Close Encounters

April 1st, 2013
in contributors, syndication

Report written through the trading day Thursday 29 March 2013

by Pebblewriter,

Will today be the day?  Five years since the market finally accepted the reality of the financial crisis, we’re almost back to where we started.

We had a reversal at the .618 Fib, the .786 Fib (for a Gartley Pattern), the .886 Fib (for a Bat Pattern) and are now approaching a double-top triple-top.

What will the market find when it gets there?  Will it have scaled its own Devil’s Tower, only to find that the other side falls away just as steeply?  Or, will a giant mother ship with an awesome sound system swoop down and carry it to another universe where debt is irrelevant and short-selling is prohibited?

Stay tuned.

Follow up:

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The Crab Pattern that begun with the May 2 peak (in white) is only 5 points away from completing.  After that, the double-top looms at 1586.75.

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Just how close are we?

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UPDATE:  10:00 AM

The markets opened slightly higher, waiting for economic news that came in mixed.  Beating estimates: GDP, personal income, spending.  Missing: Chicago PMI, initial claims.

Re the PMI, ISM say:  BUSINESS ACTIVITY,  NEW ORDERS - fell sharply after three months of solid gains; PRODUCTION - lowest since Sep 2009; ORDER BACKLOGS - ninth month of contraction in the last year; INVENTORIES - fourth contraction in the last six months; SUPPLIER DELIVERIES - longest in 15 months. BUYING POLICY, CAPITAL EQUIPMENT - longest since September 2012; MRO SUPPLIES - longest since May 2012.

Crummy report like that, should be good for SPX 1571 or so. Needless to say, we remain long.

The big picture for SPX…

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A whole cluster of harmonic targets have been tagged without reaction — so far.

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A close-up…

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UPDATE:  10:35 AM

I updated the COMP page last night.  EURUSD and RUT coming up.

Here’s an overview of the patterns at work in SPX.  I realize there’s a lot going on there, but the important completed patterns are:

  • completed Crab Pattern from 1370-1074 (red) at 1553.39
  • completed Crab Pattern from 1474-1343 (yellow) at 1555.57
  • completed Crab Pattern from 1530-1485 (white) at 1559.32
  • tagged LT trend line (yellow, dashed) from 1994
  • tagged IH&S target from Feb 13-Mar 4 (red) at 1565.69
  • tagged the previous closing high at 1565.15

The as-yet uncompleted patterns are:

  • the small purple Crab Pattern 1.618 at 1579.10
  • the small red Crab Pattern 1.618 at 1576.46
  • the IH&S target from Mar 18-Mar 25 at 1583.17
  • previous all-time high of 1576.09

Of all of those, 1576.09 is the one that matters.

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The RSI charts are giving higher prices the go-ahead.

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UPDATE:  12:20 PM

SPX reached 1568.30, in excess of the previous closing high, and is tang a pause here. Look for a backtest of the 1564.90 high and/or the yellow trend line.  I’d use the little red channel as a guide for any intra-day trading.

It’s currently around 1564.65 and rising at a slope of 8-9 points per session. As drawn, its upper bound crosses 1576.09 at the closing bell.  Would we have it any other way?

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UPDATE:  3:15 PM

SPX’s steady advance has had all the drama of a flossing exhibition.   We just got the first little dip outside the channel I drew over 5 hours ago.   This, along with a couple of members’ questions, prompts me to discuss my game plan.

Click to enlarge

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