Charts I’m Watching: Jan 21, 2015

Stocks faded quickly after the open yesterday — testing the moving averages on both the upside and downside as expected.

2015-01-20-SPX 15 0623USDJPY had reached the upper bound of a falling channel.

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.

2015-01-20-USDJPY 60 CU 0600Note that the channel picture for USDJPY is still negative — though we should be wary of a bounce off the falling red channel (in a backtest.)

2015-01-20-USDJPY 60 0600One 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.

2015-01-20-SPX 15 0637USDJPY rebounded .35 off this morning’s lows, bouncing off the broken red channel as discussed above.

Now for the upside targets…

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