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Nothing much has changed since Friday’s close. There’s a slight negative bias, which could be nothing more than consolidation after Friday’s rally. We’ll play along on the downside, with the understanding that 1673 is still on the table either intra-day with a reversal, or on the way higher. In other words… tight stops.
Price has been on a tear, but the underpinnings of the rally have been fading the past several days — as seen on the 60-min RSI chart.
We went to cash at the close Friday because of the disagreement between short-term and long-term patterns such as are displayed in the currencies. The euro and dollar have hit short-term targets, but have more room to go before the tide turns.
UPDATE: 10:10 AM
Note that we’re currently above the yellow TL connecting the 1994 and 2002 lows, and at 1667.50 have pushed above the top of the purple channel itself.
As I mentioned earlier, this might be nothing more than an intra-day move. But, we can’t ignore the possibility of a breakout here. It’s visible on both the short-term and longer-term RSI charts — the action immediately ahead of us will determine which it is.
The most logical move, given the degree to which we’re overbought, would be a reversal off the channel tops. But, we’ll see…
UPDATE: 12:47 PM
SPX got within .16 of our 1673 target and is rolling over. Watch for the latest even-more-steeply sloped channel (white) to catch it around 1669-1670. A drop back through the top of the purple channel would argue for 1663 (yellow dashed TL) for starters, maybe lower.
I’ll likely take a crack at an interim short position with any push through 1669.60.
UPDATE: 12:56 PM
I’ll probably just wait for a push through 1669 instead.
To give you an idea of how silly this has become, the little white channel slopes up through the red channel which slopes up through (and has, for the moment at least, departed) the purple channel.
This is, by definition, exponential: increasing at an increasing rate.
UPDATE: 1:19 PM
For the bears, a move back through 1663 is necessary to generate any real downside potential. Otherwise, this could be viewed as a backtest of the yellow TL.
As always, watch for the back test of the broken channel/TL — in this case, stops around 1670.50 should be safe.
UPDATE: 2:40 PM
Got very close to the yellow TL and bounced. It’s not clear yet whether that was the extent of it. But, I’d expect SPX to at least tag the red channel midline — currently at 1663.75.
UPDATE: 3:55 PM
Holding short into the close. The dollar and euro appear very ready to reverse, and SPX is still back below the purple channel top, meaning a reversion to the midline is the most likely scenario.