ORIGINAL POST: 7:30 AM
We got the long-awaited fan line tag a few minutes after the opening this morning. We had been looking for 1411, but since that call the fan line has declined a bit; 1410 gets the job done.
The bigger picture is beginning to resolve itself. The daily charts for SPX, NYA, RUT, COMP, DJIA, NDX, VIX, DX and EURUSD are presented below.
continued…
SPX and DJIA are ahead of the other indices, which might end up falling short of their harmonic targets at this time.
The RSI continues to pester TL #3 — not the safest thing to do based on past experience.
DJIA: Completed a Bat Pattern last week. Today, it tagged the fan line from Oct 11, 2007 (if we ignore the May 1 shadow.)
NYA: Hasn’t quite made it to the .786 or its 2007 fan line, but the channel tag is pretty clear.
RUT: ever the laggard relative to the go-go indices. Its May 2011 high still stands.
COMP: a mere 12 points from completing a Gartley at 3046.97.
NDX: Reached one set of harmonic targets last week, tagged the shadow-less fan line today. Probably shooting for the larger pattern’s .886 (and higher fan line) at 2755.
VIX: a double bottom. ‘Nuff said.
DX: Just completed a fabulous back test of the channel line from 2002 and the .786 of its last run-up and a decent-looking falling wedge.
EURUSD: still respecting the 1.24 trend line in a sea of dismal headlines…
UPDATE: 12:30 PM
If the market backs off from the fan line as I expect, 1410 will make a great (at least) interim high. To recap, it fits the bill from the fan line perspective, is only 6 points in excess of the Fib .886 retracement of the 1422-1266 plunge, tags the former H&S neckline that set off the last drop, as well as the midline of a potential channel.
These elements can each be seen on the chart below. And, so, I am quite content to remain short. Remember, I went short at 1399 — with the understanding that SPX would probably tag 1411 — which it essentially has.
If it weren’t OPEX week, I would expect a plunge to 1366 as soon as tomorrow. But, OPEX has a way of thrashing logical forecasts, so there’s a possibility the market will go nowhere until after Friday.
I’ve spent all day working on a forecast for the next couple of weeks. But, it’ll take an hour or two to post and explain it. And, I have to run out for a couple of hours; so, it’ll have to wait until after the close.