Charts I’m Watching: May 14, 2013

The eminis continue to bump along at harmonic resistance: the red 2.24 at 1626.41 and the small white pattern’s 1.618 at 1631.62.

ES 60-min…

The DX is right back to the levels reached on Friday — the white channel midline.  A thrust above would likely kill off the equities rally (or, at least hobble it.)  A retreat would be bullish.

The fact that it hasn’t yet pushed through has to be bullish in the short run, but the fact that it’s balanced on the precipice is ample grounds for caution.  Tomorrow marks the day on my charts where the white midline and purple midline intersect.

DX is poised just below both, so a push higher would be very important.

From a harmonic standpoint, a move above the Apr 4 high of 83.66 kills off a potential downside scenario to the white D.  Today’s high so far: 83.53.

SPX has opened stronger, completing the small white Crab Pattern 1.618, the red Crab Pattern 1.618 and the larger white Crab 2.24. The only harmonic target left is the white 1.618 at 1642.38.

I show the top of the purple channel at 1640.34 and the red channel midline at 1640.63.  Remember, 1640.90 was our preferred target.

It is right next to the IH&S target we identified in April and is a great harmonic fit with the downside scenario.  More on that in a moment.

SPX just tagged the red midline and purple top at 1640.89 — close enough for me.  I’m shorting here.

The white 1.618 is still up above at 1642.38 — and it’s a decent looking pattern.  So, we might be a couple of points early.  Any push higher and I’d likely just take an interim long.

There’s also an interesting Fib extension at 1646.73 — the 2.24 extension of the 1074 – 1292 rally in late 2011 as applied to the 1158 Nov 2011 low. It intersects there with the purple TL from the 1994 and 2002 lows of 445 and 776.

And, on a smaller scale, 1640.47 was the measured move target from 1626.74 yesterday.

UPDATE:  10:15 AM

SPX just tagged the white 1.618 at 1642.38.  As discussed above, if we don’t get a reversal here I’ll add an interim long position.

UPDATE:  10:28 AM

Getting a push higher, so I’m adding an interim long position here at 1643, with trailing stops.  If SPX pushes higher than 1648, I’ll consider abandoning the short position.

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