Earnings haven’t impressed.  Economic data has been mixed.   The Fed even talks openly about withdrawing the mainstay of the rally since 2009: QE_n.  So, why does the market march ahead as though everything is just great?

We’ve looked at “how.”  A handful of ramp jobs* over the past four months has transformed what would otherwise have been a 15% loss into a 2% gain.

 

There are two fundamental explanations as to “why,” depending on your level of cynicism: (1) the beneficial wealth effect of higher stock prices; or, (2) TPTB wants/needs the money.  Either way, there is no longer much attempt being made to disguise the blatant manipulation.

Fortunately for us, these same conditions have existed throughout the past couple of decades.  Therefore, we have tools that have been fairly effective at pointing out the obvious and not so obvious paths ahead.  We’ll start with the charts for RUT and COMP.

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The dollar caught a bid at the .236 Fib line of the rising red channel last night.  This also represented the .500 Fib retracement (green) of the drop from 84.595 to 80.615 and, more importantly, the .618 (white) of the drop from 88.90 to 72.86 that began in Jun 2010.

The dollar intrigues me in the way it acts as the canary in the coal mine for all the fear and greed associated with so many markets.

DX spiked as SPX was tumbling towards 1266 in Jun 2012, then again as it initially failed to retake the .786 of the 1422-1266 plunge.

When SPX recovered and went on to new highs, DX plunged — especially when the Fed announced another round of QE in Sep 2012.  It made our top call at 1474 nerve-wracking.  Clearly the markets thought QE would trump the biggest Bat Pattern completion ever!

It spiked modestly when SPX tumbled to 1343 — obviously thinking the drop was manageable.

TRADE UPDATE: 10:44 AM

I’ll take an interim long position if we break 1678 (for protective purposes.)  This is probably just a stop-clearing exercise to weed out weak shorts.  Remember, our target date is Monday.  Core short position still in place.

THE DOLLAR, CONTINUED…

It settled back down as SPX recovered from 1343, but got increasingly nervous as SPX approached 1553/1555 — the completion of the Crab Patterns set up by the 1370–1074 plunge in 2011 and the 1474–1343 correction in the fall of 2012.  DX hit its peak about the same time SPX was testing the previous all-time high at 1576.

I was quite bearish at this point, and can well remember the fear present in the marketplace (for those of us who shorted then, it was more on the greed spectrum.)

DX bottomed in early May as the euro and the yen both slid at the same time and SPX tagged the trend line connecting the 2000 and 2007 highs, reaching an interim high as SPX topped out at 1687.  And, this is where it got weird.

I had shorted at 1687. From an equity fear/greed standpoint, I was looking for a rise in the dollar as the market sold off.  The dollar had just topped July’s 84.25 high.  Having just completed a Bat Pattern in April (purple grid), it was well on its way to completing a Crab Pattern up at 87.66.  Why, as stocks were melting down, was the dollar following along?

The answer came courtesy of the yen, which caught a bid when the USDJPY tagged both the .786 of the 110–75 decline that began in Aug 08 and the midline of a price channel going back forever (yellow, dashed line below.)

As a result, USDJPY broke down from a wicked-steep acceleration channel it had been in since August 2012, spurring an avalanche of short-covering by yen bears.  As USDJPY found channel and Fib support in mid-June, SPX’s rebound from the initial 1687–1598 plunge ran out of steam.  The combination of the two sent the dollar soaring again.

But, when SPX found another bottom at 1560, the dollar kept rising.  From 1560 all the way to 1654, the two rose in lock-step.  I considered this quite normal, as SPX was closing in on the .786 retracement of the 1687–1560 decline at 1560.

Then along came Wednesday and Bernanke’s little chat.  Within a few seconds of the dollar index closing on the ICE, someone started buying up eminis like crazy.  Later, the talking heads would explain that Bernanke had allayed fears of tightening — i.e. raising interest rates.

This was insane, as no one in their right mind ever equated tapering or even ending QE with a Fed directed increase in interest rates.  And, there was no change in the previously discussed plans for QE other than the wording that was, if anything, stronger regarding its end (by the year’s end.)

The emini buying was enough to break through resistance and initiate a marvelous ramp job that boosted SPX to the .886 the following day.

By the time the poor dollar re-opened several hours later, the damage had been done.  It gapped down and has been holding on for dear life.  It found support where it should have, and is waiting to see whether stocks are really going to ignore the obvious Bat Pattern reversal opportunity.

As our study pointed out yesterday, this has not occurred in the past six years of trading.  No other well-formed Bat Pattern of this size has utterly failed to register even a blip at or near the .886.  And, even those that made a very modest retracement reversed from a double top back to the .886.

So, I think it’s worth taking the chance that this is a slight overshoot of a Bat Pattern .886 that will reverse on Monday.  If I’m wrong, and it hits 1687 first, odds are we’ll be even or ahead of the game after a pullback from the double top.

I’ll be updating the forecast Saturday afternoon.

GLTA.

 

It’s here a little early, but this morning should see the end of the rally from 1560 on Jun 24.  Look for the market to top out at the .886 Fib retracement of the 1687 to 1560 decline to complete a Bat Pattern.  This is the higher of the two targets we’ve had in our sights since May 21 [see: If It’s Tuesday] — which was the last time we saw a sharp rally 17-point ramp job on Fed comments that were decidedly not bullish.

The original forecast, shown below, called for a much quicker return to this level from a low of 1600, followed by a decline to 1560.  Instead, we are reaching the interim high after the 1560 decline.  Time will tell how this translates in terms of waves.  But, we should get a sharp pullback regardless.

For anyone short from yesterday, expecting a pullback before this final thrust like I was, the options are to hold and wait it out or play the upside and re-short.  I’ll do the latter.

UPDATE:  9:44 AM

SPX has come to a screeching halt at 1670-1671.  We could still see another point or two, but no doubt there are others who are wondering the same thing and won’t wait to short.

I’m pulling the plug, will revert to a full short position here at 1670.57 w/ tight stops.

Note the dashed line SPX tagged just now at Point D.  This is one of the three trend lines from 1994/2002 we’ve been tracking (445.45 on 12/8/94 and 776.76 on 10/9/02.)  Its yellow cousin is just above at 1685, and the red version is down at 1619.

Note the consolidation that has occurred around each — validating their importance.  A sustained move above the yellow one or below the red one will tell us much about future prices.

Also, an update to yesterday’s ramp job tally: this morning marks the 11th ramp job for 10 or more points since the 1687 high on May 22.  The S&P 500 might be down 16 points since then, but without those ramp jobs it would have been far, far worse.

My back of the envelope calculations:

UPDATE: 2:36 PM

The eminis just completed its own Bat Pattern, so SPX should be free to reverse now.

Obviously, Bat Patterns don’t always produce meaningful reversals.  That’s why we use stops.

But, the nice thing about them is that they occur at the .886 Fib.  So, if they bust, a double top — another shot at a reversal — is only 11.4% (of the decline) away.  In this case, if 1672.72 doesn’t produce a reversal, the previous top of 1687.18 is only 15 points away.

I’ve spent the last several hours looking at the 12 significant Bat Pattern over the past six years. I limited the study to those of 95 points or more which involved a reversal off a decline rather than a rally.  Both are legit; I just wanted to see what recent history said about situations like the current one.

To review, a Bat Pattern involves a drop from one significant point to another.  They should be at least meaningful interim highs/lows, though this is obviously subject to interpretation. They are shaped like a big “W,” with the height of the right side only 88.6% of the height of the left (from the very bottom.)

The trick with Bat Patterns is the Point B.  It must come in at less than 61.8% of the initial drop from X to A.  If it’s greater than or equal to .618, you’re probably looking at a Crab Pattern which finishes at the 1.618 extension (or more.)

One common problem is deciding which reversal to label as Point B.  Here, there are no absolutes; but, my practice is to choose the greatest reversal to date.  In the current case, that came at 1626 on Jul 1 at roughly the .500 Fib.  It was only 22 points, but there are no other candidates as large since the 1560 bottom.

BTW, we could have chosen the Jun 18 high of 1654 as the origin.  The 1626 reversal would be at its .707 Fib, which means it could not be a Bat Pattern.  The pattern from 1687 to 1560 qualifies perfectly.

I’ll publish the actual data after the close. But, the bottom line is that of the 4 patterns that actually qualified (B<.618), every one of them posted a reversal within a few points of the .886.  The extent of the reversals:  44 points (2/11/11), 61 points (5/2/11), 106 points (8/31/11), and 130 points (10/11/07.)

The last one is the biggest pattern on the chart that represents the 88.6% retracement of the drop from 1576 to 666 that began on 10/11/07 and finished on 9/14/12.

The Bat Patterns that “busted” weren’t really Bat Patterns.  They featured either a Point B that exceeded (even slightly) the .618 Fib or a much bigger reversal at, say, the .786 Fib (indicating a probable Butterfly Pattern.)

But, of those that did “bust,” a reversal at the double top occurred in almost every case — typically down to the .886 or more.  The result of this, of course, was another chance to break even.  So, even someone completely asleep at the switch, who shorted at the .886 but did nothing as it climbed up to the 1.000 typically saw a reversal back to their entry point.

As I wrote back in December 2012, as SPX was leaking up past its .886 retracement of 1474-1343, the gap between the .886 and a double top is the most challenging area for harmonics traders.

SPX tagged 1676.60 a moment ago.  Is it a slight overshoot (not uncommon) of the .886?  Or, is it a double top, instead?  If it tops 1687, will it stop at a double top, or is there more upside to come?

Given the acceptable form of the price movement up from 1560 and the channels at play, I’ll stick by the Bat Pattern call.  If it closes at 1677 and they ramp it up again tomorrow, my downside is probably another 10 points, which I should be able to recoup in the likely event it reverses at 1687.

I’ll take a quick break after the close, and be back within the hour to post the study data as well as a revised forecast for the next few months.

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FOMC minutes will be released at 2PM ET today.  Some see the minutes as an opportunity to get a behind-the-scenes look at the real Fed agenda.  I see them more as a tool the Fed uses to communicate what it wants the market to hear.

Bernanke has already stated, and reiterated, that some tapering will likely begin “later this year.”  From June 20:

“If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year…

…we would continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year.”

SPX traded at 1654.19 on the 18th, and subsequently fell more than 100 points on fears of tapering.  Yesterday, it traded as high as 1654.18.

It is possible that the “random walk” of 500 stocks — reflecting the collective wisdom of both bullish and bearish investors, discounting the present value of future cash flows, etc. — just happened to come up one penny short of the previous high.

But, I think it’s more likely that TPTB have a very specific game plan in mind.  The trick, as always, is to figure out what it is and trade accordingly.  I’ve tried decrying the lack of orderly trading and transparency — it doesn’t help at all and is not very profitable.

Some of you might have noticed the following chart in our May results post.  It shows the effects of the gaps up and first hour of trading following ramp jobs in the overnight markets.

In May, for instance, the S&P 500’s net gain of 35 points (+2.2%) was dwarfed by the 100 points gained via ramp jobs.  Without them, the month would have shown a 65-pt, 4% loss.

Between Apr 18 and May 22, SPX traded in a very steep, very narrow channel (below, in red) that carried it from 1536 to 1687 in one month.

Looking at it closely, we can see that 120 of the 151 points came in the first hour of trading following ramp jobs.  The total rises to 164 points if we include the first two hours of trading.

Aside from punishing those who don’t trade the futures markets, this obvious bull market engineering should be a reminder to all that there is always an agenda.

*  *  *  *  *

Since SPX closed within the purple channel dating back to November 2012, we should expect some positive follow through.  But, the momentum was turning negative in yesterday’s closing minutes — and SPX likely would have closed back below the channel if someone hadn’t pumped it at the close.  Things aren’t always what they seem.

We laid out the different scenarios and targets in yesterday’s post.  Today will be about reading the tea leaves and following along — whatever the market has up its sleeves.

Since the market is all about fake-outs lately, I assume that the manner of yesterday’s close indicates declines ahead that the MM’s didn’t want the average Joe to see coming.

I’ll short any breakdown of the rising wedge and go long on any breakout — trying to stay nimble enough to change positions when the market changes its mind — especially around 2PM.

UPDATE:  10:18 AM

Getting a little breach here…  I’m tempted to take a short position at 1651, but this is probably the first of many fake out attempts.  We’ll know it’s something more if it back-tests the wedge and breaks through the purple channel bottom — currently at 1647.50.

Note that the bottom of the purple channel intersects with the .75 line of the rising red channel and the .75 of the falling white channel at around 1647.75 in about an hour.  This could be a significant time & price — just as the previous intersections were.

UPDATE:  10:46 AM

I’ve fine tuned the purple channel and like the possibility that this is a back test of the bottom.  I’ll try a long position here at 1649, with stops just below at 1647.50.

The red channel top is up at 1657 and the .786 is at 1660.03 — so decent decent risk:reward.

A break below would likely target 1638.72 — the .618 Fib retracement of the 1687 – 1560 drop.

From the You-Can’t-Make-This-Stuff-Up Department, Jack Lew is lecturing the Chinese on cyber-espionage:

Lew said that for economic relations between the two countries to succeed, U.S. firms had to be “preserved and protected from government-sponsored cyber intrusion.”

In a completely unrelated story, the manhunt continues for Edward Snowden — the former NSA contractor who alerted the world to the enormity of America’s cyber espionage program.

Also this morning, Zerohedge reports that the NSA has embedded its own code — known as Security Enhancements for Android — in the Google Android operating system.  Android shipments totaled 162.1 million units in Q1 2013 — 75% of all smartphones shipped.

Eventually all new phones, tablets, televisions, cars, and other devices that rely on Android will include NSA code, agency spokeswoman Vanee’ Vines said in an e-mailed statement.

Thank God for the NSA.  At least we won’t have to worry about those sneaky Chinese!

UPDATE:  1:55 PM

The market has essentially gone nowhere since this morning’s first posts.  SPX is sitting just below 1651.

My expectations: if 1655 is broken, look for 1660 or 1672.  Downside, a break of 1650 leads to 1638 or 1623.  FOMC minutes should be released in a few minutes.

UPDATE:  2:08 PM

The minutes are available HERE.

UPDATE:  2:15 PM

My initial take is that this represents no dramatic change from the latest statements by various Fed governors or the Bearded One himself. The biggest news is explicit discussion of support for an end to QE by the end of the year.

Half the voting members would support ending QE late this year, while “many” others said it would need to continue into 2014. Participants also described their views regarding the appropriate path of the Federal Reserve’s balance sheet.  Given their respective economic outlooks, all participants but one judged that it would be appropriate to continue purchasing both agency MBS and longer-term Treasury securities. About half of these participants indicated that it likely would be appropriate to end asset purchases late this year. Many other participants anticipated that it likely would be appropriate to continue purchases into 2014.

Several participants emphasized that the asset purchase program was effective in supporting the economic expansion, that the benefits continued to exceed the costs, or that continuing purchases would be necessary to achieve a substantial improvement in the outlook for the labor market. A few participants, however, indicated that the Committee could best foster its dual objectives and limit the potential costs of the program by slowing, or stopping, its purchases at the June meeting.

I suspect that using the word “end” rather than “taper” will attract some attention.

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The currencies played out exactly as we expected overnight — but the equities ramped anyway.

The eminis are showing +10 right now and are likely to test the Jun 19 high after a miniscule reaction at the .886 Fib level.

In so doing, ES have pushed up into the purple channel.  With the FOMC June minutes released tomorrow, it appears to be the only play the markets have: ramp as far and as fast as possible before BB reiterates the Fed’s intention to taper if/when.

I am a bit surprised TPTB don’t try to build more of a base for a meaningful rally.  I guess this falls into the category of “get while the getting’s good.”  Far be it from me to stand in the way.

A 10-pt pop on SPX doesn’t run into any resistance other than the Jun 18 high, so I’ll play along on the long side on the opening, but watch for any pullbacks near 1654.19.  The gap from Friday will apparently remain open for now.

A 10-pt pop also leaves SPX in no man’s land: 10 points shy of the .786 at 1660.03, but 5 points over the line separating the purple channel from reality.

UPDATE:  10:05 AM

The 10-pt ramp job has been pared back to a 5-pt rally that’s stuck at the purple channel’s lower bound.

I’ll go short here at 1646 on the off chance that we’ll get a back test of the white channel top and or gap fill down to 1632.  Tight stops on this one, though, as it might just as well be a back test of the broken purple channel bottom.

From a trading standpoint, this is a bit of a quandary.  If you expect the FOMC’s minutes to boost the market, the .786 and .886 of the 1687 to 1560 decline are just overhead to provide resistance at 1660 and 1672 respectively.

If you expect them to disappoint, we’ve already pulled back from the purple channel incursion and, despite what intra-day height we reach, are likely to close at the channel boundary.  What more is there?

I suspect SPX will remain in a trading range for the next 24 hours — with current prices pretty well indicating investors’ current expectations re the Fed.

If this situation seems vaguely familiar, it should.  On May 21, the market rallied on expectations that Bernanke’s testimony the following day would be bullish.  One of the biggest ramp jobs in recent memory followed that night, and SPX shot up 17 points in the opening hour on May 22, only to provide a great shorting opportunity at 1687.

The forecast I posted on the 21st called for a drop to 1600 in early June, followed by a .786 retracement to 1670 and a subsequent drop to 1560 before a rally to 1823 around the end of the year.

Here are the charts from back then [see: If It’s Tuesday]:

We got the drop to 1600 right on schedule.  But, instead of rallying to 1660 next, we got another leg down to our 1560 target two months ahead of schedule.  Now SPX is working on that retrace to 1660.

To me, the wave picture is a mess.  At 1560, we had a nice little A=C corrective move down from 1687.  A push above 1654 would certainly help confirm that 1560 is all the correction we’ll get anytime soon.

But, there are three potential problems that need to be overcome first:

1. SPX dropped out of the purple channel back on Jun 19
2. the currencies are positioned as though a correction is imminent
3. the white channel bottom was never tested

I’ll take the next hour or so to review the big picture.

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NDX lost 83% of its value between 2000 and 2002.  Its 2007 high came close to retracing a Fibonacci 38.2% of the losses before the next crash lopped 56% off the top.  Now, as it tags one important Fib level and approaches another, is there another big correction around the corner?

What does it mean that the latest red channel — parallel to the one formed off the 2002 low — just broke down?

The major channels generated by NDX’s 1994, 2000 and 2008 lows are shown below in white and purple.

NDX just nudged the purple midline, and is closing in on the white .382 channel line.  But, the placement of very long-term channels is subject to interpretation/error, and being “just a little off” can lead to large errors in forecasts.  So, we look to other indicators for confirmation.

A large Crab Pattern (in white) dating back to 2007 recently completed at 2993 — very close to where the purple midline crossed.

The May 22 high of 3053 would be a relatively easy “top” call if not for the fact that the yellow IH&S target is still a few points away at 3100 and the .618 retracement of the drop from 4816 to 795 is 227 points away at 3280.

NDX reacted nicely at 3053, shedding 228 (7.5%) before beginning a rebound that, like SPX, recovered slightly more than .618 of the losses.

So, top or not?

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The eminis reached a natural turning point overnight, completing a Bat Pattern on the purple grid… …and tagging the .618 retracement of the drop from 1685 to 1553 in the process.

SPX should follow suit — meaning a very good chance of a pop and drop in our target range from last Wednesday [see: Fireworks Ahead.]

That’s why I won’t be surprised if, while no one’s watching on Friday, we reach 1638 — the .618 of the 1687 to 1560 correction.

A close today at 1618  — .618 of the decline since 1626 on Monday and the intersection of the falling red channel top and rising white channel midline — would set up a nice looking right shoulder targeting the downside.

But, it would also set up a Crab Pattern with a 1.618 extension at 1640.23, less than two points from the grey .618.  Something to think about…

UPDATE:  9:33 AM

That’s good enough.  I’ll short here at 1640, with stops around 1645.

There’s at least a 50:50 chance of tagging the .886 at 1643.49, but we could also see things unravel rather quickly with the .618 tag.

This morning’s push completes the long-awaited backtest of the purple channel — depending on how it’s drawn.  I’ve revised it hundreds of times since SPX 1343 eight months ago.

It’s important to remember that backtests don’t always complete as precisely as we’d like — even when the channel is perfectly drawn.  That’s why we use the harmonic patterns, and other indicators to confirm.

Note that USDJPY has reached our target from Jun 28:

USDJPY is pushing up toward the .786 retracement of its drop from its May 22 103.72 highs. Conspicuously, the intersection of the white channel midline and the .75 line of the yellow channel I show taking over is at that price (101ish) on about July 4.

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FTSE (represented here by UKX) overshot a double-top by about 2% on May 22 — completing a Crab Pattern in the process.

It fell back to test the .786 at the bottom of a well defined rising channel, and has since retraced almost .618 (655.01) of that slide.

If it’s able to penetrate 674 again, the yellow 1.272 is waiting up at 763 (late Oct, early Nov.)

If not, there are multiple H&S Patterns waiting in the wings that could usher UKX down to the mid 500s — starting with a bounce at the channel bottom around 610 (Jul 25.)

The eminis completed a Gartley Pattern based on the Jun 19 high (purple pattern) overnight that saw a second tag of the purple channel bottom (from 1343 in Nov 2012.)  This pattern could rule the roost, though with the breakout of the red channel the reaction could be limited to a backtest of that pattern.

With the .500 reversal on the white grid on Jul 1, a Bat Pattern at 1670 remains a possibility down the road.  As last night’s tag #2 illustrates, the backtest of a broken rising channel doesn’t always mean lower prices ahead.

The dollar is at a critical point — having reached the top of the purple channel and pushing through to the top of the yellow channel.

I’ll go long on the opening, but don’t be surprised if SPX doesn’t simply tag our target and reverse.

UPDATE:  09:32 AM

SPX just pushed through Monday’s high, but tagged the midline of the yellow channel and should reverse here at 1627.  I’ll switch to short and see how much of a retracement it can put in.  Perhaps 1620-1621?  Stops at 1627ish.

This is likely a backtest of the broken white channel midline, so higher prices are likely in store for those who are patient.

Note that by topping Monday’s high, SPX just cleared two bearish short-term harmonic patterns from the chart.  The prominent patterns left on the red grid (from 1654.19) are the Gartley or Bat Patterns at 1634.1 and 1643.49 respectively.

On the grey grid, Monday’s high already retraced .500 of the drop from 1687 to 1560.  So, the next significant target is the .618 at 1638.72.

As we discussed when we went long Wednesday at 1605 [see: Fireworks Ahead]:

That’s why I won’t be surprised if, while no one’s watching on Friday, we reach 1638 — the .618 of the 1687 to 1560 correction.

A close today at 1618  — .618 of the decline since 1626 on Monday and the intersection of the falling red channel top and rising white channel midline — would set up a nice looking right shoulder targeting the downside.

But, it would also set up a Crab Pattern with a 1.618 extension at 1640.23, less than two points from the grey .618.  Something to think about…

A push through 1629ish negates the potential H&S pattern setting up (in red) as the right shoulder would exceed the head.

UPDATE:  10:05 AM

I think that’s probably going to do it for the pause.  I’ll go long again here at 1621 with stops at 1620ish.

A drop to 1615-1616 would better establish a backtest of the red channel and also a right shoulder for the IH&S in the works (targeting 1650ish.)  So, set your stops at what works for you.

UPDATE:  10:15 AM

Just fell through our stops, so short again at 1620 for a likely trip to the purple channel bottom.

All SPX needs to do is loiter here just long enough to make the IH&S obvious.  Though, it could also decide to deal with this morning’s gap (1615.17?) while it’s in the neighborhood.

UPDATE:  10:24 AM

That’s good enough for me.  Back to a full long position here at 1614.77 with stops at 1609ish (.25 of white channel.)

Here’s a better look at the IH&S I mentioned in the 10:05 update (in purple below.)  Note that this morning’s gap is no more…

UPDATE:  1:35 PM

The downside risk, BTW, is that the bottom of the rising white channel (currently about 1600) still hasn’t been tested.  I’ll raise my stop on the long position to 1614ish.

I’m changing the color of the rising white channel to red, since it exactly matches the slope of the red channel that set up in the big rising purple channel from 1343.  It tacked on 151 points between Apr 18 through May 22 — about 10% in one month.

It first established its bottom at 45 points higher than the 1536 bottom after a 16 point pullback from the initial 61 point rise to 1597.  This morning’s high was 67 points higher than the 1560 low, and a 16 point pull back would put it at about 1611.

Applied to the current chart patterns, this would probably translate into a backtest of the broken red channel and/or a tag of the bottom of the rising red channel on Monday.  If the market simply kills time for the next 3 hours and closes at or near the neckline (1628.45?) of the nearly completed purple IH&S, this is a very reasonable scenario.

The current purple channel, IMO, is a bit of a stretch.  It has only held the job for a few days — since multiple predecessors were fired for incompetency.  There’s no reason to believe this one will last any longer.

UPDATE:  2:25 PM

SPX just closed the gap from Jun 19.   I’ll likely close my long position here and go short on the first sign of serious weakness.  But, if it can push through, the red .786 is just ahead at 1634 and the yellow IH&S target at 1632.

I’ll keep an eye on the USDJPY, which at only .50 below the .786 retrace of 103.72 to 93.78, is probably a very good indicator.  From the 12:13 PM update to the Jun 28 post:

USDJPY is pushing up toward the .786 retracement of its drop from its May 22 103.72 highs. Conspicuously, the intersection of the white channel midline and the .75 line of the yellow channel I show taking over is at that price (101ish) on about July 4.

UPDATE:  3:15 PM

For anyone who hasn’t yet had the chance, yesterday’s post regarding May 2013 has some interesting data regarding the ramp jobs that have become endemic over the past several months.

I knew they were responsible for much of the market’s upside lately.  But, I hadn’t realized they were responsible for all of it — and then some.

The trend continued in June, though I haven’t tallied the total yet.  Bottom line, there is a whole lot of manipulation going on.  Today’s close and tomorrow morning’s opening will probably play into it.

UPDATE:  3:25 PM

SPX just broke through the bottom of the rising white channel and the red midline at 1626.13.  This drop should stop by 1624 or so.  Any lower and I’ll probably change sides or at least get some protection going.

SPX looks like it intends to close at our near the neckline (1629) as we discussed earlier.  I’ll take a few minutes and discuss my expectations for the next week or two.

Before I do, I want to mention that there are three annual memberships left from the sale earlier this week.  I’ll update prices on the website this afternoon, so anyone who’s been thinking about it…here’s your last call to save $800.

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