Charts I’m Watching: Sep 9, 2013

A reminder: as discussed Friday, our focus on equity prices is now on the E-minis (ES.)  The overnight action is too important to leave out of the equation, and playing the cash markets only leaves anyone holding a position overnight susceptible to big moves without the ability to hedge or stop losses.

Although the E-mini can easily be margined, I don’t recommend it.  Our focus on finding and exploiting turning points in equity markets works well most of the time, but occasionally I miss a call.  In an unleveraged portfolio, this could mean a

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USDJPY has recouped some of its losses following the Bat Pattern completion Friday, but is still looking bearish.

DX is back to Friday’s low, but is holding so far at the large falling white channel midline, the red neckline and the rising white channel .236.

The E-minis are up 5 points this morning, but have yet to recover Friday’s losses.

I’ll go long on any sustained move through 1660, but otherwise remain short.  Any such move higher is likely to run out of steam at the .786 of 1661.43 or .886 at 1662.63 — though the white channel top is drawn through 1664-1665 and could attract an intra-day push while still holding.

A move through 1668, on the other hand, targets 1694 — the purple 1.618 — thanks to the substantial reversal (Point B) at the purple .886.

The key levels on SPX are the tagged .886 at 1664.72 from Friday, and the Aug 26 high of 1669.51 (the white .500.)

UPDATE:  7:00 AM

Going short here at ES 1665 and SPX 1666.  The falling white channel tops have been tagged, and ES just finally tagged the white .500 Fib.  Neither has exceeded the Aug 26 highs — meaning the purple Bat Pattern held.


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