Things are on track for the big Butterfly pattern to complete very soon — even as soon as later this morning. For those who have been following this website for any length of time, this is a major milestone we’ve been anticipating since Mar 29, 2012 — shortly after this website was launched [see: All the Pretty Butterflies.]

The S&P 500 is one of many major indices approaching or reaching important Fibonacci reversal levels, as we discussed last week [see: Around the World.]

To recap the current state of affairs…

• The Nikkei reached 15,597 this past Friday.
• The NYA already came within 13 points of our 10,239 target.
• The DJIA is only 200 points from our 16,300 target.
• The FTSE 100 is only 6 points away from our 677 target.
• And, SPX is only 15 points away from the 1823 target.

It bears repeating that these harmonic targets — being so large and from such a long time ago — rarely provide on the nose reversals.  The April 2010 reversal, after climbing from 666 to 1219, came up 9 points short of the .618 Fib level.

The May 2011 Gartley Pattern completion came up 11 points shy of the .786.  The September 2012 Bat Pattern completion, on the other hand, overshot the target by a couple of points.

Bottom line, when you’re within 1% of a target after a 1,142 point move (from 666 to 1808) it’s hard to predict exactly where things will turn.  It also bears repeating that these patterns, though not known to all, are known to many large institutions that — with relatively little money — could decide to blow them out of the water if it suits them.

These are the same institutions which have a very strong vested interest in a market that never, ever declines.  They peddle mutual funds, underwrite stocks and bonds, facilitate M&A transactions, and have huge trading books of their own (not to mention trillions in derivatives.)

With the Fed throwing free money at them, how hard would it really be to run prices up past a key resistance level?  We’ve seen it happen many times in the past year alone.

As always, trade safe.  Volatility will be elevated this week.

UPDATE:  9:40 AM

ES just backtested the purple channel midline and should be headed for the red 1.618 at 1815.35 as soon as SPX fills this morning’s gap (1804.84.)

UPDATE:  10:00 AM

SPX gap almost filled, should flesh out the rising white channel.

UPDATE:  11:55 AM

ES and SPX are a little out of sync.  ES overshot the purple midline, and has been straddling it ever since — hinting at a backtest of the last minor top at 1800ish or the white .500 at 1800.67.

UPDATE:  3:10 PM

ES just reached 1800.50, which should offer decent support.  As mentioned earlier, we should see a reversal here.  If it slips any lower, the next support is at 1798.59.