Charts I’m Watching: Jan 8, 2012

We’re getting a little more momentum going on the downside today.  SPX completed the small H&S pattern I posted yesterday.  It targets 1445 — approximately the .146 Fib of the 1266.74 – 1474.51 rally.

DX completed its back test of the falling red channel and continues to show strong positive divergence.  The RSI chart shows substantial upside.

And, despite the Japanese vote of confidence, the euro is showing continued weakness — with another test of the rising wedge and a white channel line coming up.  The channel line intersects with a .382 Fib at 1.3060, so look for a bounce there.

We remain short from SPX 1462, but we can expect to see some bounces along the way.  As discussed in the last performance posting, I will likely maintain a core short position until we reach our ultimate target.  But, I’ll also provide thoughts on any foreseeable interim moves.

Longer term investors who wish to ignore the intra-day swings should feel free to disregard that info.  While, those who hope to capture the many 10-20 point swings along the way will have some useful (and hopefully helpful) information.

As of last week, the primary directional moves accounted for about 40% returns since inception on Mar 22.  The interim swings were good for an additional 55%.  So, pick your poison.

UPDATE:  11:15 AM

AAPL just broke through an interim channel line on the primary channel we’ve been following since early November.  This should set up another test of the channel midline and, more importantly, the H&S pattern neckline.

Since AAPL is an important bell cow, it’s important to know what’s at stake here.

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