Will this make 19?  It seems a little ridiculous to focus on the day of the week, when in fact the market has been up almost every day for the past six months.

Since the Nov 2012 low, we’ve seen three corrections of any consequence on the eminis:

• -4.4% over six sessions in late December 2012
• -3.1% over four sessions in February
• -3.9% over five sessions in April 2013

If ES tags 1675 today, it will have gained exactly 25% in a little over 6 months.  Interestingly, the beginnings of those three downturns have lined up fairly well with a time Fib grid, seen below in red.  And, the lows have come at fairly regular intervals.

If the pattern holds, we could be nearing the beginning of the fourth downturn, with a low to come around June 3-4.  Could it be more than a whopping 4%, or is that all that’s programmed in?

*   *   *   *

The dollar is back-testing its channel midline…

 

While the EURUSD is pushing up against its channel midline…

The futures point to a higher opening.  So, we’ll play along on the upside with an interim target of ES 1675.

Note that this is the intersection of the 2.618 extensions from both the 1419 to 1262 decline from Mar – June 2012 and the 1468 to 1340 decline from Sep to Nov 2012.

We’ve certainly seen more than a few Fib patterns bust lately.  But, these two offer the benefit of intersecting there with the top of a relatively significant channel – shown below in purple.

 

UPDATE:  10:10 AM

SPX just completed a Bat Pattern at the .886 of the small white pattern and is reacted fairly strongly.  Yesterday, SPX didn’t quite reach the 2.618 established by the Mar-Jun 2012 decline:  1672.84 v 1674.21. But, it might have been close enough.

SPX also came very close, but didn’t quite tag, the IH&S target of 1673.50.  I’m leery of a fakeout, but we’ll see.  A drop through the previous low of 1663.52 would be a good sign.

I’ll take a short position here at 1670 just in case, with stops right at 1670. Charts in a few…

UPDATE:  10:35 AM

Are we in for a 4% decline over the next 7-10 days?  And, if so, how might that play out?  Is there any chance of a bigger decline?

SPX just pushed below the red channel midline.  So, this downturn is definitely in play. The bottom of the red channel is very close to the purple TL from 1994/2002 later today at 1650 — which would be a great start and a .886 retrace of the 1648-1672 rally (red pattern below.)  This is also the location of the purple channel .75 line.

We should expect a bounce there, as the red channel dates back over 30 days in its own right.  A bounce back to the yellow TL or so (1665) would be quite normal, and would set up a Bat Pattern on both the purple and yellow grids.

The purple midline, purple .786 and red 1.618 all intersect Thursday at 1633-1634.  Here, we would expect to see another bounce.   And, if this correction was to be smaller than the rest, this could be the end of it.

If it bounces up to, say, the purple .75 line, it will have set up a Bat Pattern on the yellow grid and a Butterfly on the purple.  The purple 1.618 and yellow .886 intersect at 1591-1592 early Thursday morning, so this would be a more severe sell-off than the move in the paragraph above.

Otherwise, we might look for the yellow .786 which intersects with the bottom of the purple channel around the 30th at 1600.87 — a 4.3%, 8 session decline from 1672.84.

UPDATE:  11:40 AM

Well, that was exciting.  Not.  SPX is back above the red midline, retracing .618 exactly of this morning’s decline.

Interestingly, the dollar got whacked by this retracement.  Prior to this morning’s opening, I was expecting DX to sell off to 83.609 by tomorrow’s opening.  It would set up a 1.618 extension to 85.075 — same as the light blue 1.618 from the decline from 83.66 on Apr 4.

It appears likely that this tag, if it occurs, would come at just after midnight tonight (EDT) — at the intersection with the bottom of the purple channel.

UPDATE:  12:11 PM

SPX is coming up on 1670, the .786 of the drop from this morning’s high.  As such, I’m hesitant to blow out the short position, and will give the stop a little more leeway — up to 1672.

UPDATE:  1:06 PM

Getting a push through 1672, so I’ll take an interim long position and see if we can get a proper tag at 1674.21 or 1686.73.  Note that 1674 is the 2.618 of the Apr – Jun 2012 drop from 1422 to 1266.

1686.73 is the 2.618 of the 1474 – 1343 drop from Sep – Nov 2012.  Unlike the eminis, these two patterns for SPX do not coincide.

 

UPDATE:  1:09 PM

Didn’t take long.  Closing the long and full short again unless SPX can push through 1675.

With that said, it’s becoming more and more difficult to see the downside scenario. The bounce off 1662.67 came right at the yellow TL from 1994-2002, which I have though was an important line in the sand. A day or two push above wouldn’t necessarily guarantee a continued rally, but the longer we spend up here, the more established the trend becomes.

UPDATE:  3:45 PM

I have no idea what might transpire tomorrow that might be negative for the market.  Well, I do…but, I can’t imagine it actually happening…

If the market reacts negatively to whatever Bernanke has to say, here’s my best guess as to the next few months. Here’s the close up through the end of June:

And, the bigger picture:

I have a lot of fine tuning to do, but I’ll wait until the direction is clear.  If the market likes what it hears, of course, we could shoot up another 10% without the drop to 1600 in early June, bounce to 1666, then drop 1576 in September.

I have to get on the road for a meeting and won’t get back until very late.  So, I’ll catch up with everyone in the morning.  I’ll hold short into the close, with stops still around 1675.

GLTA.