Beware of Butterflies

Today should be all about establishing a Point B for the final Butterfly Pattern.  The magic number?  SPX 1806.16 (1805.50 on ES.)

How else to explain the market’s euphoria over a taper-quickening jobs report?  This morning’s made to order market “response” sent ES scampering up to nail Wednesday’s target.  And, it’s hanging in there — at least until the pop and drop.

UPDATE:  9:50 AM

We’re seeing a Gartley unfold first, which will lead us to the .786 later in the day.  Look for the IH&S we’ve been expecting to set up after the pullback from 1801.58.

UPDATE:  11:15 AM

Making a slight adjustment to the IHS.  The pullback shouldn’t be all that great, as we’ll probably reach SPX 1806 at the close, leaving latecomer bulls who hold long over the weekend with a disappointing opening on Monday — one last shake down before the climax next week — probably Wednesday.

The eminis are a little trickier.  If they’re to reach their 1.272 at 1837.26, it’ll have to happen overnight or over a weekend.  With an extra 15 minutes at their disposal, they could easily tack on an extra few points to reach the white .886 at 1808.53 today — even if SPX only reaches the .786 at 1806.  If not, Sunday would do nicely.

SPX could also push past to its own .886 at 1809.61, which would be a great head fake as it would signal the 1.618 extension at 1834.  Bottom line, be careful.  If you intend to hold long over the weekend, keep in mind that this whole move is an precision exercise in manipulation.  It has been very carefully crafted to separate you from your money.

UPDATE:  1:50 PM

SPX just reached the .786.  Well…almost reached it.  By coming up just a few pips short (1806.4 versus 1806.16) they can justify a last-minute rally to close at a high point.


The day’s high for SPX: 1806.04 versus our 1806.16 target.  For the e-minis: 1806 versus our target of 1805.05.  Close enough for government work.

I have some very interesting charts to post regarding the implications of completing the big Butterfly Pattern.   As mentioned before, there are two versions: mildly upsetting, and leaping- from-windows ugly.   I’ll try to get them posted later this afternoon.

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