Charts I’m Watching: Apr 2, 2015

Yesterday’s evil plan was going so well… until CL-driven algos snuck in and unwound it all with a very impressive (even for it) ramp job.  We’re left to wonder whether the purple channel might continue to hold, in which case it’s going to be tough for equity bears to make any headway.  Note last night’s usual reset of the day’s ramp.

2015-04-02-CL v DX  60 0601We discussed this last week.  With DX and CL so strongly negatively correlated now, a bearish move in USDJPY (pair drops due to a stronger yen) results in a relatively weaker dollar, which facilitates CL’s rally, which tends to pull stocks higher.  It’s a recipe for going nowhere fast — a.k.a. “chop.”

Bottom line, industry and OPEC have no interest in playing the HFT/algo game unless it results in higher oil prices — a result the central bankers cannot abide because it would pull the rug out from beneath Japan’s no-inflation meme.  As long as a weaker yen is the basis for the biggest carry trade in the universe, this balance will not be upset.

SPX closed above its SMA100 again…

2015-04-02-SPX daily 0600…as did USDJPY.

2015-04-02-USDJPY daily 0601It was the perfect model of restraint until CL spiked.  At that point, it felt the need to backtest the falling red channel top again.

2015-04-02-USDJPY v CL 60 0601We’ve slightly adjusted the channel to reflect the move.  But, the objective remains the same — although delayed by a day.

SPX targets remain the same as well.

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