Setting up House in Crazytown

SPX reached Mike Vacchi's Bet The House level yesterday, stayed there for minutes rather than hours, and then retraced seventeen points before bouncing. I had a really fun day after three days of dreary intraday tape this week, and it was great to have a two sided day. What had the bears actually achieved by the end of the day? Um ......... well .......

Not a great deal really. A marginal lower low was made on SPX for the day but while that might be interpreted as a downsloping H&S forming, it can equally be interpreted as a sideways megaphone forming here. We will need price to set direction today to see whether we are finished on the upside short term. If we get back to Bet The House, which is at 2043.50 ES today, then I'll be looking for short entries again. SPX 5min chart:

On the 60min chart the low yesterday was the first test of the important 50 hour MA support level since the break back up over it at 1890. That showed at least some sign of life on the downside, but wasn't inherently bearish. SPX 60min chart:

At the high yesterday SPX pinocchioed megaphone resistance slightly. If we spend much longer up here that trendline may start looking ragged, but I'm not expecting a sustained break over it before a more significant retracement. SPX daily chart:

I've mentioned a target at 88.80 on USD a few times over the last few weeks. DX has formed a triangle and broken up from that with a target in the 88.80 area, and I'm expecting that target to be made today or tomorrow. DX 60min chart:

We have now spent an amazing six days in Mike's Crazytown zone, and having made it through the first few hours in this area, which is generally all we see, ES is settling down, picking out drapes and checking out local schools. This won't last indefinitely and a retracement is likely to start soon. Meanwhile we should see two sided trading and I may get more opportunities to short from Mike's Bet The House level.