Many of our downside targets were hit on Friday, including SPX, ES, COMP, RUT and DXY. As we wrote last Thursday [see: US Dollar – Time’s Up]:
…ES has tepid support at 2665.27 and 2635.29 and SPX way down at 2612.97, followed by the .146 at 2582.36. Note the SMA200 is up to that level now. It’s the lowest SPX can go and still find reasonable support.
We had a number of indicators pointing in the same direction, but had to wait and see if the white channel bottom would hold. If it did, there was still an upside case to be made. It didn’t.While it’s always fun to nail a target, Friday’s plunge means the analog we’ve been following since Feb 6 is kaput. It doesn’t mean the market has no further upside, simply that that particular path is no longer being followed.
On the other hand, things are somewhat simpler here at the 200-day moving average. Past experience tells us that when SPX reaches its SMA200, we usually get a nice bounce. When we don’t, things can get pretty ugly in a hurry.
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