Staying Alive

SPX has continued to sell off, if tentatively, since we called for a reversal after Monday’s Bat Pattern completion.

But, it hasn’t yet left the comfort of the rising gray channel and is back above the purple channel midline. For now, the all-is-well meme is staying alive.

Along the way, VIX revisited the yellow channel bottom……while USDJPY bounced where it needed to……and, CL kept its rising channel alive — so far. Like SPX, it’s on the cusp of a significant breakdown.With Greece acting as the canary in the global financial markets coal mine, can we really tell what’s coming next? There are quite a few clues.

continued for members…

First, CL has gone essentially nowhere for about 7 weeks. With SPX having completed the Bat Pattern and CL hanging by a thread, I think the next move is down — likely to the white channel midline at 57.94 or bottom at 49.72 — but potentially to test its former lows.

Then there’s EURUSD, which is straddling the fence between bullish and bearish.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. As we discussed yesterday, that would be unusual.

Yet, several of the potential downside targets for SPX suggest the same outcome — if, of course, the white channel bottom can be broken and the SMA200 tested.

Shorter term, our targets remain the same as yesterday’s. SPX should find support at the bundle of moving averages between 2105-2107 (the 10, 20 and 50.) But, if those fail, a backtest of the falling red channel is in order — followed by our 2050 target. The SMA200 is now up to 2051.57. The rising gray channel should provide strong clues as to the intra-day moves. A close-up: Last, note the negative divergence between SPX’s price and its daily RSI — which is bumping into a falling TL (white) from early in the year. Of course, it’s also bouncing back and forth in a rising channel (purple.)