Charts I’m Watching: Dec 24, 2014

Things continue to go pretty much as planned, though there are a few currency-related bumps in the road just ahead.

DX, having reached our year-end target yesterday, is reversing.  Whether it will amount to something meaningful or is just a head fake remains to be seen.

2014-12-24 DX 60 0605USDJPY has clearly lost a little momentum in the short-run, giving up the purple channel and stalling at the white channel midline (remember, USDJPY has frequently ignored the rules of channels and chart patterns lately.)

2014-12-24 USDJPY 60 0605Even EURUSD is on the rise, after pushing below our year-end target.

2014-12-24 EURUSD 60 0605On the bullish front, VIX continues to slide…

2014-12-24 VIX 60 0605…and 10-yr yields continue to rally.

2014-12-24 TNX 60 0605The net effect is a rising channel for SPX that, as we’ve pointed out before, looks more and more like the mid-October melt up.  Prices could continue to rise even as momentum fizzles and the initial channel’s relevance fades.

2014-12-24 SPX 60 0605For now, we’ll consider the purple channel legit, and watch to see if prices can remain in this uptrend for the holiday-shortened session (1pm EST.)

2014-12-24 SPX 15 wo 0605My expectation is that we’ll get a small sell-off somewhere along the way — perhaps as early as at the close today — just to shake out the weak bulls and set the stage for the last leg.  An obvious initial target would be to close yesterday’s gap at 2078.73.

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