Note: We’ll continue yesterday’s update to our analog after this morning’s wrap-up below.

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The big story chart-wise is the 10-yr — which reached our 23.2 target (23.35 intraday.)  As we discussed last week, the normally inverse relationship between TNX and SPX has been magically turned on its head since mid-April.  Will it revert as TNX starts dropping off?

The US dollar continues its lackluster backtest of the broken purple channel.And, CL continues to move sideways, flirting with a breakdown of the rising channel after completing a Crab Pattern last week.All in all, it wasn’t a productive environment for SPX, which finished the day fleshing out the falling white channel we proposed two weeks ago.  Our downside target from last week remains intact.

continued for members…

On an intermediate basis, this morning’s drop to the red .618 is probably as much as the bears can hope for…… as USDJPY has retreated to the yellow .618 for its eleventy-billionth stick save of the year.

Note that the .618 also represents a tag of SPX’s white channel midline.  A further drop to the .786 (2078.57 – Gartley Pattern) or even .886 (2073.6 – Bat) in the next day or two would still leave the rising purple channel midline intact.

UPDATE:  11:10 AM

SPX bounced to the .786 channel line — also the SMA20 on the daily chart.  Looking for a continuation of the downside here from 2101 — probably to the red .886 at 2073.60.  Fresh charts in a moment.

ANALOG UPDATE:

Thanks for your patience, folks.  Lots going on amongst the youngest pebbles that just wouldn’t wait.

This past few weeks has been extremely volatile — which only helps confirm my belief in our analog.  Had it not been in place, SPX could easily have added another 15-25 points to reach 2138.  But, to TPTB, merely reaching it would be disastrous.

They want (need) a push right through 2138 like we saw at 1576 and 1823.  Otherwise, the resistance might just be too much.  And, failure is not an option.

First, a reminder of the relevant dates:

Here’s the USDJPY 2012-2013 chart again, illustrating how its movement in the gray channel and relative to its SMA100 and SMA200 influenced SPX.

Remember, SPX during that same period: (1) recovered from a Bat Pattern tag at 1474 (the yellow .886) that should have produced a deeper retracement, (2) broke above the 2007 highs at 1576, (3) broke out of the gray channel dating back to 2009, and (4) busted the Butterfly Pattern that should have produced a sharp reversal at 1823.

Tomorrow, we’ll take a look at the equivalent period in 2015.