pebblewriter

One Step Backward

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When broad indices such as the S&P 500 can be easily managed via HFT, currency manipulation, etc., capitulation is practically unheard of.  The most we can hope for is to recognize that a planned move is about to get underway.

Yesterday, our targets worked out beautifully.  Things never got out of control — thanks in large part to the carefully controlled rebound in USDJPY.   Note, however, that the well-defined rising purple channel broke down this morning…2015-0707 USDJPY 60 0600  … which means that the 15-pt ramp job in ES came undone in the last six hours.2015-0707 ES 5 0600There are two reasons this was permitted.  One: in order to relieve the pent-up selling pressure on the euro.  Note that it is closing in on our target from two weeks ago, albeit a few days late.  In our last update on the euro [see: Staying Alive] we noted:

Yesterday’s dip below the purple channel midline and today’s backtest suggest further downside.  I like the idea of it, but the timing suggests a 4th of July low.

2015-0707 EURUSD daily 0600The other reason is that once in a while you have to take a step backwards in order to facilitate the next two steps forward.

continued for members…

For SPX, this might mean finally tagging the support it’s been attempting to reach for the past week: the SMA200.  Yesterday’s lower downside targets remain in place until such time as EURUSD and USDJPY find support and start rising again.2015-07-07-TSPX daily 0645The SMA200 is at 2055, while the red .886 we discussed yesterday is at 2050.52.  Either would suffice, though I have long favored 2050.

Stay tuned.

UPDATE:  10:09 AM

Finally, the SMA200 tag.  Traders should go long here at 2055.19, but we’ll watch for signs of a further dip to 2050.  The immediate objective is to again rejoin the purple channel whose bottom is around 2065.  Loose stops are recommended.

2015-07-07-SPX daily 0709UPDATE:  10:30 AM

SPX dipping below the SMA200, appears headed for 2050. 52.  I’d play along for the extra 5 points, try a long again there.

Keep an eye on USDJPY for the reversal — probably somewhere between 122.07 and 122.10.

2015-07-07-USDJPY 60 0733Remember, if it gets rolling, 2039.66 is the next major support.

UPDATE:  10:41 AM

Still dropping, but just tagged the bottom of the red channel at 2046.17.  CL just tagged the white .786 as well, so this is likely nearing the end.  I’d take another stab at a long position here.

2015-07-07-SPX daily 0740CL’s daily chart shows the initial dip to the white .886 at 42.41, follow by a move almost to the white .618 at 64.38.  That rally failed at the purple 1.618, and has instead settled for a backtest of the broken .786.  I’ll be surprised if it doesn’t bounce here, to at least back test the broken white channel (54ish.)

2015-07-07-CL daily 0740UPDATE:  1:00 PM

SPX just reached our bounce target of the broken purple channel bottom.  I’d close the long position here at 2067 and call it a (very good) day.  The rest of the day is likely to be — to use a technical term — pretty squirrely.

2015-07-07-SPX daily 1000


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