Charts I’m Watching: Apr 7, 2014

The panic felt on Friday over a 1.3% drop was surprising, given that the markets were still up on the week.  What will investors do when they face a real plunge of 5-10% or more?  On Apr 14, 2000, SPX dropped 100 points in a day — a drop to get excited about!

While things started out pretty well, by the end of the Friday’s session the drop felt tired and back in control — if it was ever out of control.  USDJPY fell to the .382 retrace of its last rise, fleshing out a rising channel bottom.

2014-04-07-USDJPY 4hr 0609

ES busted the crazy-steep purple channel, but never broke the rising white channel midline until last night — only to bounce back.

2014-04-07-ESM4 daily 0623SPX found support at the latest .618 — near the purple midline and a channel bottom — but will probably benefit from a slightly lower bounce.

2014-04-07-SPX 15 0615Bottom line — I’m certainly not turning bullish, but the potential for a bounce here shouldn’t be ignored.  Keep an eye on the yen — the driver of the whole mess.  If it can hold 102.98, we should be off to the races.

UPDATE:  1:55 PM

102.98 has held so far, even as SPX/ES managed to put in another lower leg as expected.  Aside from the highly leveraged go-go names that are over-represented in the hedge fund world, this decline still feels rather “managed.”

I’ll take a stab at some downside targets.     continued for members…


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