Today’s the biggest economic data day we’ve had in a while:
Just in case that’s not enough to move the market, many global markets are nearing important potential turning points.
Japan’s Nikkei is nearing its .886 retrace of its drop from May 22 at 15,997.
The FTSE 100 is nearing an .886 at 677.84. But, more importantly, it’s already completed a triple top (6875 in June versus 6950 in 1999 and 6754 in 2007.)
The NYSE just completed a couple of Crab Patterns and has another one just above current levels at 10,239.
SPX completes a huge Butterfly Pattern (of the 2007-2009 crash) at 1823.
Ditto for the Dow at 16,300.
Should be an interesting day…
UPDATE: 8:35 AM
Retail sales came in slightly higher than expected, but below expectations ex-cars. CPI fell 0.1% thanks to falling gas prices — the first drop since April. NAR releases ficticious existing home sales at 10AM ET and the FOMC market forecast minutes come out at 2PM ET.
This should be good for a little spurt in the markets. Not sure it’s time to chase it just yet. Charts in a few…
UPDATE: 9:00 AM
Should get a reversal here on ES at 1789.50 for a completed Bat Pattern. The key will be remaining above the white channel top. If not, look out 1780.
UPDATE: 9:55 AM
So far, so good. Let’s take a look at the rest of the day.
continued for members…Looking at SPX, I see the need for a tag on the yellow wedge bottom.
But, I’m not sure about the timing. And, a tag on the wedge right at the 1.272 seems a little too convenient. Here’s an alternative channel that puts the bottom at 2pm — when the FOMC minutes come out.
The E-minis have a similar situation setting up, with the 1.618/.886 target we discussed yesterday now confirmed with a small scale (red) 1.618 at 1779.73.
UPDATE: 10:28 AM
Hmmm…spoke too soon. ES and SPX both just nudged past their highs from yesterday (almost by design?) If we get the Butterfly/Crab completions now, it’ll be courtesy of a non-conforming Harmonic Pattern — not ideal, but not all that unusual.
Note that the reversal came at the .618 of the drop from the 18th, same as the high on the 19th.
My money’s still on a drop to SPX 1783/ES 1780 around FOMC story time.
UPDATE: 11:20 AM
There’s some heavy-duty propping-up going on this morning… While the above scenario tickles my fancy, I have to admit the duck scenario is the more likely one (if it looks like a duck, quacks like a duck…)
In this case, SPX would catch at the purple midline and run up for a tag on the .786 (1798.46)… then, who knows? Perhaps 1783 is still in play.
UPDATE: 11:56 AM
Here’s the cleaner view of the immediate upside case on SPX — as long as the red channel holds. What about the yellow wedge bottom, you ask? Perhaps after the 1807 tag.
Given the extent of FedGovSpiel the past couple of days, I have to believe the script has been written by experts and the minutes will do nothing to upset the market.
Note that the 1.618 extension of the 1784-1795 spurt leads to 1807.05 where it overlaps with the 1.272 of 1802-1784. This would be a logical spot for an interim pause.
BTW, the existence of a reversal at the 1.272 suggests a .786 reversal (1798.46) in order to properly set it up, though this is not necessary.
UPDATE: 1:24 PM
Getting more whipsawing here — probably a shakeout before the spike higher. Maintaining upward momentum dictates a catch here around 1789.62.
Meanwhile, how about an update of the big picture as seen through the RSI charts? The daily chart is quite positive – the steeply rising red channel within the downward sloping white channel within the upward sloping red channel.
The tea leaves on the ES RSI suggest the market will probably correct a little after today’s spike, perhaps back to the red .382 line where it intersects with the rising red channel bottom. This would probably be followed by the last spike higher to the white channel top or red channel midline.
My best guess is the white channel top, as it would involve negative divergence — a likely situation if the fall from 1837 (or whatever) is to be very steep.
The 60-min RSI chart shows a break-out and back test from the falling white channel. It has already smacked the rising white midline and fell back, so it’ll need some pretty good speed to break above it — say, really bullish FOMC minutes, for instance.
Once it does, we should expect a backtest of the midline before prices surge higher. The midline probably lines up with ES 1800, 1805 or 1811.
UPDATE: 1:59 PM
Minutes due out any second…
UPDATE: 2:02 PM
No change. Buying at 1783.75 — the .886 of the 1782 to 1794 rise. Stops around the 1.618 of 1780 probably make sense.
UPDATE: 2:14 PM
Well, ES reached the 1.618 after all! This should about do it. Big Bounce coming.
And…
SPX just tagged the bottom of the purple channel. We’ll see if it holds.
UPDATE: 2:49 PM
Spoke too soon. SPX now tagging the white channel bottom — as is the ES. Makes for a nice Bat Pattern for ES — and an equally nice back test of the Nov 7 high.
If ES 1778.50 doesn’t hold, the next very strong support is at 1774.50.
UPDATE: 3:10 PM
ES just tagged 1774.50 — major support here which the bulls need to hold.
SPX reached its 1.618 at 1777.90.
UPDATE: 3:34 PM
ES 1774.50 appears to be holding, as is the SPX 1.618 of 1777. SPX needs to get back to roughly 1787ish by the close in order for this slide to be considered a shadow and not a trend-changing violation of the wedge bottom. It would leave SPX flat on the day.
It would be roughly the intersection of the falling white midline and the yellow wedge bottom at 4:00 PM.
ES would need to reach 1785.88 or so; oddly enough, it would have a shot at 1837 by tonight if it made a comeback at the same slope as previous moonshots (in purple.)
We were expecting a shakeout — but, what a shakeout!