Charts I’m Watching: Jan 14, 2015

Yesterday was a wild ride for SPX.  It took off in the morning, overshooting our upside target by 7 points.

2015-01-14-SPX 30 0600But, our 9:40 top call proved accurate, and SPX maxed out at 2056.93.

SPX just sliced through the SMAs and tagged 2054.75.  It should top out between here and 2059 — the .886 of the drop and a backtest of the rising white channel.  I’d be very careful about chasing it any higher.

It subsequently dropped to our downside target of the day, a plunge of 48 points to the .786 & SMA100 combo at 2008.  I had actually expected it to come the following day (today.)

IMHO, this morning’s rally is overdone.  But, the algos are propping it up.  As such, I suspect any initial slide will be limited to a backtest of the SMAs — unless USDJPY reverses soon.  But, odds are its reversal will come after the close and not affect SPX…The problem is that it should drop further.  But. again, that could happen after the close without affecting SPX.

The bounce from there, again, overshot our upside target of 2020, but didn’t have enough juice to keep going and settled back to close within the falling red channel.

…SMA100 tag for SPX, we should see a nice bounce here.  How far will depend on many factors, but I’d say at least back to the .618 at 2020.  Beyond that, the rising white TL comes back into play.

All in all, a quite bearish 48-point drop from its initial 23-point ramp.

On to today…

USDJPY reached our 116.68 target overnight — and, then some. This was the downside target we set on Monday, (the red circle) so the timing turned out pretty good.

The .786 would have kept the pair in our falling red channel, but this morning’s retail sales numbers were just too dreadful.

2015-01-14-USDJPY 60 0615The e-minis are following suit, currently off 23 after being down about 30 points earlier.  SPX looks destined to reach the .886 (2000.65) we’ve been targeting.  If it overshoots — and, there’s a decent chance — there’s channel support down around 1986ish.

2015-01-14-SPX 30 0600UPDATE:  10:00 AM

SPX came pretty close to our initial downside target: 2001.38 versus 2000.65.

2015-01-14-SPX 30 0700USDJPY’s bounce at the .886 should provide a bounce for SPX as well.  From there, it starts getting interesting.

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