ORIGINAL POST: 5:15 AM EST
USDJPY just confirmed the H&S we were watching. Target = 100.68. There’s good horizontal support for it there, as well as the purple channel .236 line.
The daily chart shows the much lower potential.
UPDATE: 6:15 AM
The Nikkei futures H&S pattern targets 14300 near the purple channel bottom.
BTW, for those who were looking at the transports’ divergence as a silver lining — I hate to break it to you. DTX just completed a large Crab Pattern that should smack them back significantly.
Dip buyers beware. This will get worse before it gets any better. Art Cashin just said [watch on CNBC] exactly what we’ve been saying since Dec 27: the yen’s strength (and USDJPY decline) represents a flight to safety — as are lower yields.
Right now, everyone’s talking about Argentina and the Ukraine, but watch for the focus to switch to Asia any minute.
Next week is huge from an economic news standpoint. We have the new home sales, durable goods, the FOMC announcement, initial claims, advance GPD, consumer confidence, Michigan sentiment and Chicago PMI. The unemployment report (Wednesday) should be a big boost, as the 1.4 million folks whose benefits Congress just declined to extend will no longer be counted. The unemployment rate should plunge.
Coming up, downside targets.
continued for members…
We’ll probably get a bounce somewhere between 1792 and 1799 on SPX. But, I expect we’ll test the bottom of the white channel — which intersects with the .886 at 1777 around Feb 5. A secondary turn target might be the .786 at 1785.42.
The moving averages are worth watching. I suspect whatever pullback we get will be back above the SMA50 at 1812.62. The SMA100 is currently at 1761.49, and edging up about 2 pts per day. It should reach 1777, then, in about 8 sessions — which would be Feb 5.
For ES, the chart looks slightly different. Today’s low, if it isn’t already in, could be the red 1.618 at 1787, the purple .618 at 1789, or even the .707 at 1781. It would line up perfectly with a TL off the 11/8 and 12/16 lows for a nifty H&S neckline.
The 50SMA is currently 1808, and the 100-day is at 1757. The channel is larger, so the bottom on Feb 5 looks more like the purple 1.272 at 1728 — though if it gets a head of steam the white .618 at 1714.96 looks more interesting.
I’ve slapped a H&S Pattern on the chart because I think it’s likely that we get a big retracement in the mix of next week’s economic news — lot’s of potential catalysts. The biggest, of course, would be the FOMC blinking re the QE taper. It’ll be interesting, since the unemployment number could be as low as 5.9-6.0%.
Gold certainly seems to be pricing in a tapering of the tapering. Though, I suspect it will join the rest of the bear market once things get going.
UPDATE: 3:20 PM
Getting a little momentum going here. Though there’s a good chance of follow through on Monday, I’ll probably take profits here before too long. Both have reached their red 1.618. If that doesn’t hold, 1781.18 looks good for ES, and 1785.72 for SPX.
I wonder if 12:34 will come into play today…
USDJPY, which bottomed at 3:30 this morning and retraced .886 of the bounce, just broke a little trend line. I think it’s important whether 102 holds or not.
UPDATE: 3:50 PM
Check out the Dow…
UPDATE: 4:20 PM
If it was an F-15 instead of e-minis, I’d say we stuck the landing today.
