Our Little Secret

Just in case there was anyone left out there who still believed the game wasn’t rigged, the FOMC comes along and confirms that certain people are more eligible than others to receive potentially market-shaking information in advance.

Not to worry, though, as it was only politicians, their staffers, the lobbyists, their organizations and employers, relatives, friends, neighbors, household staff, the folks at the next table over at Minibar, the valet parking guys…

In any case, the minutes confirm what we could have surmised based on the governors many speeches, CNBC appearances, etc.  There is dissension in the ranks about tapering or ending QE, but it’s still a minority.  They’re still worried about unemployment, etc. etc.  Nothing new here.

A few moments ago, a Fed spokesman opined that they weren’t aware of anyone on the early distribution list having traded on the information.  Riiiiight…..

*   *   *   *   *   *   *   *  

In the biggest development of the last 24 hours, the channel the US dollar’s been in since Jan 11 officially broke down.  Recall that DX completed a Bat Pattern on Apr 4, signalling a reversal that is playing out nicely.

This gave SPX the go-ahead to make a new all-time high, which it did this morning — finally exceeding the Oct 2011 1576.09 high.

We remain long from 1539.86 [CIW: Apr 5, 9:33 update] and are now looking ahead to several potential turning points — the first of which are coming up between 1579-1583.

The most significant appears to be 1582.95 — a Butterfly Pattern 1.272 extension of the drop from 1573.66 to 1539.50 last week.  It happens to intersect this morning with the former H&S neckline (red, dashed) and a TL connecting the 1994 low with the scheduled  May 2011 high of 1381.50 (yellow, dashed.)

UPDATE:  10:15 AM

Just tagged the low end of our target range — the 1.618 extension of the 1563-1538 drop at 1579.10 (in purple, below.)  This also represents a tag of the white channel that’s guided the swings of the past 3 weeks.

We could get a pause here, as SPX has broken out of its ridiculously steep red channel. Traders might wish to take a crack at what could be a pullback to 1573  (channel midline) or 1570 (channel bottom.)

But, the interim goal remains 1582.95.  Of course, the question then becomes “now what?”

A quick check of the daily RSI shows that the game could be over at any point now.  This marks the 5th distinct point of divergence and a tag of the yellow channel top and white midline.

The yellow channel is the same slope as the falling channel from 1474 to 1343 last Fall and the falling channel from 1422 to 1266 in the Spring.  Can it put an end to this rally?

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