Charts I’m Watching: Feb 14, 2014

The USDJPY completed another H&S Pattern — that hasn’t yet played out.

A reminder of the bigger picture.  The yellow channel midline remains the next big test.

Though the yellow channel is a sloppy turd of a channel, the midline has held repeatedly throughout Abe’s magic carpet ride.  The rising white channel — somewhat better defined — intersects with the yellow midline in late Feb/early Mar.  We’ve backtested the .236 line, so the bottom is the next support and should arrive sooner than later.

If the pair pushes down through the yellow midline or white bottom, things get interesting real fast — with the purple midline down around 93-94 and a bunch of Fib lines gathered around the yellow channel bottom at 91ish.

The falling Nikkei has obviously helped strengthen the yen.

Support is coming in the form of the purple and yellow midlines.

But, again, if those don’t hold — or if we merely get a bounce there — the downside is considerable.

UPDATE:  1:26 PM

ES just completed a Bat Pattern at its .886 (1833.50.) SPX should do the same shortly (1837.97.)

DJIA finally tagged its .618… 16,158 should be about it.

The big picture is compelling…beautiful symmetry around 10,000 in late August — about a 40% drop from the top. The intersection of the purple channel midline, the grey channel midline, the red channel bottom and about a 61.8% retrace of the 2009-2014 rise at a psychologically important number.

But, TPTB would never allow it, right?  That would be nearly a 40% drop from the top — comparable to Sep 08-Mar 09 (but, perfectly in keeping with our USDJPY model.)  Unthinkable.

How about 13,317 (-19%.7%) in the same time frame?  Say, at the intersection of the yellow .886, red channel midline, purple channel .786 line, and grey channel .786 line.  A pullback to the .886 is very commonplace for completed Butterfly Patterns.

Even a boring old company like MMM (a great proxy for the broad markets) looks like it’s corrected its year-end excesses and is ready to return to earth.

Will the market fall apart Monday?  Will Tom DeMark’s 1929 play out?  I have no idea, but the charts are certainly quite negative, and complacency (along with margin debt) is very high.  The risk of something ugly happening is very, very real.

Oh, yeah.  Happy Valentine’s Day.



Charts I’m Watching: Feb 14, 2014 — 1 Comment

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