Charts I’m Watching: Jul 22, 2013

The markets continue in limbo, as Friday’s after-hours ramp didn’t hold up (for a change) and currency markets continue to vacillate.  DX is pushing toward a potential reversal and resumption of its uptrend at one of two .618’s…

…while EURUSD, having bulled its way back into the purple channel, tries to convince us that it’s on the rebound.

USDJPY continues to flirt with a couple of H&S patterns that could accommodate a move up to the .886 if need be.

The eminis pulled the usual nonsense after the cash markets closed Friday, spurting a couple of points after the close and another few on Sunday.  But, by this morning, all of it had been unwound.

SPX tagged along for a nanosecond this morning, but has since settled back to flat on the day — probably waiting for the existing home sales data (10 AM EDT) for some direction.

As of this moment, there’s a nearly completed Butterfly Pattern at the red 1.272.  It fell .53 shy on the opening thrust, which is probably good enough given the larger forces at work such as the double top we’ve discussed extensively.

UPDATE:  10:05 AM

The NAR existing home sales came in at 5.08M versus 5.28M expectations — a big miss considering it’s seasonally adjusted to begin with and that NAR is well known for huge revisions following inaccurate (cheerleading) initial reports.  This data reverses a 3-month trend of increasing activity and, due to the lag, doesn’t even reflect the impact of higher mortgage interest rates.  Distressed sales continue to make up almost 1 of every 5 transactions.

Past Freddie Mac data indicates sales will continue to slow once the real impact of higher rates is felt in the marketplace.

In the past, prices were knocked back by higher rates, but rebounded when rates moderated.

Though, increases in the use of adjustable rate mortgages were largely responsible for maintaining/regaining price momentum.

There’s no denying that average prices have risen in many markets.  The MSM attributes it largely to an inventory shortage.  I continue to suspect it’s largely a function of activity in the lower end of the price range — mostly from institutional buyers of distressed portfolios. CoreLogic reports about 2 million units still in some stage of foreclosure, and foreclosure filings are once again on the rise.

UPDATE:  11:08 AM

SPX just pushed up through this morning’s high.  I suspect the 1.618 at 1698 — call it 1700 — is in focus.  I’ll take an interim long position here at 1695, but leave our core short in place.

Tight stops (1695) though, as the dollar just tagged the lower of the two .618’s discussed above.

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