USDJPY says it all — busting through the falling purple channel top, the red triangle top and the last significant high — busting the downward pointing harmonic pattern in red.

With futures up 5-6 points at present, SPX will most certainly break horizontal resistance and make a second higher high.  Like USDJPY, this busts the downside harmonic pattern (gray.)

The employment report (and, especially revisions) supposedly increases the odds of a rise in interest rates this year. So, there is a dark lining to this silver cloud.  Watch out for the scenario we described in yesterday’s member section:

Given the volatility and manipulation of the last two days, I wouldn’t be surprised to see SPX slightly exceed 2064 in order to stop out the bears before reversing.

USDJPY, having done its job, will certainly retrace a great deal of this morning’s gains.  Look for it to top out around 119.08.

continued for members…

Unless SPX moves strongly through the top (2065), this is probably a good shorting opportunity.  Updated charts in a moment.

UPDATE:  9:53 AM

This is technically a megaphone pattern — a series of lower lows and higher highs (marked here with red lines.)  It can break out or break down.  But, the assumption is always a reversal at the bounds unless proven otherwise.  So, it can be played as a short, but with relatively tight stops.I also like the very well-formed rising wedge (also in red.)  If it does reverse, targets include the .886 at 2055 for starters, followed by the purple channel top at around 2046.

If it breaks out, instead, look for a move to the purple channel line crossing the 1.272 at 2073.28.

GLTA.

UPDATE:  1:13 PM

SPX eased up through the red TL signifying the megaphone top at 2065 to nearly tag our 2073 target (0.88 away), but has since fallen back below the red TL.  Note that the purple .786 was tagged, which makes for a decent reversal spot.  Downside targets, as detailed above, are the .886 at 2055 and channel top/.786 combo at 2046.

Note that I’ve sketched in a rising white channel that uses the rising wedge upper bound as its own.  This is purely speculative, but I often find that over-exuberant wedges broaden into channels when TPTB are determined to support a push higher.  The fact that the midline intersects with my downside target is a bonus, and lends credence to the 2046 target.

I probably don’t need to remind members (but, will anyway) that the normal and obvious downside targets such as backtests have been less than reliable ever since the market manipulation became commonplace over the past two years.  Stops are highly recommended.

UPDATE:  3:00 PM

SPX just reached our initial target: the .886 at 2055.  I still like the 2046 target more, but we’ll see.  USDJPY seems to have dug in at current levels, and may not come off until after the close.

I just posted an alert on bonds, which — IMHO — made much too big a move this morning.  In fact, it’s making me wonder if 2046 is enough of a downside move.

Thus, I’m throwing a couple of other targets onto the chart such as the red .618 at 2015 and the SMA200 at 1991.  It’s currently at 1979 and increasing about a point/day, so it’ll be there soon enough.  And, TPTB have been itching to tag it — just didn’t want to get things pointed in the wrong direction.  This way, they can tag strong support based on a Fib and SMA.

UPDATE:  3:35 PM

Cautious types might wish to take profits here at 2050 — a nice 22-pt gain from this morning’s reversal at 2072.  Aggressive types, especially those able to hedge their positions over the weekend — I think there’s more downside to come…

…especially if VIX pokes through that midline…

…and, USDJPY reverses as it should.

Just know that TPTB might plan on defending that purple channel top fairly strenuously — unless the megaphone pattern holds and it was all just a head-fake.

GLTA.