SPX is coming up on the trend line connecting the index’s previous highs. This TL has been respected in the past, but there is also a tradition of important TL’s being leapfrogged on low-volume holidays. Today should be very low volume.
The daily chart shows the abject lack of meaningful pullbacks since the 1820 lows — particularly since USDJPY’s moon shot higher. The SMA10 should reach the Sep 19 2019 high tomorrow — perhaps time for a token pullback?
DX and SPX don’t always march in lock step, but lately they have. So, a reaction at the .886 should incite a reaction for SPX as well. If TPTB don’t use today as an opportunity to hop the TL discussed above, perhaps we’ll see the two events in sync.
USDJPY continues to race higher, topping 116 with the .886 just ahead at 118.59. Reuters re-published an article from this weekend speculating that Abe planned to delay the sales tax increase slated for next October.
The big picture:
Needless to say, this enabled the Nikkei to reach our upside target range posted on Nov 6. As is often the case, the rally was halted just short of the .886, meaning there is room for another spurt higher while still respecting the yellow .886 retracement (of the drop from 18,700 in Jul 07 to 7,325 in Oct 08.)
Should the Nikkei’s .886, the USDJPY’s .886, the DX’s .886 and SPX/ES TL all function as they normally have, we should get a meaningful downturn in the next 24 hours or so. But, of course, the S.S. Normal sailed a long, long time ago.