SPX nailed our initial downside target yesterday. We had forecast 2090 back on Apr 23 (with SPX threatening to break out at 2117.66), and in fact it tagged 2090.62 midday before putting in a modest bounce and settling lower. From the April 23 post:
Though the 1.618 is only 18 points away at 2138, I don’t think SPX is ready to take a run at it yet… I’d be shorting here at 2118.85, with a target at 2090 and stops at 2125 or so.
Currencies are driving everything this morning. But, don’t look for those charts to make any fundamental sense.
In the wake of the announcement of no QQE expansion, the yen is…weakening?
And, after beating its head against a major Fibonacci wall for two sessions, the euro is suddenly… strengthening?
What we have here is a May Day, low-volume algo-splosion ramp job that’s unhindered by real global investors with legitimate economic concerns.
Follow it if you like, because these days the fake “market” moves are often more powerful than the real ones.
Asia is closed for the weekend, and most European markets are closed in observance of Labour/May Day.
Germany, France, Spain, Italy, Austria, Belgium, Switzerland, Denmark, Finland, Sweden, Norway, Greece, Iceland, the Netherlands, Portugal and most of Eastern Europe are closed all of Friday.
The eminis are taking advantage, up 10 points with a minimum of effort on the part of those scripting today’s moves.
USDJPY should run out of steam at 120.11 — also the red channel top — which should shift ramping duties to CL if it is so inclined.
There are a few news hurdles to be dealt with, so best be nimble around 10AM EDT — especially if SPX hasn’t ramped up past the H&S neckline (resistance at 2098ish) by then.
More shortly.
UPDATE: 10:30 AM
Well, the data was pretty dismal. ISM was flat, but a miss versus the 51.9 consensus. Construction spending was supposed to be up by 0.4%, not down 0.6%. And, sentiment was flat but a slight miss from the 96.0 the market expected.
Aside from the usual overshoot fakeout on USDJPY, how does it affect our stock forecast?
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