As humankind’s only hope for survival gather in Jackson Hole this week, we’re left to wonder whether faltering currencies, teetering emerging markets and soaring interest rates mark the beginning of the end.

We’ve examined the downside case in detail.  Yesterday, we took a good hard look at the upside case — hoping that the FOMC’s Jully minutes would settle the bet.  It didn’t.

We continue to wait for a sign.  SPX has expanded the channel that took prices from 1343 in Nov 2012 to 1687 in May 2013.  It’s perched now on the precipice of that channel.  If the Jackson Hole Gang can shoot straight and the channel holds, SPX 1823 is right around the corner (Zweig Breadth Thrust, anyone?)  If not, it’s a long way down to 1553.

I remain full long from 1642.36 at yesterday’s close.

UPDATE:  9:20 AM

Ten minutes from the opening bell… the dollar spiked earlier but has settled back without having made a higher high.

The USDJPY has made a new high, and just tested the purple channel midline after breaking out.  Possible Crab Pattern?  At the very least, it should hold value over the coming days as it seeks out the .786 or .886 at 99.05 or 99.46 to back test the white channel and the purple channel midline.

The big question, of course, is whether it can retake the purple midline or even the white channel.  Keep your eye on the falling white channel, as a break out would bode well for the large purple Butterfly or Crab Pattern completion at 106.43 or 109.47 (a favorite bullish target for quite some time.)

The eminis are up about 8 pts.  SPX should open strongly.  The first test will come at the grey channel midline around 1648.  After that, the red channel midline is at 1651.47 and the  IH&S neckline is at about 1656.

The right shoulder was a little deeper than I expected; but, the pattern continues to look like a good possibility.

Just realized today is composer Claude Debussy’s birthday.  He’s one of my favorite composers, and his popular Claire de lune is one of my all-time favorite pieces.  It’s played here by Victor Borge, celebrating his 80th birthday.  Judging from his unusually reserved presentation, I’m guessing Claire de lune was one of Borge’s favorites, too.  Enjoy!

UPDATE:  9:45 AM

Just tagged the red midline.  We’ll watch for signs of a pause here.

UPDATE: 9:50 AM

I’ll try an interim short position here at 1651.69.  Should be good for 5-6 points.  Stops at 1652.

continued for members…

UPDATE:  10:07 AM

We’re getting a nice pause here, but not much price action yet.  Note that this is the .618 of yesterday’s drop from 1657 to 1642 in addition to the red midline.  A drop to the grey midline and red .382 around 1647.76 would make sense here.

UPDATE:  10:13 AM

Stopped out on the interim, continuing full long.  Remember that yesterday’s 1657 high was the .886 of the 1658 to 1639 drop, meaning a Crab Pattern is a good possibility if/when 1658.92 is cleared.  The 1.618 is at 1670.96, also the IH&S target.

UPDATE:  10:20 AM

SPX has reached the .786 at 1653.79.  Since there was little reaction at the .618, this becomes the next most likely place for a little pullback.  I’ll try another interim short position here at 1654.  Core long remains in place, stops at 1657 or the neckline.

UPDATE:  10:46 AM

Okay, so it’s not a thing of beauty.  But, it is a perfectly legitimate IH&S Pattern.  We should get that pullback (that didn’t come at the .786 or .886) here at 1656.50 if we’re going to get one at all.

Of course, at this point, it might just drop to 1653 — breaking us even on the interim short.

If SPX can punch through the red neckline and tag the 1.618/IHS target at 1671, I’d say it’s in keeping with a Zweig Breadth Thrust that set up with the recent lows in the A/D calculation (see first chart up top.)

SPX is by no means out of the woods.  Stocks bounce off channel bottoms just before they plunge through all the time. But, it’s a great start.

UPDATE:  11:26 AM

I’m covering the earlier interim short here at 1652.26.  Full long again. Stops at 1651.50 for another short.

UPDATE:  1:17 PM

I’m guessing this is a continuation of the corrective wave off the neckline.  I expect it’ll dip down and backtest the red midline and white channel bottom intersection at 1648.65 or so.  Going short here for the 7 points each way, but will gladly switch long if this is a pennant rather than flag.  Stops at 1657.

UPDATE:  2:00 PM

Looks like we’re going to complete a little Gartley here at the .786 of 1655.62.  We’re nearly back to the neckline, so this could pop on through.  Alternatively, another wave down to the 1649.  At this point, I don’t see any value in blowing it out.  The 1657 stop should continue to be fine.

UPDATE:  3:30 PM

Back to full long here at 1656.

UPDATE:  3:45 PM

Taking profits on the long here at 1659, will short into the close and go to cash at the close.

UPDATE: 3:56 PM

Cash for the night here at 1657.  The neckline backtest isn’t yet complete, but it’s close enough and not worth holding overnight.

I have to run out for several appointments and will post more later tonight.

UPDATE:   1:30 AM

I’ll wrap with the same chart I started the day with, a potential BT on SPX.  Another day or two like this would do it…

I’ll take a fresh look in the morning.  GLTA.