This morning’s rally is pretty good confirmation that our analog is playing out.  I’ve spent 18 of the past 24 hours charting, and have some additional info on what to expect from SPX, ES, DXY, USDJPY, EURUSD, TNX, ZN, RB, CL and, of course, VIX over the next two months.

I’ll post it later today, but I’ve yet to come across anything that concerns me from a charting standpoint (i.e., conflicting signals.)  But, of course, there are any number of things that could throw it off track or bust it all together.

One example is Deutsche Bank.  I don’t usually post about individual stocks, though I do a lot of charting on them for consulting clients.  In this case, I had a client who was trying to decide whether to throw in the towel on the stock.

I called the bottom 2 days and 4 cents early at 11.23 on Sep 27, 2016 [see: Deutsche Bank – Will it Survive?] and it dutifully bounced up through our various targets until reaching the last target (20.43) I laid out in our Dec 7 post on the stock [see: Deutsche Bank – Another Pause or More?]My view at the time was that DB would correct modestly.

If DB makes a meaningful reversal here, the rising white channel I’ve sketched in should take form – opening the door to a deeper backtest and fleshing out the rising white channel. It emerges from the falling red channel around Jan 13 at 14.30ish. But, the more conservative target would be the midline at 16.90.

As it turned out, DB topped out at 20.94 (after gapping higher, gaining 5.6% that day alone) on Jan 25, and reached 16.90 (-19%) less than 3 months later.  It didn’t stop there, however.  It dropped on down to and through its SMA200 and a 50% retracement of its rise where it finally bounced at 15.79.

Since then, it’s been bouncing back and forth between roughly 15 and 20.  This has been going on for almost a year, since March 2017.  It’s enough to make you wonder where senior management’s incentive stock options are priced.

The Feb 2 drop was a real blow — the latest drop through the SMA200. As of this morning, DB had dropped 22% since Jan 24.  It’s in line with the string of 20% drops and 20% rallies which had occurred every month or so through last September.

But, this one looks different from a charting standpoint.

continued for members…

As well as the rising white channel fits the turning points, it does a poor job of corresponding with Fib levels.  And, it argues that today’s lows will hold — which doesn’t jibe with the analog I’m watching.

Let’s look at some other potential channels.  The one that makes the most sense is the purple channel.  It captures the lows nicely, while making sense of the Feb 5 breakdown (drop through the midline) and leaving open the possibility of a drop to the .886 at 12.3 if the SHTF.If our analog continues to hold, that isn’t going to happen just yet.  We should get an interim low around Mar 1, followed by a high around Apr 3.  That suggests that the red channel might be the operative one for now — arguing for a tag of the white .146 and purple .618 (14.72-14.91) around Mar 1.

This would be a more solid base from which to rally into early Apr — say, the SMA200 if fortune smiles on DB.  The lottery win would be more like 23.28 or even 26.14.

And, if things go badly after Apr 3, then the red channel would break down and open the door to 12.30 – another 24% drop from current levels.

UPDATE: Feb 13, 2018

Showing the other channels which align with our Fib targets.