Lots of red out there this morning. SPX just retraced .886 retrace of yesterday’s spike higher – a good place for a bounce. We should get a bounce here, but keep an eye on the primary target: the purple channel midline, currently around 1642.19.
UPDATE: 10:00 AM
SPX just bounced up through the falling purple midline at 1650. I’ll play the bounce here, with tight trailing stops.
This could be a bounce to further establish the falling red channel’s upper bound at 1658-1659, but you never know. It could just as easily be a simple backtest of the falling purple channel midline — hence the tight stop.
There’s a tiny potential IH&S setting up that targets 1660 — the confluence of the .500/.382 retracements and a quick gap fill. But, there’s also a small rising wedge here…
UPDATE: 10:23 AM
Stopped out on that little move, so back to full short.
Next stop should be the big purple channel midline. It looks like 1641.85 on the 60-min chart, which is so close to the pink .886 at 1641.14 that I’ll use that as my target.
The big question, of course, is “then what?” I did a lot of charting last night, and found some interesting patterns in the currencies [see: Update on USDJPY] that might shed some light.
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