal by the end of the day that climbs back out, or a tag of a prominent red channel feature such as the midline at 1635 or bottom at 1620.94 (also the red 1.618 extension.)

I’ll hold long unless prices push below last Wednesday’s low, in which case I’d go along with the fear trade.

UPDATE:  9:45 AM

So far, so good.  But, keep an eye on the 1639.49 low.  A dip below probably means a trip to that 1620 mark on accelerating volume (so far anemic.)

I have to run out for several hours (in LA today) but will post later in the day.

UPDATE:  EOD

SPX held the 1638 stop/support for several hours, but in the end couldn’t recover.  The Syria rumors are coming fast and furious, and it’s certainly beginning to look like a shooting war.

As mentioned above, a plunge through our 1638 was cause to go short with an initial objective of 1635 (didn’t hold) or 1620.94 — where the 1.618 and .618 reside.

The next support isn’t until our original target from our downside scenario of a few weeks ago — 1577, though the .786 isn’t a bad fit depending on the timing.

The eminis present a different view, however.  A stop right here solidifies the lower bound of the rising purple bound (it’s broken on SPX.)

I’ll be in and out of appointments tomorrow but should have the opportunity to post before the market opens and periodically throughout the day.

Comments are closed.