Charts I’m Watching: May 29, 2015

Yesterday played out very much as planned, with SPX coming within 2 points of our downside target before crude light’s rebound spoiled the bears’ fun.

Recall that we were looking for CL to reverse at 56.78 — the purple .786 — when the cash market opened.  And, that’s exactly what happened.

2015-05-29 CL 60 0600This nearly 4% bounce off its lows provided all the ammunition SPX needed to abort a full backtest of the IH&S neckline and SMA20 and nearly close in the green.2015-05-29 SPX 60 0600It was a near repeat of Tuesday’s plunge which also came up short.  The eminis are currently off 4 points, but were down as much as 10 points overnight before the euronext “broke” — which is code for “let’s turn this puppy around, but fast!”

Then economic elephant barging into the algos’ room today is the BEA report that the economy contracted 0.7% in Q1.  From Briefing.com:

Screen Shot 2015-05-29 at 6.43.54 AMAs Briefing.com points out, the 1.1% decline in retail sales is the biggest quarterly drop since the Great Recession.  Then, thanks to the dollar’s lofty levels, there’s the continuing plunge in exports…

Screen Shot 2015-05-29 at 6.44.52 AMGiven all the above, we’re left to wonder whether SPX can defy week-end and month-end convention of a stirring display of all-is-well-ism and follow through to the downside.

As usual, USDJPY holds the key.   continued for members


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