[4PM Stocks and Euro]
Resolution tomorrow ? As you can see in Chart 1 of the Sept SP mini, there are two ways to count the decline ([i] of 3-down in the more bearish case) as being complete at today's low (light blue labels and the bordered labels) while there are two ways to count the decline as being missing a final drop to lower lows (green labels and blue labels).
So far, the rebound since this morning's low is more corrective than impulsive (chart 2, SPX cash), unless we assume a LD advance.
Price actions overnight and tomorrow should bring about resolution of this uncertainty.
Positive divergence between US stocks and Euro/USD. One piece of observation which may lend some support to the possibility that a near term low in stocks may be in place is the positive divergence between stocks and EUR.USD (Chart 3). The caveat is as discussed above - no confirmation yet and a likely corrective rebound so far off the lows.
EUR.USD has broken above the overnight high as well as yesterday's high after the FOMC announcement (potentially reflecting better carry as well as the Fed's downgrade of the U.S. economy) while major U.S. stock indices have so far unable to successfully challenge the corresponding highs (Chart 1).