with Anthony, ZigZag & Platy
It has been my expectation that this market is working its way up to an important high around the 3rd week of September. On Friday i banked my chips after the news that the ECB has initiated a bond purchasing program in order to stabilize the European region. Do i think there is more upside left in this. Yes i do, i think this market could reach as high as 1360-1370 by late September. So why have i taken chips off the table. Well i think that we are heading into a period of extreme volatility and whipsawing as we make our way up. Whilst i see the potential of further +pts maybe 20-30 pts i want to be on the correct side of this trade to the short side and sit out the Fed meeting shanningans.
The dollar chart below is already extremely oversold, however now we have broken the mid channel of the Andrews Pitchfork (posted weeks ago) there is the possibility for much further downside. The CIT time have been highlighted in blue 10-12 Sep and 19-21 Sep. I do expect a retest of the mid channel, its possible that news of QE3 at the Fed meeting sends the dollar back down again into the next CIT time frame which would coincide with an equities high in the same period.
I think that the dollar is showing that we could see further upside by early next week causing an S&P high in the region of 1450 a number a lot of other analysts are calling for. After this a decline into the Fed meeting and then a final pop to new highs. I may be tempted to take a pop at a short if we end up higher on Monday but for now as usual its wait and see, i also may be tempted to buy the close of the Fed meeting if its a down day. Its not going to be easy going into the meeting so i suggest if you have already made healthy profits from the run up to bank them. There are always other opportunities.
The S&P500 CIT dates for this week are
10/11 Sep & 12/13 Sep
So you can see why it is going to be a volatile week. After the fed meeting we should continue up into 19-21 Sep.
Have a great weekend