The last time the spread between the 10, 20, 50, 100 and 200-day moving averages was this small (22 points) was on January 3, 2008.  It’s the sort of consolidation that almost always precedes a significant move — whether higher or lower.

Back in 2008, it obviously occurred in the early days of the crash.  But, the previous instance in 2004 came at the tail end of an 11-month consolidation that eventually broke out, yielding three more years of the bull market.Coiling doesn’t tell us which way the market will go when it breaks out/down, just that the consolidation’s days are numbered.

Of course, HFT and algorithms have become so effective at manipulating prices these days that we hardly need an excuse for a breakout.  I’m looking at you, CL.

Our targets remain unchanged from yesterday.

continued for members…USDJPY is back below the red channel midline, signalling it’s open to that SMA200 tag. The SMA200 isn’t far away at 2076.50, so that will remain our initial target today.  Being a Friday, it would be unusual for things to fall apart.  Being the middle of the month, however, the risk is elevated.  The dashed purple line passing just below current prices is the TL from October 15.  All the other diagonal lines are channel lines that may or may not matter.  The white lines have been more pertinent lately, even if they don’t really work longer term.

I’ve left the red target in place (at the falling red channel midline) because I still view a completed H&S Pattern as a real threat to the bulls — one that could prompt some action from the BOJ.

Last night, the PBOC actually strengthened the yuan a little, so perhaps that threat has been removed from the pitch.  If so, the BOJ might need another paper tiger to justify their next QQE expansion.  Of course, it could also be something as simple as more horrid economic news — of which there has been plenty.

Stay tuned.

UPDATE:  1:49 PM

A lot like yesterday — not much action, not much direction.  My best guess is a dip to 2076 around the end of the day.  But, I would let that white TL (currently 2089ish) be your guide in placing stops.  TPTB love weekend breakouts — whether or not warranted by news.

A pop through the white TL would signal the SMA100 at 2098 — also the red channel top at the close today.

UPDATE:  2:37 PM

Still no resolution.  And, it all hinges on what the folks manipulating the USDJPY decide to do in the next 83 minutes.  Something’s gotta give…

Pretty silly, right?  CL is flashing a sell-off, but USDJPY could easily override.

UPDATE:  3:02 PM

USDJPY decided to break out, so I imagine SPX will, too.  Closing the short at 2089.20. Short timers should consider switch to long for 2097.20.  But, USDJPY’s red channel midline is overhead at 124.32, so watch out for a reversal at SPX’s SMA10 @ 2091.39.