Another day, another case of whiplash. The dollar is indicative of the volatility — a downtrend to the white .886 that reversed back up to the .382 before heading lower, right? After retracing about 101% of Sunday’s low, it reversed and regained the white channel — only to abandon it again this morning.
The EURUSD has been almost as schizophrenic, reversing after completing a Bat Pattern — but failing to break out after the catch at the white .500.
The USDJPY broke out of a very well-formed channel (in white below) a few days ago with an even better-looking channel (in purple), only to put in a backtest that’s a full-on nail biter.
The close-up:
Then, there’s the equities markets…we’ve got dueling H&S Patterns (both bullish and bearish), violated Harmonic Patterns and violated channels coming at us right and left.
This morning’s post-consumer confidence plunge (completing an H&S Pattern) probably had more than a few bulls reaching for the sell button. But, it stopped .25 shy of yesterday’s low and recovered the neckline in a matter of minutes.
What does it all mean? (continued for members)
Staring at the H&S on ES, it occurs to me that investors have no idea which way the market is going. Normally reliable short-term indicators have been very unreliable the past few days.
Clearly, someone with very deep pockets didn’t want yesterday’s 1798.50 low broken (at least at the speed at which it was going) and didn’t mind ponying up some big bucks to beat back the bears.
And, I guess therein is our answer. With all the talk of 2013 as 1929 (DeMark) and the upcoming Butterfly Pattern completion (yours truly, among others) the downside case is very compelling.
It wouldn’t take much to shove this arthritic bull over a cliff. But, TPTB aren’t quite ready. And, so they’re shaking out as many weak hands as possible before the last leg up.
At least that’s my take, FWIW.
UPDATE: 12:30 PM
The H&S is fading, but not quite gone. The IH&S, on the other hand, just broke out and back-tested. If it’s real and not a fake-out, it targets 1815ish — which is in the vicinity of two Crab Pattern completions.
If, as I suspect, we get a decent pullback at the .886 on the way up (1808.02) we could get a second right shoulder for a complex IH&S targeting 1818.
UPDATE: 3:55 PM
Guess that was getting a little too predictable… The rising wedge setting up after the IH&S completed just broke down and ES retraced almost .786 of its gains from this morning to basically flat on the day.
We’d want to see ES back to 1802.60ish in order for the traditional H&S neckline to not be breached. 1803.88 would put the IH&S back in business.