Looks like we’re getting some follow-through this morning on Friday’s technical rally.  But, this doesn’t appear to be one worth chasing unless it can push up strongly through 1560.

I’ll play along on the opening with an interim long position, with tight stops for the fizzle that could come quite quickly.  If 1560 is exceeded, look for 1573 or so.

The dollar pushed above the TL from the prior highs as well as its .618 Fib of the Apr 4 high.  This bodes well for a run to at least the purple midline — probably at the .786 or .886 (83.258 or 83.446.)

UPDATE:  9:35 AM

There’s 1560.10, I’ll close the interim long here and revert to full short unless SPX can push higher.

UPDATE:  9:39 AM

Got a pullback to the neckline of the small https://pebblewriter.com/inverted-head-shoulders-pattern/ (in yellow, below) completed on the opening.

I’ll try another interim long position here at 1554, with very tight stops (1553ish) in the event SPX pushes down through the neckline.

The IH&S targets 1574 — which is also roughly the .618 retracement of the 1597-1536 decline.

UPDATE:  9:50 AM

I’m going to allow a little more wiggle room on the stop, as this setup is too good for the bulls to waste.  Hanging in there for 1574.

UPDATE:  10:00 AM

The existing home sales won’t make it any easier for more upside, here.

Pulling the plug on the interim long unless it can push back up through 1555.

As we discussed Friday, the right shoulder formed thus far is sufficient for the H&S Pattern proposed on Apr 16 to play out.  All we need now is a drop back to 1535 or so.

But, getting SPX up to 1474 would be a coup for the bulls.  At that point, it would have formed 2/3 of another larger IH&S that targets 1610.  So, don’t expect them to give up this seemingly insignificant pattern easily.

UPDATE:  11:55 AM

SPX just shot through 1555 on weak technicals.  I’ll add an interim long position, but wouldn’t get excited about this move just yet.

It’s questionable whether can push through 1558.74 — the .886 of this morning’s decline.  I’d have to classify it as corrective unless it can break out of the falling white channel.

UPDATE:  12:15 PM

Just reached 1558.53, pushed above the channel upper bound for about 3 1/2 seconds, and retreated.  I’ll hold on to the long, but raise stops to 1556ish.  The bulls really need a breakout here.

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UPDATE:  12:40 PM

SPX just burst through our channel line mentioned above.  This puts the red .786 at 1566.94 on the table — a Gartley Pattern.  Note that this is also roughly the level of the .500 retracement of the 1597 – 1536 decline.

Assuming SPX will push through 1560 this time (the RSI chart below suggests it will) we’ll look for signs of weakness between 1567 – 1574.

UPDATE:  2:35 PM

SPX making nice headway toward our interim target range of 1567-1574.  I’ve had a chance to fine tune some of the charts; and, this move is shaping up pretty much as expected.

Recall that we shorted at 1597 back on Apr 11, and held went long again at 1541 last Thursday.  SPX is coming up on the .500 retracement (in white, below) of that decline, which is a common enough corrective wave move.

Note also that the red .786 and light blue 1.618 are very close to that same price level.  While the coincident Fib levels concur on the importance of 1566-1567, it’s the chart patterns that will likely determine the next 100-point move.

continued for members…

SPX just reached the bottom of the purple channel that guided prices from 1343 to 1597.  We really should see a reaction here, but note the new Inverted H&S pattern just completed (yellow, dashed neckline.)  It targets 1582, another 8 points higher than the one from earlier this morning.

To get to 1582, however, SPX would have to: (1) bull its way back into the purple channel from which it broke down last week; and, (2) push up through the presumed shoulder line of the latest traditional H&S pattern (1568.)  That’s in addition to all those Fib lines at 1567-1568.

We’ll look for a pullback here to backtest the neckline just established (1561.50) and then a rally to 1567 either late in the day or (more likely) tomorrow morning.  From there, though, I’d give a continuing rally to the 1574 level a 60:40 shot.  And, it probably goes without saying that we want to pay very close attention to where SPX closes, as an intra-day push into the purple channel is a very different animal from a close there.

The 15-min RSI continues to point to 1567ish, with any push to 1573 likely coming after RSI has peaked and is exhibiting negative divergence.

Given the daily RSI picture, the most logical move would be a strong push to 1566-67 in the next 15-20 minutes, followed by a quick retreat back out of the channel to, say, 1563.30 or so.

If it doesn’t happen today, then look for a similar action tomorrow morning.  The tricky thing, however, is the durable goods report due out at 8:30 ET.  Briefing.com forecasts a -4.0% print, while the consensus is for a -3.1% (versus +5.6%.)  It’s easy to imagine a drop on those kind of numbers, but a pop..?

UPDATE:  3:52 PM

SPX is backtesting the neckline as discussed above.  Our target was 1561.50, and it’s looking very likely at this point.  Apparently we’ll close below the purple channel and try that tag in the morning.  I still have a core short position on, so I’ll leave the interim long in place as well.

I have some updates for RUT, NYA and DJIA I’ll post later this afternoon (along with an email notice.)

GLTA.