SPX reached our secondary target at 2110.48 Friday — two sessions ahead of schedule. Per our Mar 17 forecast (members’ section):
Assuming SPX can get past the SMA20, the midline also intersects with the broken purple channel bottom for a backtest Thursday morning at the red .786 (or next Tuesday the 24th at the .886 at 2110.48.)
We recommended taking profits at this level Friday. In addition to completing the small Bat Pattern, SPX has backtested the broken purple channel. Of course, bulls would love nothing more than to barge right back into it as has been done with many V-shaped “recoveries” over the past year or two.
This morning, USDJPY is nearing the white channel bottom with support around 119.61 (and secondary support at 119.44)……while CL was eased down overnight to its trend line support.The damage done to DX isn’t dinging stocks…
Note that EURUSD is nearing completion of a Gartley Pattern at 1.0949. Regardless of whether it reverses, EURUSD’s strength since bottoming at 1.0462 on the 17th has to leave ECB easing fans wondering — if not worrying.
DAX’s spectacular 28% run (from Jan 5) leveled off on Mar 16, when EURUSD’s slide was interrupted in order to save SPX from declining any further. If the euro resumes falling, however, that task will revert to USDJPY and CL — both of which have managed to boost SPX during the day (sometimes taking turns) while resetting overnight.
Thus, neither is really going anywhere. But, the benefit to SPX is nevertheless positive. It begs the question: “how long can this go on?” The answer, as is often the case, lies in the past.
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