Oops. It’s a word you never want to hear from your pilot, your surgeon, or your fellow EOD tech. But, I could swear I heard a collective “oops” — and maybe even a few choice expletives — from TPTB when markets sold off during yesterday’s FOMC announcement of cheap money till the end of time. If more QE won’t kick start even a little rally, what’s left? Indeed.
Yesterday’s SPX high came near three important Fib levels, not to mention a key channel line I’ve been watching for months (yellow, dotted.) In addition, many key indices, currencies and individual securities reached critical channel or Fib tops intra-day.
We remain all-in on the short side from SPX 1438 [1:30 post], though any rise through 1440 likely means we need to bag the .786 @ 1446.44 before heading down.
As to the downside, watch closely for a break of the white acceleration channel line shown above. There are numerous H&S setups waiting to come into play once a break and back-test occur. The EURUSD is about to take a big dump as well.
UPDATE: 12:45 PM
First big hurdle is at 1419 — the neckline of the Inverted Head & Shoulders pattern completed on Tuesday. We usually get a back-test of a neckline, so bulls typically see a neckline tag as an opportunity to buy.
Next stop, 1413.65 — the .618 of the latest move up and the target of the little H&S pattern completed this morning.
Still dancing around the neckline mentioned above. There are many more H&S patterns waiting in the wings if we can push below 1415 or so. The next one up (purple neckline) signals 1393-1395.
Note, however, that the back-test of the white neckline hasn’t completed. So, we could still go up and tag 1426-1428 first.