Charts I’m Watching: Jun 4, 2014

Another day, another snap-back rally to test the top.  This one reversed exactly at yesterday’s lows (probably just a coincidence.)  SPX’s Crab Pattern target of 1926.77 is still out there, so be careful of any new highs here on SPX/ES.

2014-06-04-ES 30 0715S

USDJPY may have topped out for now, but the white .618 is still a possibility — and, a likely ally in any push higher in the “market.”

2014-06-04-USDJPY 30 0715

We should see more of this chop until Draghi’s big announcement tomorrow.  What will the ECB do?  Smarter guys than me are certain it’ll be negative interest rates.  I happen to believe more LTRO s and an expansion of relieving the “dead banks walking” of more of their crappy paper/derivatives.  Whatever the announcement, the “market” will probably sell off viciously for all of 30 seconds before rallying to new highs.  Sigh…

I have more Comcast issues, so will sign off now.  GLTA.

UPDATE:  11:15 AM

Quick update…ES and SPX just made new highs, so all those pretty harmonic patterns showing potential downside targets are garbage. Remember the SPX 1926.77 target, though.  If SPX should reach it during trading hours, we could see a decent sell-off.

The way the algos have been working lately, however, is to push to a new high (to stop out the shorts, if there are any still alive) and then linger there near an obvious harmonic or chart pattern reversal point to keep the newly minted bulls in the game until the rug can be pulled out from under them — preferably in the after-hours.

If the talking heads on the boob tube really wanted to discuss where all the traders went (why this is the most-hated bull market in history) they’d spend a day or two talking about algorithmic trading.  It is undermining the integrity of the “market” just as surely as is the Fed and is slightly more important than driverless cars or the latest funny-money acquisition.

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