For those interested in the new fund, I have added a page to the website where you can sign up for news and updates.  Because the offering will be a private placement, you will be asked to affirm that you are an accredited investor* before being able to register.  

Please note that pebblewriter.com members will be given priority (first come, first served) for the 100 slots I plan to offer.  To sign up, CLICK HERE.  If you received an email update on June 20, there is no need to register again.  If you have signed up since June 20, you will included in the next update going out later this week.

In conjunction with the offering (and because it’s long overdue) I am planning a road show in late July or August.  Domestic stops will most likely include NY, Chicago, Atlanta, Miami, Dallas, Denver, LA and SF.  I’ll provide dates as soon as the schedule firms up.

* we are still working on a means by which non-accredited investors may participate — details later.

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As discussed yesterday afternoon, the rally is on.  Our scenario is playing out as expected so it will be safe to be long on the opening.  Once SPX reaches that cluster of upside targets [see: 3:10 update], watch for a swift downdraft to our 2nd downside target.

DX will be under pressure initially, but should resume its push after fleshing out the little corrective channel.

EURUSD’s backtest of the broken channel line could theoretically get as high as 1.3178, but — like DX — it seems to know this is a head fake and doesn’t want to get caught rallying for no good reason.

UPDATE: 10:18 AM

At 1588.31, SPX came within about 3 points of closing the gap at 1591.17 from Friday, and is doing its best to shake out the weak hands before doing so.  Note that we’re within striking distance of our other targets [yesterday’s post: 1:45 update]:

The midline of the red channel (the one I’m expecting to play out) intersects with the midline of the more bullish white channel at 1593 or so, and a move to that level would close the gap at 1591.17.

Also, 1593.77 is the .618 of the same pattern where the .786 was 1568.38.  A retracement from the .786 to the .618 is quite normal, even when the eventual move is to the .886.  And, of course, 1593.98 is a .886 retracement of the drop from Friday’s high.

Last, don’t forget about the white dotted line lurking behind the white .618.  This is the TL connecting 1552 and 1576 (the 2000 and 2007 highs.)  SPX obviously exceeded it in April, but fell back through as reported on Jun 20.  Today’s rally can legitimately be considered a backtest of it.

This bump up is likely a corrective wave in pursuit of our goal set back on May 29.   It’s obviously coming much earlier than expected, following a rebound from 1598 to 1664 (versus our forecasted 1594 to 1668/1677.)

As we discussed yesterday, the timing changes things a bit.  I am working on revising the forecast, and will hopefully post it later today (assuming we reach our target by then.)  continued for members…

 

In a perfect world, today’s high would come at exactly 11:40 — the intersection of all those features mentioned above.  There is a lot of selling pressure at work here, though. The price action within the little white channel is downright ugly.

This is like one of those dinner parties with people you really don’t like very much.  Your spouse has made it clear that you must go…you have no choice.  But, you take your time getting dressed and out the door because you know how dreadful it will be.

If SPX can’t seal the deal here, the drop would be swift and steep.  As always, use stops.

UPDATE:  12:35 PM

Our target area is finally within sight.  The plan is to short somewhere between 1591.17 (the gap) and 1595 (the rest of the targets, see the 10:18 update) for a quick drop to 1553/1555.

As always, there’s no guarantee of a reversal.  The fact that this move is taking forever doesn’t help the odds.  As we detailed the other day, the more bullish view would have SPX burst through the red midline and go up to back test the bottom of the purple channel (B? below.)  But, it’s a distant 2nd in my estimation.

DX, which normally would have sold off a bit as equities were rallying, tagged its channel midline and is backing off only a bit from this morning’s initial thrust.  Presumably, currency traders can see this move coming a mile away.

UPDATE:  1:20 PM

If you arrived at this site 45 minutes ago looking for the trade alert, here’s what’s happening.  It could have been a straightforward run up what was an obvious channel.  I sent the email two points and a few minutes before I expected 1591.17 to be tagged.

Bottom line, the market makers are jerking us around.  We’ll get a few quick thrusts downward, making it look like the channel is breaking down.  As soon as the weak longs are flushed, the MM’s can run it up to 1591+.

Should we take profits here?  If 1591 is in the cards, it would be just an opportunity cost.  We could even jump back in for the last 10 points.  Probably not a bad idea if SPX drops below 1583.

The red channel midline reaches 1591.17 around 2 PM Eastern.  But, given the games being played today, don’t be surprised if upon reaching it SPX suddenly catches its second wind and trades to or through our target range.

It will look like it’s breaking out of the white channel, which will get some folks pretty excited (and get them to buy a bunch of calls at the worst possible time.)  But, it will have reached the midline of the red channel — which should provide at least a pullback.

As discussed before, a thrust out of the white channnel and up through the red midline targets a big backtest to the bottom of the purple channel.  It could even be a big flat wave to finally tag 1553 in August as I originally charted.  Wouldn’t that be fun?

As discussed in the comments earlier, a dip from 1591 to 1566-1568 could establish a right shoulder in a potential IH&S.  Ramp it back up at the close or overnight to complete the pattern, and you’re looking at a target of 1625/1630 — right where the top of the red channel intersects with the bottom of the purple.

The .786 retrace of the drop from 1654 to 1560 is 1634.10, and the .618 of the 1687 – 1560 drop is 1638.72.  There’s also a gap to fill at 1629.22 from the 20th.  I’m not saying this will happen, only that it could.  It’s what I would engineer if I were VP of Manipulation.  Keep it in mind…

If the same guys who rigged yesterday’s close are in charge again today, look for a close on a very negative note.  That way, the market makers can unload all those puts they’re buying at a 20% discount to ATM calls right now.

Just as much fun would be a close at the highs and sell-off overnight. Gap down on the opening, tag 1568 and rally from there?  There are all kinds of ugly scenarios to consider — these, and more.  Like last night, many involve making their moves under the cover of night — when the average Joe Trader is best taken advantage of.

How to play a situation like this?  I think the only logical approach is to continue to play what’s right in front of us — gathering as much ancillary info as possible.  If SPX reverses at the red midline, it’s probably heading south to at least the .25 line.  If it breaches that, then our 1553 target is on the table.  If it reverses, then the alternative scenario is potentially in play.

Assuming we hit our target (3:34 ET?) I plan on shorting around 1593/1594 with a stop at 1596ish.  It might only leave a few minutes for the short to play out.  I’ll consider whether to leave the position overnight at that time.

UPDATE:  3:30 PM

Just closed the gap and squeaked a little higher. Will stick to the plan…

UPDATE:  3:37 PM

Closing out my long position here at 1593.79 and reverting to full short.  Stops around 1596 should suffice.

A reversal below 1588 would probably give me enough confidence to hold short overnight.  Of course, if the white channel holds and things look fairly positive at the close, that might be a better reason.
The 60-min RSI looks like it might be reversing here at the yellow midline.

I’m going to stay short overnight, though the usual warnings apply: hedge if you can, to cash if you won’t sleep well, etc.

UPDATE:  4:00 PM

So far, so good…