For those following along with our analog, today is day 232.  Things appear to be right on track, and our downside targets are unchanged from Monday.

Today’s decline should be led by USDJPY.  The daily chart looks fairly benign, while the 60-min shows the drama has already begun.

The eminis, currently off 4 at 2057, were as low as 2033.50 overnight — but, bounced back when USDJPY sought the refuge of the critical .618 Fib at 120.11.

Stocks should begin a more significant reaction today, but it should be modest compared to the weeks ahead.

continued for members…

SPX spent the day with a slight loss, but tumbled at the close to break the SMA50 and the TL from Oct 2014. The first downside target is the .618 at 2033.88.  To get there, SPX will need to pass through the purple midline and the red neckline from last month’s interrupted H&S Pattern.If we’re surprised to the downside, it might involve the purple .382 at 2004.83.  Though that would be quite a drop for one day.  And, it would involve a drop through the SMA200 currently at 2012.82.

Remember, this analog isn’t a harbinger of horrific downside as was the 2011 one.  It’s a mechanism that uses USDJPY’s approaching moving averages to lever stocks higher through tough overhead resistance  — which I suspect is the 1.618 at 2138.

Though things could get out of hand, TPTB have done a pretty good job over the past several years in preventing such calamities — even when it required quite obivous manipulation.

While the 2012-2013 episode involved USDJPY closing below the SMA100 on day 232, it could happen after equities are closed for the day in order to minimize the impact on SPX.

continuing…