Charts I’m Watching: Jul 19, 2013

New all-time highs, yes, but no follow-through just yet…

My working theory is we’re due for a typical double-top pullback. As detailed in yesterday’s post, characteristics of big (95+ points) double-tops since Oct 2007 include:

  • average 0.32% overshoot
  • peak 5.91 sessions after the .886 tag
  • drop 4.5% from the double top high
  • almost always retrace to the .886 Fib level

Yesterday’s 1693.12 high, which came 5 days after the recent .886 tag (of the 1687 to 1560 decline), amounted to a 0.35% overshoot.

We remain short from 1692 yesterday, but will be ready to pull the plug should the market decide otherwise.  Today is OPEX Friday, when bullish levitation sometimes materializes out of thin air.

The dollar is taking the new highs in stride.  Recall it was whalloped last week in a well-orchestrated after-hours take-down following the startling revelation (not) that the Fed didn’t intend to raise interest rates anytime soon — all to get SPX past the .786 Fib at 1660.

Since then, however, it has more than held its own — even as SPX has been ramped up another 33 points.  The bullish longer-term channels and harmonic patterns are still in place — though the falling red channel midline could limit any push higher to the .786 (85.47) in the near-term.

UPDATE:  3:10 PM

Pretty quiet day, with the usual ramp into the final hour going on now…

There’s a good chance the small Bat Pattern (red) will complete at the .886 (1692.09) before the EOD.

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