Charts I’m Watching: Nov 13, 2012

The futures point to a 10-point sell off for SPX on the open — perhaps enough to tag the Fib levels we discussed yesterday.

There’s perhaps a 50:50 chance we’ll move slightly lower before reversing.  Note that on the small purple pattern, 1370.63 marks the .500 retracement of the 1266 to 1474 move.  Right there with it is the .886 (red pattern) of the 1354 to 1474 rally — at 1368.31.

And, of course, 1370.58 was the May 2011 high.  A reversal here would likely be seen as bullish by most investors who care about wave structure.

The e-minis completed a little Bat Pattern, reaching the .886 of Friday’s 1363.50 to 1388 rally.

My  view has been that either the .786 Fib of the 1576-666 crash (target #1) or this lesser Fib level (#2) — which also represents the May 2011 high — would catch the falling first wave.  I charted both (see the member section) in our Nov 6 forecast [see: The Morning After.]

We got a good bounce at 1380, but as I’ve noted over the past several days, the wave down didn’t quite look complete.  A reversal here would likely remedy the situation.

UPDATE:  11:20 AM

SPX got within 76 cents of the .500 Fib at 1370.63 and, more importantly, stayed above the May 2011 1370.58 high as expected.  We’ve had a strong reversal and just reached the .886 of the 1391 to 1371 dip.  We should see a pause here and put in a distinct Point C before continuing higher to our next interim target of 1403.75.

Just for grins, I pulled up that chart from Nov 6 to see how well the market followed our forecast.  Funny how things worked out…

UPDATE:  2:30 PM

We got the reversal we were expecting at the .886, along with a pullback to 1382 (the higher of the two C’s we proposed early this morning.  We’ll know the rally is proceeding once we exceed Point B at 1388.81.  It would also help enormously if SPX could close above 1381.60 — the 200-day moving average.

I’ve spent the last several hours fine tuning the analog forecast in order to provide some guidelines as to what to expect in the next leg up.  There’s a lot to factor in, so bear with me if this gets kind of technical.

For those not terribly interested in details, I’ll finish with a chart summarizing the next few moves.

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