Things continue to go pretty much as planned, though there are a few currency-related bumps in the road just ahead.
DX, having reached our year-end target yesterday, is reversing. Whether it will amount to something meaningful or is just a head fake remains to be seen.
USDJPY has clearly lost a little momentum in the short-run, giving up the purple channel and stalling at the white channel midline (remember, USDJPY has frequently ignored the rules of channels and chart patterns lately.)
The net effect is a rising channel for SPX that, as we’ve pointed out before, looks more and more like the mid-October melt up. Prices could continue to rise even as momentum fizzles and the initial channel’s relevance fades.
My expectation is that we’ll get a small sell-off somewhere along the way — perhaps as early as at the close today — just to shake out the weak bulls and set the stage for the last leg. An obvious initial target would be to close yesterday’s gap at 2078.73.