Charts I’m Watching: Jan 28, 2013

A positive durable goods report, mixed CAT earnings and the usual meaningless NAR drivel (this time negative, but being spun as a lack of inventory) have combined to drive SPX down 5 points.As we discussed Friday, the bottom of the purple channel (1498) and/or midline of the white (1496.50) are good trigger points for those who play intra-day moves.  Look for a bounce there.

The bottom of the white channel is currently 1485, the level at which a move lower would seriously undermine our current position.  Otherwise, our core position remains long.

The dollar, which broke back down below a channel line on Friday, had a 2nd nice bounce off the next lower channel line, but as yet hasn’t broken out.  The short-term harmonic picture continues to be ambivalent.

Keep an eye on the RSI channels, which still point lower in the short run amidst a general move higher.

The EURUSD continues to linger in double-top territory — also the completion of a Crab Pattern (small, purple.)

Note that this is also a .500 and .382 Fib of much larger patterns, so we should get a sizable reaction here.

I’m adding two pages to the website this morning.  The first is a general discussion of harmonics trading techniques — something I’ve been wanting to do for months.  Part 1 has already been posted under the harmonics section of the “learn” tab.

The second, which will be posted shortly, is a brief summary of my current core position and will be available under the “markets” tab.  Many of you have asked for such a page, but I’ve hesitated because of the risk of misinterpretation.

Someone taking a quick look might see a long position, for example, without noting the commensurate high risk of a sharp downturn that was discussed in the daily post the day before.  There’s also the risk that a short-term trade is misinterpreted as long-term, or vice versa.  At tops and bottoms, when we’re waiting for the market’s stripes to emerge, core and short-term trades aren’t always easily distinguishable from one another.

Last, such a page will out of necessity be a snapshot — a peek at where things stood at the time of its posting.  The outlook might have changed two minutes ago but not have been posted yet.  Someone who reads the full daily post would realize a change is in the works, but this page wouldn’t yet reflect it.

But, with those caveats out of the way, I’ll post it later today for members only.

UPDATE:  11:30 AM

SPX bounced at the white channel midline as suggested earlier (1496.33 v 1496.50 target) and is back above 1500.

I believe our short-term forecast is right on track.

continued for members


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