Yesterday’s melt-down was a good start on the Bat Pattern reversal, reaching the white .618 on its way to the cluster of moving averages we discussed yesterday and coming within 3 points of our downside target issued in Monday’s member section [see: Strange Brew]:

Whether or not the rumor is true or the interview even occurred or the finance minister was telling the truth…who knows?  All I know is that the .886 was tagged and our bias is to the downside from here at 2128.  First downside target is 2105.34.

This morning, we have blow out data on personal expenditures which has initiated a sharp rally off of absolutely no technical support.  While the data’s benefit to the economy is dubious (are higher gas prices really going to aid in a recovery, or will we all spend less somewhere else?) the 14-pt spike in the eminis since yesterday’s cash close is a quandary.

Fortunately, there are other technical indicators which provide some important clues.

continued for members…

Consider CL, which IMO is breaking down.  That purple TL running across the recent highs remains intact and the purple/white channel lines are looking iffy.And, USDJPY, has yet to break out of the falling red channel we’ve been watching.  In fact, it continues to settle lower this morning.

Absent any real news (or believable fake news) out of Brussels, this morning’s rally in SPX should be short-lived.  I would maintain a short bias, with the afore-mentioned targets still intact.

UPDATE:  2:23 PM

SPX just tagged 2105.  Since the decline was pushed out a few days, there’s a good chance it’ll continue lower and make a proper backtest to the falling red channel.

While we originally put the SMA100 tag (currently at 2094.12) early next week — timing that was selected to coincide with the SMA100 passing through the red channel top.  But, there’s no reason it couldn’t make it sooner or, alternatively, bounce here now and come back in a few days when the SMA100 exits the channel.

Either way, look for a bounce between 2000 and 2102, but be cautious re overnight ramp jobs or dips. SPX has been so quiet today that it’s obviously being heavily managed.  Anyone holding short should consider placing stops.