Monday’s Big Picture update was one of our most important posts in a while. It not only explains the past several months, but offers specific price targets going forward into next year. 

If you’re new to pebblewriter.com or have been away for a while, we’re offering a great way to get acquainted.  Auto-renewing monthly subscriptions are available for half off the first month.  For details and to sign up now…

CLICK HERE!

 *    *    *    *    *

In May of 2015, SPX completed a huge Butterfly Pattern set up by the 57% drop between 2007 and 2009.  It helped us call an important top [see: The Last Big Butterfly] and made for some pretty profitable shorting opportunities.

Since then, as TPTB wrestled with a way to get SPX back above 2138, the Dow slowly worked its way higher.  Just Monday, it came within 40 points of completing its own Butterfly Pattern for the same time period.

Might this signal another important top?

continued for members…The daily picture shows a deep dedication to breaking above the 2015 highs and backtesting the falling channels established by the subsequent drop — whichever channel you happen to like.Forty points is nothing to the DJIA – a measly 0.2%.  So, it would take very little effort to push it on through.  However, as we’ve been discussing for the past several days, SPX is currently in need of a 1.5% retracement to backtest its broken white channel and, most likely, its SMA10.

Note that the SMA10 finally poked its head above the channel top today (the yellow arrow.)  Since moving averages are generally calculated on a trailing basis, it won’t officially be there until tomorrow — provided prices hold at current levels or slightly lower.  So, there’s the possibility that we’ll have to wait a bit longer.And, the pieces are in place.  USDJPY has reached our next upside target at the white channel top and the white 1.272.VIX’s rising red channel is holding.And, API reported a much bigger than expected inventory build yesterday, which means that CL reversed at the top of its falling purple channel as expected.  The EIA will have an opportunity to bless those data with its own at 10:30 ET.UPDATE:  10:40 AM

EIA inventory report shows a much bigger build than expected: 5.27MM barrels versus forecasted 1.5MM.  CL sold off initially, but has since rallied back to yesterday’s highs.  You can read the report below.  There’s absolutely nothing bullish in it other than the fact that output dropped a bit (duh… who increases output when prices are dropping?)

Coincidentally, the Russian energy minister chose this very moment to announce he sees “big chances” for OPEC to agree on an output deal by Nov 20.  Obviously an impartial, observation completely divorced from any self-interest.