USDJPY provided the stick save overnight yet again, with the small flag pattern holding thus far.

For equities, we’re at a crossroads of sorts.  The bulls are working very hard, and propping up markets everywhere to cast recent moves as signs of higher prices to come.  While, the harmonics argue otherwise.  Who’s right?

continued for members…The channel picture illustrates several conflicting trends.

The latest channel (in red) is fairly well formed, with prices currently holding at the midline.

The red channel is an attempt to redirect the less ambitious purple channel, formed by connecting the significant tops from the past two years.

While the large white channel could point to significant additional losses or new highs, depending on how it’s drawn.

Here’s the bullish view:

And, the bearish view:

We’re often presented with a choice as to which channel is “right.”  I admit I favor the bearish view, as the Oct 2011 low was cut short of the obvious Fibonacci targets which would have otherwise provided a tag on the lower bound.

In general, I tend to trust placements that put significant reversals at the midline, as occurred in July 09, July and Aug 2010, Aug 2011, Sep 2012, etc.  We’ll know in time, of course.

So, in the meantime, we’ll pay attention to all of them — and, especially in context of the harmonics and, of course, the currency effects.  Both the long-term USDJPY chart and the completed large Butterfly Patterns on SPX, DJI, etc. and Crab Pattern on DTX suggest a significant move down.

We’ve clearly had a very deep retracement (of the recent highs) in SPX at .886+, with less impressive retracements in DJIA (.618), RUT (.786) and DTX (.500.)  COMP has been an outlier, with new highs reached on Tuesday.  But, those new highs tagged the .786 retrace of the all-time highs, so I don’t consider this a bullish development.

And, regardless of where the lower bound should be drawn, there’s a very clear TL connecting Tuesday’s highs to the 2010 and 2011 highs.

A trip to the bottom of the wedge as drawn would mean a drop of 11.7% to 3777.  Come to think of it, it appears pretty darned similar to RUT, which just completed a Crab Pattern at the top of its own long-term channel/trend line.