Charts I’m Watching: Oct 10, 2014

Futures have been all over the map overnight, nearly tagging the ES .786 at 1910.75, which might represent a reversal as suggested yesterday by VIX’s completion of a Gartley Pattern.  The key remains USDJPY, which has vacillated just shy of completing its own Gartley Pattern.  In any case, it remains below the channel that took it from 101 to 110 in less than 3 months.   The BOJ might let it linger in this 107.50 – 108.10 range — which could set up a repeat of the early months of 2014 — with the pair providing occasional lifts for stocks during the trading sessions, and resetting overnight.  We’ll see.  All I know is it’ll be difficult for stocks to rally meaningfully without the carry trade’s participation.  And, any doubt as to whether it’ll hold its value might create even more uncertainty for stocks.

2014-10-09-usdjpy daily 0500

SPX still has the potential to drop down and tag the .886 at 1917.83, though I have mostly favored a tag later in the month when it will offer a test of the SMA200 — currently 1904.86 (which is finally up above the Aug 7 low.)  But, I certainly can’t rule out a test of both as early as today. Any move below 1925 is probably headed for 1917, so it might pay to just wait and see.

Double bottoms are always a killer for chart guys, and the amount of whipsawing this market has done is certainly in keeping with that kind of move.

2014-10-10-SPX 60- 0500

On the flip side, any sustained rally should still seek out the purple .618 at 1983.65.

UPDATE:  11:20 AM

SPX tagged the .886 — after a 15-pt wild goose chase after the open.  From here, it’s anyone’s guess whether we’ve seen the low for the day or whether we’ll take a run at the SMA200.  The cynic in me suspects a close right at the SMA200 — or maybe even a tick or two below — going into the weekend.  In any case, I think it’ll be a lot of chop for the rest of the day.  And, my back continues to give me fits.  So, it’s back to bed for your humble host.  GLTA.

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