Helicopter Ben provided a lot of excitement yesterday and as he spoke, there was a very impressive hourly candle downwards. There was a lot of talk on Monday of how the equity markets were rallying because if they fell, the Fed would embark on another round of quantitative easing, but that seems to be asking a lot of a threat of action rather than the action itself.

As a matter of fact, I suspect that is exactly the way the summer will end, but I don't think that the Fed will do that until the markets have fallen a lot more than they have as yet, and I don't think the markets will rally until QE2 gets going for real. Ben will have to show us the money rather than just point towards his printing presses. 

My rather sloppy declining channel on SPX was respected yesterday and looks likely to continue to be respected IMO. Some bulls have been talking about a big IHS pattern forming, but the action over recent weeks makes a rather better downsloping H&S pattern:

On ES we've seen an impressive recovery overnight, which I'm very happy about, as I haven't finished building my short position for the next few weeks. The ES forecast that I posted yesterday is predicting chop with a downward trend for the next few days until the decline begins in earnest near July 28th, and I'll be selling this rip and others until then.

A very possible ES rising channel was broken overnight before the rise began and I have a candidate declining channel to replace it, which fits the sideways to down chop in the ES forecast pretty well. Resistance at 1084.5 is a possible high today if this rise gets that far:

Signals are as mixed as ever. Bonds made a new high for the year which is a strong bearish indicator for equities. Copper rose strongly which is a strong bullish indicator for equities. EURUSD retraced hard yesterday, but has not broken back through the broken wedge upper trendline, also leaving a significant question mark over direction. 

Oil broke the recent declining channel yesterday, and is retesting the broken channel trendline as I write:

On the currency markets, GBPUSD is still within the rising channel of recent weeks:

CADUSD has formed a triangle since the top in April which is compressing to a point. For obvious reasons I am expecting this to resolve down, but I hate trading triangles as  they frequently break one way before resolving in the other:

AUDUSD has been testing the strong resistance level at 88.565 again overnight, and as I write has broken up through it. That is looking very bullish as you can see from the chart:

Signals are still very mixed here but I'm still leaning strongly towards the bear side on balance. I would be concerned to see a break of 1090 ES in the next few days, though I'd be happy enough to see an intraday spike to fill the open gap at 1093 ES and turn back there. Key resistance remains at 1099 ES, and a break of that would be a strong signal to get out of shorts IMO, while we saw whether the June high would hold.