Moment of Truth

It is perhaps fitting that SPX has waited until today to peak again. Today is Mario Draghi’s last press conference as president of the ECB but also as presider over the great monetary experiment which has kept the euro zone on life support for the past 10 years.

SPX is poised to reach 3004.51, our favored upside analog target which I had all but given up on. The futures already reached it and, then some…. …tagging the highest of the targets we set back on Aug 27 [see: Analog on Track.]

Yes it’s very late. But, as they say…better late than never. SPX’s version is 3004.51.Whether or not the futures can cling to a small gain until the cash market opens is irrelevant to. From a Fib standpoint, yesterday’s finish is close enough. What matters is whether we get the swift downdraft to new cycle lows that the analog forecast in July.

Meanwhile, core CPI just topped estimates, reaching levels not seen since September 2008. More fuel for the no-rate-cut camp. With the Fed unlikely to unveil any dovish surprises next week, stocks will have to rely on Trump’s next trade-related-say-whatever-it-takes-to-reach-new-highs tweet. It has always worked before. How many times, however, will the algos fall for this crap?

continued for members…I’m going to take a break and watch Draghi’s press conference and will be back later with commentary on this morning’s charts.

Here’s the rest of that chart from above with the actual price action since it was drawn on Aug 26. In it, I haven’t changed the start date to July 30 as we’ve discussed many times. With that change, the forecast low of 2792 would occur tomorrow, Aug 13.USDJPY is backing off the channel top.The euro is dropping again in reaction to Draghi’s “whatever it takes ’cause we’re all screwed” blather.CL and RB are tumbling.And, VIX seems content with a 14-ish low.

All of this points to a pop and drop for SPX — establishing a candle much like ES will have constructed.

ZN should bounce nicely here, perhaps taking out the recent highs but at least reaching them. And, gold should get a nice bounce here off the purple midline — ideally reaching the .618 at 1588.20.

I don’t know how high SPX will pop on the open. But, if it were to reach exactly 3004.51 then the C=A target would be 2798.65 – quite close to the white .786 at 2792.83.

UPDATE: 9:45 AM

Looks like 3013.26 is the top, putting the C=A target at 2807.40 — still below the SMA200. If the goal is to get the target up to the SMA200, SPX will need to bounce a little higher to, say, 3019-3020. 3020.82 would put the C=A target right at yesterday’s closing SMA200 of 2814.96.

UPDATE: 10:45 AM

Just heard that Trump is weighing additional changes to the scheduled tariff terms. It’s truly unbelievable how brazenly Trump, Mnuchin and Kudlow are willing to manipulate the market higher. Don’t get me wrong, every president has done it. But, these guys don’t even both to cover their tracks.

If the algos ever call BS on this ploy, look out below. At 3019.64, the C=A target is adjusted to 2813.78 vs the SMA200 of 2814.96. Getting pretty close to line-in-the-sand time.

The bears desperately need CL to collapse below that little red TL.

…and USDJPY to put in a meaningful reversal. Come on Abe/Kuroda, you really want to put up with four more years of this stuff? VIX has slipped to the white channel midline — important support. Quick heads up, I’m going to need to be out of the office from 11:30am to 2:30pm. I’ll be watching the market but unable to post during that time.