Here Comes the Boom


I posted this chart early Friday morning, knowing full well that in order for EURUSD to follow our forecast… equities might not.

Thanks to the miracle of after-hours trading, the EURUSD has kindly tagged our target “c?” and has rebounded — all without a nasty hit to equities prices which look to open in the green in a few hours.

UPDATE:  9:35 AM

We remain long from Friday at 1426.  But, tight stops are recommended here since the potential remains for an intra-day tag of the 1.618 at 1422.43 before the rebound gets going in earnest.

This is a minor harmonic level compared to the .618 tag of 1426.34 Friday, but it would put a period on the downside since 1470 on the 5th.  For a full discussion, see the 11:35 update to Friday’s Charts I’m Watching.

Watch for a reversal off the small white channel or the yellow channel line just above.  If SPX can break out of and successfully back-test the white channel, we should see some very healthy gains over the next few days.

Some well-defined trigger points on the 15-min RSI — the white channel mid-line that’s currently being back-tested at and the dashed, red TL showing this morning’s trajectory.  If both were to hold, it would be very positive for this rally.

If both break, look for support at the bottom of the white channel — probably our 1422.43 mark.  Such a move would be healthy for SPX, as it would clear out much of the immediate harmonic-based downside.

A somewhat analogous situation exists for AAPL at its .618 of 621.6.  The low of 623.55 on the 9th was close enough, but bagging the actual .618 would establish a more solid foundation for either a retracement to a Point C (if the top is in) or the Butterfly that began in April to play out to 719.

Either way, it clears the way for a 50+ point rebound.  But, holding the 620 level is key.  As regular readers know, I don’t typically play individual stocks.  I don’t like the event risk.  But, we occasionally chart AAPL just as a bellwether.

There’s even a nice little Butterfly Pattern that points the way.

UPDATE:  11:25 AM

SPX has broken out of its price channel, and the 15-min RSI is very close to confirming.  Looking for a break of the yellow, dashed TL.

I’ll post some upside targets shortly.


UPDATE:  1:30 PM

We got the breakout we were expecting, and SPX has paused here at the intersection of three different channel lines as well as the .786 of the last harmonic pattern down.  It strikes me that this is a good time to review our various targets and to handicap each in terms of its likelihood.

If we’re lucky, we’ll be able to extend the month’s already nice gains (≈ 9%.)  If not, it’s a great opportunity to go on record and embarrass myself.

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