The Big Picture: Apr 14, 2014

Yesterday’s 17-pt ramp job got going around 4am NYT — well before the retail sales that will be credited with the results and the pathetic Citigroup earnings that will be ignored.  Bottom line, ES has back-tested the SMA100, and USDJPY is still vacillating on the bottom edge of the rising red channel.

I’m traveling through Wednesday, so won’t be able to post intra-day.  Instead, we’ll take a quick look at the big picture and how I expect things to play out.

continued for members…   As mentioned above, ES has backtested the SMA100.

2014-04-14-ESM4 4-hr 0538If my placement of the declining channel is correct, this also represents the midline of that channel as well as the .236 of the rising channel.  I think it also supports the idea of a tag of the purple .618 today or tomorrow, followed by a potential drop to the .886/SMA200 combo if the .618 doesn’t hold.2014-04-14-ESM4 daily 0538

USDJPY clearly broke out of the declining purple channel.

2014-04-14-USDJPY 60 0548It is backtesting the midline of the flag pattern shown in yellow — after testing the white flag pattern bottom.  I show the midline at around 102.08.

2014-04-14-USDJPY daily 0548As long as USDJPY can hold the rising red channel, stocks shouldn’t suffer too much.  But, the big picture shows the potential downside for the pair when the red channel fails.

2014-04-14-USDJPY daily big 0548My best guess is that if the red channel fails, the pair will go down and test the bottom of the yellow pattern where it intersects with the purple channel .786 and the .618 purple retracement (yellow circle.)

2014-04-14-USDJPY daily MCU 0548If that fails, then a deeper retracement such as the .886 would be the next step, with the purple channel midline just below there.

Drops in USDJPY have been highly correlated with drops in Japanese equities.  So, it’s important to note that NKD has backtested the falling purple channel midline and the recently broken yellow/purple H&S necklines — all without leaving the falling red channel.

2014-04-14-NKD 4hr 0630One last note: there is a channel within a channel that indicates the downside could be over for SPX.  It is shown below in red, and represents the most bullish case.

2014-04-14-SPX red

I believe it is destined to fail as the purple takes over.  It is much more in keeping with the overall channel system based on the 1994-2000 rally.

2014-04-14-SPX wkly I show it because there have been so many instances of the very most bullish case playing out over the past several months.  Bearish patterns — H&S, wedges, harmonics, etc — have failed with much greater frequency thanks to the games being played in the overnight markets.


UPDATE:  1:00 PM

NKD and SPX back to midlines, SPX almost done back testing the H&S.

2014-04-14-NKD 60 0950 2014-04-14-SPX 60 0950


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