The Nasdaq-100 Index hasn’t played nicely with respect to Harmonics or chart patterns — except those that manage to push the index higher.  It plunged 83% when the 2000 bubble popped and, after 15 years, has finally managed to retrace 88.6% of those losses.

The most prominent feature in the long-term chart is the white channel — almost all of which has been irrelevant as the index spent the vast majority in the top half (and, most of that in the top 23.6%.)Interestingly, the rise from 2009 has was fairly orderly until this past October.  NDX plunged below the bottom of the red rising wedge after reversing just past the white .786 at 3955.

But, as we all remember, Fed President Bullard went on TV to promise more QE, and the BOJ actually did roll out more QQE.  NDX was suddenly back in the rising wedge, zipping right along like nothing ever happened.  So, it’s especially intriguing to see it lose the support of that wedge yet again.

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In last quarter’s update on COMP, we suggested its immediate upside potential was to the 2000 top at 5132 [see: Mar 23 Update.]  The timing looked like late May.

All it took was a Fed president hinting at additional QE, and the BOJ greatly expanding their already enormous QQE.  After a close call on Apr 27, the actual tag occurred Jun 18 — a little over 15 years after the previous bubble popped.

Will those who rode the NASDAQ down nearly 80% be interested in sticking around now that they’re back to even?  Will new money find its way to this, the most volatile sector during the two previous crashes?

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The big picture shows a break out of the white channel top, but not the yellow.

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Last November,  we noted the Dow’s breakout from a long-standing rising wedge and megaphone pattern to new highs following the BOJ’s huge Oct 31 expansion of QQE [see: Nov 20, 2014 update].  It knocked the yen from 107 to 122 to the greenback, thus giving the flailing yen carry trade (and, of course, the Dow) a much-needed shot in the arm — enabling it to rebound from the broken purple rising wedge and go on to new highs.

We set a new upside target for DJIA at 18,274 — the completion of a Crab Pattern based on the 8.6% drop from 17,350 to 15,855 in October.  We noted at the time:

The megaphone pattern is severely dented — which was, of course, the whole point of Kuroda’s action.  Whether or not the breakout is maintained will be revealed in the coming weeks, and will depend largely on whether USDJPY reverses at 118-120.

As expected, USDJPY spiked to the critical .618 Fib level at 120.11, taking stocks along with it.  But, instead of reversing, it went essentially nowhere for several months.  Stocks initially sold off sharply after 120.11 was reached, but constant bounces to just above 120.11 kept them from falling too far.

Finally, in early March, USDJPY broke out to above the 120.11 level.  DJIA dutifully followed along, reaching our 18,274 target.  It didn’t last, however, slipping  back below 120 between mid-March and mid-May.

But, on May 26, USDJPY rallied not only above 120.11, but the March highs as well. It enabled DJIA to reach new highs, too (while breaking several chart pattern rules along the way.)  As we suspected, this move would also fail.

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The S&P 500 has plunged precipitously many times since the 2009 lows.  Yesterday’s 40-pt swoon not only reached our downside target range, but tagged the channel bottom from May 2009.  A reversal here would allow the appearance of an ever-improving market to continue.  So, that’s exactly what we’ll get today.

As we noted in yesterday’s Big Picture, SPX’s low yesterday tagged the target we first set on June 1 [see: Sell in May, Go Away] and made official on June 8 with this chart:Without last week’s fakeout breakout, the timing would have worked better for a tag of the intersection between the purple channel bottom and the SMA200 (thick red line.)  Yesterday’s close definitely broke the channel bottom by a tick or two.

Given that USDJPY has now backtested the December/March highs…

…and, CL has rebounded off the lowest possible point that would permit us to consider the white channel midline intact……we’re left with two important questions.  How big a bounce will we get today?  And, is sell-off over?

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It was nearly a month ago that we first suggested a drop to the SMA200 in late June.  We posted an iffy target in this chart on Jun 1 [see: Sell in May, Go Away.]The question marks matriculated to a full-blown target on Jun 8 [see: June 8 CIW.]

To get to 2050 would require a break in TL/channel support.  So, I hesitate to consider it “likely.”  For now, we’ll just call it a likely target should the support at the SMA100 not hold.

Things seemed to go cattywampus on Jun 15 when rumors that Greece was fixed sent SPX sullied the rising red channel (and falling white channel) that suggested the Jun 22 timing.

It required some serious charting gymnastics and patience (and a small measure of blind faith); but, it turns out that the Jun 1 forecast didn’t suck all that much.

Score one for charting.  The next step is to square the speed of today’s move with our analog from March.

Stay tuned.

And, just like that, the ability of The Powers That Be to control the markets is once again called into question.

Classic Rock fans might wish to enjoy a little Guess Who whilst reading this morning’s post and picturing Angela Merkel’s expression upon seeing the markets awash in red this weekend.

With Greece seemingly irretrievably broken, the euro took a huge dump over the weekend.  The SNB swooped in and propped it up, less the carnage be worse than it already was.  The daily chart looks fairly benign…

…but, the hourly chart shows just how dramatic Sunday’s plunge (and, the subsequent prop job) was.  Still — only a gap close, and nothing more.  And, there’s plenty more downside potential to our 1.07 target.

Friday saw SPX reach the SMA100 as we anticipated [Friday’s post]:

And, today should see our next downside targets come into play, especially since USDJPY and CL have both clearly broken trend.  USDJPY has broken below the red channel midline……and, CL has officially dumped the purple channel and is shacking up with the white channel we proposed on June 19.  From Time to Pivot:

However, I believe the CL’s purple channel is about to fail.  I expect the entire advance to pivot to the less aggressive slope illustrated by the rising white channel in the chart below. If so, the next stop should be a tag of the white midline (red dot.)

Maybe it’s just us.  But, doesn’t it feel like “The Powers that Be” have inched a step or two closer to “The Powers That Were?”

Not to worry, today’s move — and the subsequent drops we’ll see in the coming week — are all in keeping with our analog from this past March [see: A New Analog Mar 27, 2015].  We’ll explain.

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SPX nailed our downside target yesterday with a solid backtest of the broken red channel at 2101.78.   From yesterday’s member section:

SPX just tagged 2105.  Since the decline was pushed out a few days, there’s a good chance it’ll continue lower and make a proper backtest to the falling red channel…look for a bounce between 2000 and 2102, but be cautious re overnight ramp jobs or dips.

The overnight ramp job was modest — up 4 points at the present time.  It’ll be interesting to see how it does with CL breaking down.  Oil has been instrumental in stocks’ rally.  How will they do with it breaking trend?

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Yesterday’s melt-down was a good start on the Bat Pattern reversal, reaching the white .618 on its way to the cluster of moving averages we discussed yesterday and coming within 3 points of our downside target issued in Monday’s member section [see: Strange Brew]:

Whether or not the rumor is true or the interview even occurred or the finance minister was telling the truth…who knows?  All I know is that the .886 was tagged and our bias is to the downside from here at 2128.  First downside target is 2105.34.

This morning, we have blow out data on personal expenditures which has initiated a sharp rally off of absolutely no technical support.  While the data’s benefit to the economy is dubious (are higher gas prices really going to aid in a recovery, or will we all spend less somewhere else?) the 14-pt spike in the eminis since yesterday’s cash close is a quandary.

Fortunately, there are other technical indicators which provide some important clues.

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SPX has continued to sell off, if tentatively, since we called for a reversal after Monday’s Bat Pattern completion.

But, it hasn’t yet left the comfort of the rising gray channel and is back above the purple channel midline.   For now, the all-is-well meme is staying alive.

Along the way, VIX revisited the yellow channel bottom……while USDJPY bounced where it needed to……and, CL kept its rising channel alive — so far.   Like SPX, it’s on the cusp of a significant breakdown.With Greece acting as the canary in the global financial markets coal mine, can we really tell what’s coming next?  There are quite a few clues.

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First, CL has gone essentially nowhere for about 7 weeks.  With SPX having completed the Bat Pattern and CL hanging by a thread, I think the next move is down — likely to the white channel midline at 57.94 or bottom at 49.72 — but potentially to test its former lows.

Then there’s EURUSD, which is straddling the fence between bullish and bearish.Yesterday’s dip below the purple channel midline and today’s backtest suggest further downside.  I like the idea of it, but the timing suggests a 4th of July low.  As we discussed yesterday, that would be unusual.

Yet, several of the potential downside targets for SPX suggest the same outcome — if, of course, the white channel bottom can be broken and the SMA200 tested.

Shorter term, our targets remain the same as yesterday’s.  SPX should find support at the bundle of moving averages between 2105-2107 (the 10, 20 and 50.)  But, if those fail, a backtest of the falling red channel is in order — followed by our 2050 target.  The SMA200 is now up to 2051.57.  The rising gray channel should provide strong clues as to the intra-day moves.   A close-up: Last, note the negative divergence between SPX’s price and its daily RSI — which is bumping into a falling TL (white) from early in the year.  Of course, it’s also bouncing back and forth in a rising channel (purple.) 

The bearish case is highlighted by the sequence of lower lows represented by the dashed red TL: 

It can also be captured by a falling channel, shown below in red: 

I have to be out of the office today, but will try to check in during the day.

GLTA.