Need to watch the KBW here … take note of the two levels below which represent “gap support.” As long as KBW stays above these two support zones (expect the first to give away) then we are good to go …the BIG gap support is the key for me. That “should” hold if we are still very bullish …just because we lose it doesn’t mean the insanity of the “top of all ages” and “blah blah blah” is here. No, if you’ve been following this blog we’ve expected this level to be resistance for the equities …
As you have heard me say before – banks / financials lead us UP and they lead us DOWN.
Don’t get confused w/ the ‘arrows’ on the chart – they are “measured moves” and they are the harmony that causes the market to bounce around …
KEEP AN EYE ON KBW and the Banks/Financials … this SELL PATTERN on KBW has hit and has held.
Last, apologize for missing this SELL PATTERN – I simply had not looked at the KBW in a while and not until today.
This upcoming week is a big week from a cycles perspective. Not as clear cut as it was in Mid-July but STILL a time for caution. WATCH THE YEN.
This has been some rebound and move higher – across the board.
We are coming into a VERY key week from a cycles perspective and that means we could start down around mid-week or we explode higher. I was bearish going into the highs I blogged about in mid-July w/ the YEN hitting major targets and the DOW JONES hitting the measured move targets. There was a LOT of major long term targets that were hit and the market reacted downward, pretty strongly. But, that has all dissipated.
On the NYA we have a LONG TERM 1.618 projection target about 6% higher. There is also a Geometrically Derived (center of the Vesica Pisces) target a little higher. This entire zone “should” be resistance.
If NVDA blows thru thru the .786, then another target looms a little higher.
The banks have been rallying – they are NOT near the all time highs and are approaching resistance.
The XLP/NYA ratio is close to MAJOR support and if we lose that ‘neckline’ of support you can see the BUY of the ratio down at the ABCD on the .786. If we lose this support on the ratio, then I find it hard to believe the market will go down. Watch this level closely.
Even JUNK BONDS have gotten into the game BUT , again, a large target looms a little higher.
Look at the size of this candle wick in the VIX. WOWZA …
Home builders are cruising – but take a looksy a little higher and we have a major target appearing.
Here’s another target a little higher on the S&P 500.
And last, but not least, we have the USDJPY. The YEN is the big canary in the coal mine. Just a little higher is the .618 price projection and .786 and then the ABCD higher.
In July, it looked pretty clear cut that resistance was being hit .. now, it’s NOT as clear but still begs of caution going into this week.
I’m looking for the targets on the JPY to be hit …that will tell us a lot about where we are.
Here is the Banking Index PATTERN that we needed to watch and monitor. Folks, banks are everything. PERIOD. They lead us UP and they lead us DOWN. Something isn’t right at the circle K.
All things being equal, the wave that started today needs to finish 5 waves so I would step aside and let the banks pave the way … the BIG support is 83-86. Why? The red arrow is the largest price correction in the banking index since 2009. What happens at that level will be very key.
Next levels are the measured move down around 56-60 and the BIG ONE at 45-46.
