Charts I’m Watching: Jan 28, 2015

Yesterday was one of those days where the charting was deceptively easy (if only they all were…)  We started out with essentially the same chart as was posted last Friday. The only alteration was to add another downside target (the lowest red “S”) at the falling white channel top in order to accommodate a potential backtest of that channel.

2015-01-27 SPX 15 0600Our gameplan for the day was pretty straightforward, a continuation of the previous day’s forecast:

…SPX should be shorted overnight at 2053 by those with the stomach and the ability to watch/hedge such positions — a stance that’s looking fairly prescient with the e-mini’s off nearly 30 points just prior to the opening bell…SPX looks likely to nail our next downside target in its opening move.

SPX nailed our next downside target, but the bounce was muted — only 6 1/2 points instead of a backtest of the SMA20.  As such, our next downside target came into play sooner than expected.

Our original plan was for a deeper drop to somewhat match the left shoulder using the red neckline.  I chose a backtest of the falling white channel at 2017ish as the target.  I see this as at least a 50:50 shot…

The backtest stopped just short of our target at 2019.  We then projected a bounce back to the SMA10 and then the SMA20 at 2041, at which point we recommended a protective stop.  SPX reached 2043, then reversed — triggering our stop and setting our sites on the SMA10 at 2029.  SPX closed at 2029.88.

2015-01-28 SPX 0600After the close yesterday, AAPL blew the doors off most everyone’s forecast — kicking off a ramp-a-thon that saw USDJPY rally back to the channel top (yes, again) and S&P futures a whopping 24 points. 2015-01-28 USDJPY 60 0600Even though USDJPY backed off the channel top overnight, ES is clinging to a 5-6 point gain.  This leaves the chart picture muddled, which is appropriate given that we’ll have a Fed rate decision coming up at 2pm EST.  There will be no press conference, and no shocking shifts in policy are expected.  But, it still leaves the “market” in a bit of suspense.

With the close at the SMA10 support yesterday, and a subsequent pop in the futures, the immediate trend looks to be higher.  Remember, the drop to 2019 was a backtest of a falling channel.

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