The market is having a hard time deciding whether the better than expected ADP report is good news (economy strengthening) or bad news (more tapering.)

The chart shows a falling channel (white) since our top call on Dec 31, and a backtest for the past two days of the broken red channel.

At some point, we’ll probably get a deeper retracement than .618 seen yesterday morning. If it happens today, it’ll no doubt be driven by a positive reaction to the FOMC minutes due out at 2pm EST.

But, the move would look a heck of a lot better with a deeper retrace on the white grid first (.500-.886.)  The .786/1.618 combo at the white midline looks like the best fit all around.