Today marks one year since pebblewriter.com opened its cyber doors for business.  Over that year, I’ve written 351 posts with around 526,500 words (War and Peace has 560,000) which is the equivalent of about 2,100 double-spaced pages.  I’ve saved 5,976 charts (1.05 GB) of the 9,375 constructed. ThinkorSwim is thinking about naming a server after me for the thousands of drawing sets I’ve saved.

There have been some great calls and some not so great calls.  I almost always get the direction, price or timing right.  Once in a while, I get all three (I’m usually happy with two out of three.)  And, once in a while, I really stink up the joint.  My goal is to get most of the points most of the time, which we’ve done reasonably well.

SPX major moves since Mar 22, 2012:  715 points (1422 down to 1266, 1266 up to 1474, 1474 down to 1343, 1343 up to 1563.)  It’s worth about 9.91% plus dividends for someone who bought and held.  Total pebblewriter.com results:  1,573 points for 113% (thru Feb 28.)

I had no idea when I first started down this path where it would lead. In 30 years of following the markets, I never thought it possible to time the daily ups and downs, much less the major moves.  Then, I stumbled across Harmonics and came up with the idea of combining them with Chart Patterns and technical analysis and… here we are!

It’s been a lot of hard work, but a lot of fun, too. I’m excited about the managed fund in the works and am working hard to make it a reality. Thanks to all of you who have written to express your interest.  I will have some updates for you next week.

And, thanks to all those who have completed their questionnaires already.  If you haven’t, please take the time this weekend.  As a 1 year-old, we have plenty of room to improve.  I know about some of the needed improvements, but I’m picking up a lot of great ideas from perusing your comments.

Finally, this site wouldn’t exist without you and your support of my research.  To all who have been a part of the journey, thank you.

Michael

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ORIGINAL POST: 9:35 EDT

SPX has bounced back nicely and is facing its first important test of the day here at the intersection of the top of the falling channel formed yesterday and the rising purple channel .25.  We remain long from Wednesday.

Don’t be surprised if we see some hesitation here.  Bulls obviously need to see a break out in order to fulfill the promise of the purple Crab Pattern.  Bears would just as soon see the rally fail here and now.

As I’ve detailed already, there are many reasons for the market to take a big ol’ dump.  SPX has barely reacted since completing several large, important Harmonic Patterns.  But, it seems to be positioning itself for a run at 1576.

Either way, I’m fairly certain we’re in for lots of volatility.  I’d advise anyone with a weak stomach or without the ability to closely monitor their portfolio to consider tight stops and/or hedging.

continued for members…

UPDATE:  11:15 AM

We’re back to 1555.57, the 1.618 extension of the drop from 1474 to 1343 that began last September.  Look for at least a pause here as SPX — yet again — has to decide if it has the cajones to bust these patterns and go for a new high.

Note that the purple pattern already features a Point B.  Wednesday’s 1561 high was about a 88.6% retracement of the decline from 1563.62.  We might see some reaction to the smaller red pattern Fib levels, but it’s not necessary for the upside to play out.

If we push through 1555.57, there’s a rats’ nest of resistance between 1560-1563:

• the purple channel midline
• the very long-term yellow trend line
• the neckline of the IH&S Pattern (red, dashed)
• the former 1563.62 high

Several days ago we discussed what looked like a shift in trajectory for the dollar and the euro.  Both have been locked in very tight channels since early February — the dollar soaring and the euro plunging.

The dollar channel broke down overnight and is vacillating between a small .786-.886 retracement and something bigger (the red grid.)   The bottom of the red channel intersects with the 1.272 either very late today or Monday morning.

It would mean taking out the 82.255 low, of course, and would likely equate to the move to SPX 1560-1563 we discussed above.

The EURUSD, likewise, broke out of its falling channel.

We would usually expect a backtest of a broken channel, but these things have been wound so tightly that I’m not sure if we will or not.  EURUSD has reached a small scale .618, but I suspect the bigger test will be the top of the red channel I’ve charted.  It crosses the .786 at 1.305 — a psychologically important level.

UPDATE:  2:30 PM

Not much new, SPX grinding higher.  We’re getting quite a bit of consolidation around 1555.  We’ve also completed another IH&S Pattern (yellow) within the right shoulder of the larger one (in red.) This one targets 1572 — which supports the red Crab Pattern 1.618 at 1572.69.

It’s not really necessary, as the larger red IH&S targets higher — but there’s nothing wrong with wearing belts and braces.

As we discussed the other day, the 60-min RSI channel has evolved to one a little more gently sloped — which translates into more upside as the falling grey channel is out and the purple is in.

I have a strong suspicion that, if it doesn’t break out (or crash) today, SPX will close around 1563 — the red neckline and long-term TL — in order to leave us in suspense over the weekend and provide for a futures-based gap open on Monday.

However, and I can’t emphasize this enough, all the ingredients are in place for a significant downturn — especially if we close below 1555.  If you’re the type who can’t handle even a small chance of seeing the markets open down 35 points, this would be an excellent weekend to go to cash or at least hedge your portfolio.

The stage has been set for a leg higher, but there’s no guarantee that the Cyprus mess won’t get much messier in the next 72 hours.  I expect it to resolve itself, if only after a great deal of arm-twisting and maybe even civil unrest. TPTB got a great preview of how the markets would react to a fail.  And, I suspect they’ll do what they have to to keep the leaky life raft afloat.

But, who knows?  I’ve talked a lot about the big picture and the forecast possibilities over the past week.  It’s time for the market to put up or shut up.  One last chart to chew on as we go into the final hour of the week:

I have to get on the road for a quick trip.  I’ll keep an eye on things, but probably won’t be able to post again until tonight.

4:15 PM

One last chart…just too hilarious.

An hour ago I wrote how important a close above 1555 was to the bulls’ case.  Apparently, I’m not the only one who felt that way.  Check out the trading in the last 60 seconds of the day.

I have a lot of updates to post over the weekend: DJIA, NDX, CL, AAPL, VIX, FTSE, COMP, NYSE…  I’ve been holding off until we knew whether SPX would break or not, but I think we just found out.  I’ll also post some more fund-related Q&A.

Have a great weekend, everyone!

 

UPDATE:  MONDAY 3:30 AM

Just returned home from traveling, where I had no access to a high-speed internet most of the weekend.  The updates to the secondary indices will have to wait until Monday.  More in a few hours.