Charts I’m Watching: Jul 1, 2013

Important note:  Late last night I posted about the future of  With the launch of the new Fund fast approaching, I will not be offering any new memberships or renewals after this Sept 1.  However, the site will remain in its present form for members to use through September 2014, and will likely continue as a monthly or weekly digest thereafter.

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After this round, the price of annual memberships will be raised from $1,800 to $2,000 until sales end altogether in September.   Details are available HERE.

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The futures are up nicely this morning, with e-minis currently printing 1608 after trading as low as 1593.25 yesterday.

The dollar has backed off yesterday’s highs, but is till rushing headlong toward some important channel and Fib tests.

We’ll play along on the long side, picking up where we left off Friday where, once again, SPX closed in such a manner as to throw investors off the scent of the prevailing patterns.

UPDATE:  9:39 AM

The key this morning is poking through 1620.07, which was a close enough tag of the red .618 to open up the possibilities of a Gartley, Bat or Crab Pattern.  So far, SPX is content to loiter in the area of a .886 retrace from that high water mark.

The rising red channel was violated at the close Friday.  This marks the 5th day in a row where the most obvious TL from the recent 1560 bottom was violated in the closing 15 minutes of the session (marked with asterisks below.)

Each time except for the last, the market rebounded strongly the following morning.  It’s either some masterful manipulation, or SPX is exhibiting the kind of fragility we would expect if our forecast is to play out — or both.

Economic news this morning include a slightly better than expected Manufacturing ISM Survey.  It’s generally positive (50.9 vs last month’s 49.0 and expectations for 50.5) except for employment — contracting again.

I won’t put up all the Census Construction Spending charts and tables, as they’re available HERE for any data hounds.  The interesting facts I gleaned from the May numbers just released is that, while private residential spending ytd is up 25% versus 2012, private non-residential spending (offices, malls, warehouses, etc.) didn’t even keep up with inflation. Predictably, public spending dropped in nearly every category.

There’s no question that housing activity is picking up.  There is a question as to whether it’s sustainable.  This is May data — long before interest rates spiked.  In my experience, builders will build pretty much any time they have access to capital. So, as long as the mortgage market is semi-healthy, we should continue to see increased activity.  If it starts to falter due to higher rates, it could do a number on these numbers.

SPX just slipped up through Thursday’s high, so we’ll review our near-term expectations.

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