Charts I’m Watching: Oct 7, 2013

SPX almost broke out Friday…a pretty convincing move.

But, the futures  — currently down 15.25 — have done a number on anyone taking the bait.  Look for at least a .786 retrace of the move up from the purple channel: SPX 1675.

ES followed our script pretty precisely on Friday:

The key is what ES does if/when it reaches the top of the falling white channel (currently around 1679.50.)  If it breaks out, it should have legs — at least to 1687-1700.  If it reverses or stalls there, then the downside case is still a good possibility.

After reaching 1681 early Friday, ES backpedaled 8 points before topping out at 1686.  It’s safe to say that ES is now reversing and has the .886 at 1665.84 in its sights.

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