Stocks faded quickly after the open yesterday — testing the moving averages on both the upside and downside as expected.
If the upper bound holds, then this morning’s rally in stocks should burn out quickly after testing the SMA10.
SPX pushed a little past the SMA10 before dropping fast to the TL we had drawn and testing the SMA100.
…meaning SPX should find support at the white TL after this morning’s sharp reversal. If not, the SMA100 is just below at 2007.85.
We’ve replaced the TL with a rising white channel in the expectation that the uptrend will continue if the 93% who expect the ECB to bring massive QE to the “market” are correct.
Overnight, USDJPY’s rising wedge finally broke down, meaning stocks should open lower today. The rising white channel bottom makes for a convenient initial target.
One cloud hanging over stocks is ECB Governing Council member Nowotny’s comment that central bankers and policy makers should retain a longer-term perspective and “have a bit of a relaxed attitude to news and not to get too excited about the events of one day.”
Maybe it’s just me, but this doesn’t sound like a guy about to unleash massive amounts of QE.
UPDATE: 9:37 AM
Got the lower bound bounce right on target.
Now for the upside targets…
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