The first signs of a technical difficulty has been registered in the dollar index – a violation of a 3 month rising channel in overnight trading. Looking closer, this could be the beginnings of a head & shoulders pattern setting up (both head and right shoulder have been accompanied with bearish divergence of higher prices, lower momentum). This is bullish for the stock indicies which will rise to keep all things equivalent, as well as commodities which have seen a staggering decline this last month.

In early trading, the S&P gap up to form a small island reversal from the previous Monday’s downdraught. A high of 911 is registered as the rising channel is recaptured.

3:40pm update – a small bearish divergence shows on the 5/10/15min timeframe charts = higher prices, lower momentum. This suggests a profit-taking wave will take place in the final minutes of the day. Expect something like the 14 handle swoon that took place after 911 was tagged into the first lift.

7:40 pm update – The pullback is a bit larger than expected, resulting in a 17.75 handle downdraught. As part of larger a-b-c measured move, a bullish gartley pattern is on the radar into a 78% retrace of the 26.5 handle advance off the intraday lows. Thanks again to rin for providing an excellent chart analysis.

What are the possible S&P targets into this lift? The following is a chart posted in the b-line traders room by Rin outlining Fibonacci and measured move target levels on the ES emini futures contract: