NOTE:  Most of you outside the US are now able to access the site, aside from a few in Europe and Asia.  So, the propagation should be nearly complete.   Apparently the links on previous posts need to also convert over from https to http. 

There’s a process that will do this automatically for every one of the links in the past 700 posts, but I’m hesitant to try it until after the close today.  In the meantime, I’ll go through and update charts on various index pages, which should deal with the more immediate problem.  

On a positive note, Disqus is working much better now with the elimination of SSL.  You can not only edit comments, but attaching charts is a snap.

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Futures are pointed higher this morning, but there shouldn’t be too much action until Bernanke’s comments.  I won’t chase it without a break of 1675.

The dollar has channeled higher since bottoming at 83.735 overnight.  I would still like to see a little further downside — to the bottom of the purple channel in order for the downside to trigger in equities.  The white .886 is at 83.678 and intersects the channel bottom around 7pm ET.

Our target was 83.609, as that established a 1.618 extension at an intersection with the 1.618 of the decline from Apr 4.  Interesting that the dollar is trending up in advance of Bernanke’s testimony…

…especially in light of the EURUSD’s push higher. The small falling channel in the pair would argue for a move slightly higher – perhaps to 1.2993 or so.

continuing…

UPDATE 10:00 AM

There’s the push through 1675, so an interim long position is triggered here.  I’ll probably close it if/when DX hits 83.609.

Charts in a moment…

DX is closing in on 83.609, but hasn’t quite tagged the channel.  Perhaps at around 83.57.  If that doesn’t hold, the white midline is around 83.52 and offers great support.

EURUSD is closing in on 1.2993, though the 1.618 at 1.3011 is also a good possibility on an overshoot.

I would imagine SPX is heading towards the 2.618 and red channel top at 1686.73.  But, keep an eye on the currencies.  The updated SPX chart:

UPDATE:  10:20 AM

DX just tagged the white channel midline at 83.52.  Should get a very nice bounce here.

EURUSD just tagged the top of the purple channel, slightly overshooting our 1.2993 target to 1.2997.  Look for a strong reversal.

And, SPX is back-testing the red .75 line, likely on its way higher.  I’ll likely close the long position at 1686.73 as long as the currencies are behaving and not breaking out/down.

UPDATE:  10:28 AM

Closing the long position here at 1687 and will revert to full short.  We have reached the top of the red channel and the 2.618 extension of the drop from 1474 to 1343 last fall.

Note that SPX is well above the purple channel line.  So, we should see a sharp reversal.

continued for members…

UPDATE:  10:40 AM

Note that EURUSD, by pushing up above the white channel bottom and quickly retreating, is probably confirming the yellow harmonic pattern targeting 1.2398 – 1.2435.  Though, we won’t know for sure until the last bottom of 1.2795 is taken out.

UPDATE:  10:55 AM

So far, so good.  We’re back down to the purple channel top at 1673.  The bulls will want to see a bounce here and treat it as a back-test.

I’m looking to see if the EURUSD can push down through the white channel and falling purple channel midline.

Watching the Bernanke testimony…  Some great and not so great questions coming from the pols.  One of Bernake’s comments just made my list of top three lies:

• The check is in the mail…
• I’ll still respect you in the morning…
• There is a complete and impermeable wall…

Text of his prepared testimony is available HERE.

UPDATE:  11:45 AM

The bounce off the purple channel line is nearing the .786 retrace (1684.14) which is also the red channel .875.

UPDATE:  1:48 PM

We’ve retraced 88.6% of the rally from yesterday’s low.  Should get a bounce here.  I’ll play an interim long position from 1665.57, stops at 1664.

UPDATE:  2:00 PM

Got stopped out on the .886, but tagging the yellow TL from 1994/2002.  Will try another interim long here, stops at 1664, stops at 1662.65.

UPDATE:  2:08 PM

Third time a charm?  The .786 — also the bottom of the red channel — is just below at 1656.86.  I’ll try switching to long for what should be a nice bounce if/when we tag it.

Best target for a bounce: backtest the yellow TL from 1994/2002.  Note the H&S possibilities…

UPDATE:  2:37 PM

There’s the .786 tag.  Going long here at 1656.50. Stops at 1655ish.  Note this is also the bottom of the red channel, the purple 1.272 and the red 2.618.

Fed minutes, key section:

Participants also touched on the conditions under which it might be appropriate to change the pace of asset purchases. Most observed that the outlook for the labor market had shown progress since the program was started in September, but many of these participants indicated that continued progress, more confidence in the outlook, or diminished downside risks would be required before slowing the pace of purchases would become appropriate. A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth; however, views differed about what evidence would be necessary and the likelihood of that outcome. One participant preferred to begin decreasing the rate of purchases immediately, while another participant preferred to add more monetary accommodation at the current meeting and mentioned that the Committee had several other tools it could potentially use to do so. Most participants emphasized that it was important for the Committee to be prepared to adjust the pace of its purchases up or down as needed to align the degree of policy accommodation with changes in the outlook for the labor market and inflation as well as the extent of progress toward the  Committee’s economic objectives. Regarding the composition of purchases, one participant expressed the view that, in light of the substantial improvement in the housing market and to avoid further credit allocation across sectors of the economy, the Committee should start to shift any asset purchases away from MBS and toward Treasury securities.

A few members expressed concerns that investor expectations of the cumulative size of the asset purchase program appeared to have increased somewhat since it was launched last September despite a notable decline in the unemployment rate and other improvements in the labor market since then.

…a few participants expressed concern that conditions in certain U.S. financial markets were becoming too buoyant, pointing to the elevated issuance of bonds by lower-credit-quality firms or of bonds with fewer restrictions on collateral and payment terms (so called covenant-lite bonds). One participant cautioned that the emergence of financial imbalances could prove difficult for regulators to identify and address, and that it would be appropriate to adjust monetary policy to help guard against risks to financial stability.

UPDATE:  3:18 PM

Just hit our 1655 stop, so I’ll switch back to the short side, with a stop at 1656.  Best targets now are the (primary) .886 at 1653 or (secondary) the purple TL at 1650ish.  Just below that are the May 16 low and purple 1.618 at 1647.52.

UPDATE:  3:29 PM

Just tagged the purple TL from 1994 at 1650.  Will try a long position here again.

Since we’re into the last half hour of the day, this should be the bounce that works.  As usual, look for a rise to an important line in the sand at the close, leaving investors willing to hold overnight with a 50:50 shot at glory.  Personally, my brain is kinda fried.  I’m very likely to go to cash at the close.

The best targets are:

• the bottom of the red channel at 1659 – not quite a 23.6 retrace
• the yellow TL from 1994/2002: the white .618 at 1663.34, a .382 retrace

UPDATE:  3:57 PM

Going to cash.  There’s probably much more to this bounce than 1655.  But, I want to go have a nice birthday dinner with the wife and forget about the market for a few hours.

I’ll do a wrap up later tonight.  Lots of channels to update.

GLTA.