SPX finally reached our yellow target yesterday, slipping just past 2127.59 and testing our resolve before reversing into the close.  From yesterday’s member section:

Recall that Thursday’s highs came up just short of a .886 tag, so it’s entirely possible that SPX will make it back to 2127.59.  We’ll set that as our upside target for now. For wave watchers, it would constitute a truncated 5th wave in a very mild 3rd from the 2072 lows [or, taking the bearish view, a completed C wave in the corrective wave from 2072.]

While investors wait patiently for the latest great news out of Greece, currencies are racing around like crazy.  The euro is taking a beating…

…which has sent the dollar soaring……which, of course, is boosting USDJPY……which is enabling the eminis to cling to a slight gain.  But, will it hold?

continued for members…There have been few instances lately of a euro plunge accompanying a SPX rally.  But, the plunge has taken place during the after hours, meaning that EURUSD could easily reverse after the cash open at, say, 1.1123 — the purple .618 — and spark a rally as it recovers.

CL has reacted very little to the USD spike, which leads me to wonder whether the dam is about to burst.  For those betting on 64.38, I’m feeling more than a little nervous here.

As we discussed yesterday, SPX’s completion of a Bat Pattern at the .886 has to be considered bearish until such time as it can break through the 2134.72 high.  So, we’ll assume all the currency twitches are just positioning, designed to keep equity prices in line until TPTB can announce the great news on Greece — regardless of whether there is any.

The next upside potential remains the 1.618 at 2138.04 at this point.  SPX came up 4 points short on May 20, and it could easily be gearing up for another leg up — though our analog suggests that USDJPY’s SMA200 will need to be tested first.

Our downside case for 2050 at the SMA200 is being stretched.  For one thing, the SMA200 is now at 2050.99 and is slowly pulling away from the pale blue .886 at 2050.52.  The other issue is the shortage of intact channels to get prices back down there any time soon.

The red channel would have worked beautifully, but we have only the gray one to rely on now.  And, it doesn’t reach 2050 until early July.  The only problem with that is TPTB’s tendency to ramp prices up over long holiday weekends, not down.  With the July 4th holiday approaching, any potential plunge to 2050 had better get started very soon.

And, that’s where the real issue arises.  Can the ECB afford the market turmoil that we’ve theorized is necessary to get the BOJ off its duff?  I think not.  We could very well experience a competition between the ECB and BOJ that would leave prices pretty much as they are.

For now, I’m inserting a new downside target (purple) at 2096 — intersection of the white .382, the broken red channel top, the rising white channel bottom and — in a few days — the SMA100.

Stay tuned.

UPDATE:  10:43 AM

VIX tells the story…another tag of the yellow channel bottom.  Pretty bearish (for stocks) looking candle so far.  But, it’s been a long, long time since it ventured north of the white midline.