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China v Greece

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SPX tagged our downside target yesterday, reaching 2044.02 vs our initial 2050 (adjusted to 2046.17.) From One Step Backward:

Still dropping, but just tagged the bottom of the red channel at 2046.17.  CL just tagged the white .786 as well, so this is likely nearing the end.  I’d take another stab at a long position here.

It proved to be a profitable bottom call, as the 39-point bounce picked up steam along the way, turning into an algo-driven breakout from the falling white channel.

2015-07-08-SPX 5 0600Today’s “market” is shaping up as a battle between the contagion that is China versus the Greece is Fixed (again!) news out of Brussels.

Look for SPX to backtest the broken falling white channel at 2068ish and try to catch a lift from USDJPY, which is about to tag its SMA100.

2015-07-08-USDJPY daily 0620continued for members…UPDATE:  9:37 AM

SPX just backtested the white channel (the red target) but before USDJPY reached its SMA100. Looking now for 2063ish.

The bounce won’t happen until USDJPY rebounds, preferably from 121.03.  If it, instead, drops through 121 and tags the .618 at 120.11, then SPX might very well reach 2039 — but, at least 2048.55.

2015-07-08-SPX 5 0640I would hold short until USDJPY rebounds or the SMA200 is tagged again (now 2055.44.)

UPDATE:  9:50 AM

Moment of truth for USDJPY, which just tagged the SMA100.

2015-07-08-USDJPY daily 0650

I’d try a long position here at 2060.18 — but, would revert to a short position in a hurry if USDJPY breaks down further or even fails to bounce hard.

2015-07-08-SPX 5 0651UPDATE:  10:25 AM

USDJPY is still lurking around the SMA100 without much of a bounce to speak of.  I assume it’s going to backtest 120.11, but the question is the timing.  If they maintain it at 121.03 until after the close, there will be no effect on SPX.  Otherwise, plenty of effect!

I’ll dump that long position from earlier (no gain/loss) and jump in on the short side if USDJPY dips below 120.982.  Conversely, I’d jump in on the long side if SPX reaches and bounces at the SMA200 at 2055.44 — as long as USDJPY is also bouncing.

2015-07-08-SPX 5 0721UPDATE: 10:35 AM

Will take another shot with long position here at 2055.53, but with tight stops.  USDJPY’s reaction still isn’t all that impressive.

2015-07-08-SPX 5 0735UPDATE:  11:00 AM

It’s a very weak bounce, with SPX gaining a whopping 10 points…2015-07-08-SPX 5 800…until USDJPY once again starts dipping below the SMA100.  2015-07-08-USDJPY daily 0800 CL is also putting in a very underwhelming bounce back to white channel bottom.2015-07-08-CL daily 0800

I’ll go ahead and take profits here at 2065 and switch back to the downside with tight stops.  Again, be ready to go long at USDJPY 120.11. Initial objective 2048.55, secondary at 2039.60.

UPDATE:  11:45 AM

EURUSD is spoiling the bears’ fun by providing a lift (still in the falling gray channel) that largely offsets USDJPY’s drop.   2015-07-08-EURUSD daily 0845As a result, SPX is being propped up north of the SMA200.2015-07-08-SPX 5 0845USDJPY getting close, reaching 120.53 versus our 120.11 target.

UPDATE: 12:00 PM

Watching the stunning news that the NYSE has halted all trading.  This, at the same time that Zerohedge and WSJ.com also go down.  China strikes back?  They’ll never in a million years admit it, but that’s my best guess.

UPDATE:  2:53 PM

SPX closing in on yesterday’s lows… 2015-07-08-SPX 5 1144…as USDJPY closes in on 120.11.2015-07-08-USDJPY 15 1144The only hitch is the timing looks best for tomorrow’s opening minutes as opposed to this afternoon.

Cautious types might want to take profits here at 2045 and play the bounce into the close.  Could also go long with stops at 2044ish, take your pick.  But, the timing’s looking squirrely for today.

Remember, this is the .618 of the rise from 1938 in Feb to the 2134 highs.  So, a precise tag of 2039.60 is hardly essential.

UPDATE:  3:12 PM

Just fleshed out the falling wedge.  I’d take profits on the long position here at 2054.48, or at least consider stops at 2054.  There’s definitely room for a drop to 2039.60 today if it reverses here. So, a short here makes sense only if you can manage your stops carefully (use the red falling wedge’s upper bound.)

2015-07-08-SPX 5 1212In one sense, I like the idea of a close at 2039.60.  That way, SPX closes below the SMA200, sucking in tons of bears who aren’t aware of the Fib picture just in time to sucker punch them with a big ramp job in the morning.

Comments

4 responses to “China v Greece”

  1. TimothyMelger Avatar
    TimothyMelger

    What’s the next target if break below 2039? Great job over the last few days!

    1. pebblewriter Avatar
      pebblewriter

      Thanks, Tim. Please see today’s post for additional downside targets/scenarios.

  2. JamesLowe Avatar
    JamesLowe

    Hi – just wanted to give you the feedback that I REALLY like your recent dedication to posting specific trade suggestions and highlighting them in blue. Please keep it up!

    I’ve always found your forecasting service useful, but (as you acknowledged recently) there is a world of difference between forecasting and trading, and it has often been difficult to translate a forecast into actionable advice.

    1. pebblewriter Avatar
      pebblewriter

      Thanks. Appreciate the compliment, and glad you’re enjoying the site.

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