Charts I’m Watching: Feb 24, 2014

The last time SPX made a new high (1850.84 on Jan 15) it promptly dropped 113 points (6.1%.)  Is there reason to believe the new highs will stick this time?

Let’s start with the carry trade on USDJPY — which has retraced barely 38% of its drop from its EOY highs.  Remember, 105.43 represented a .618 retrace of the 2007-2012 plunge and the .618 retrace of the 1996-1998 gains and a TL from the 1998, 2002 and 2007 highs.  This was a very significant top.

The carry trade has been in place since mid 2012, providing very strong correlations between SPX and USDJPY.

Why the decoupling since the 2013 year-end highs?  And, which will revert to the other’s trend?

Likewise, the 10-year note stalled at the .382, a serious decoupling vs the SPX.

And, it’s having trouble climbing back above the TL connecting the June 2007, April 2010 and Feb 2011 TNX highs.

Speaking of decoupling, how about the DJIA and SPX?   The Dow, which is approaching a .786 retrace of its EOY highs at 16,315 and the Butterfly Pattern target of 16,300, is well off the pace set by SPX.

more later…


Charts I’m Watching: Feb 24, 2014 — 2 Comments

  1. NQ100 hit C of a 5.0 bullish pattern today @ 3698 on the 4hr and a smaller 30min 5.0 bullish pattern @ 3697 (both @ 2.24 on their respective patterns, rare!).