Steady as she goes. Today’s targets remain the same from yesterday, which was first established in our Apr 23 post:
SPX is testing the all-time high of 2119.59, and will likely slightly exceed it before falling off (probably on Monday.) Though the 1.618 is only 18 points away at 2138, I don’t think SPX is ready to take a run at it yet — not without the support of USDJPY’s SMA200. I’d be shorting here at 2118.85, with a target at 2090 and stops at 2125 or so.
SPX’s high was slightly exceeded, and we got a run up to 2125.92 before yesterday’s mild sell off. Look for a continuation today.
USDJPY is reacting this morning just like yesterday — a little yen weakness on account of extremely weak retail sales. But, as of yet, the pair hasn’t popped above the SMA100.
And, CL is backtesting the midline of the alternative red channel we added yesterday in anticipation of the purple channel breaking down. We’ll keep a close eye on this, as the breakdown could be corrected intraday.Another chart on which to focus — the EURUSD. It is staging a minor breakout that might also be an intraday excess. If the move is more lasting/substantial, it could change the downside potential a bit.
UPDATE: 2:45 PM
EURUSD has reached the white .886, which should spell the end of today’s spike unless TPTB have actually decided on a new direction.
And it’s possible, as the combination of higher oil prices and a cheap euro have to be taking a toll. Speaking of oil, that backtest of the red channel midline seems to be holding — but, right at the midline.
All things considered, it was enough for — drum roll, please — a V-shaped recovery for SPX which has now recovered most of its losses from yesterday’s high. It came within 3 points of the SMA20 …so far.
Since the EURUSD looks ready to reverse, the USDJPY looks likely to continue a little lower, and CL is running into overhead channel resistance, it’s tough to see what the impetus might be for further downside.
But, tomorrow’s a big economic news day. So, anything is possible.
So, the logical scenario at this point has to be an overnight reset for EURUSD followed by a data-driven dump in DX that leaves JPY largely unaffected (it’s happy treading water for now.) The bounce off 95.67 could ding the euro and CL, producing a modest decline to our downside targets.
Of course, the Fed could also ignore all that and just pound the crap out of VIX tomorrow in order to advance the propaganda that all is well in the Eccles Building. After today’s drop kick at the top of the falling gray “channel” it wouldn’t surprise me. We still haven’t reached the red channel bottom at 11.73ish.It’s been a while since we had a good-old-fashioned post-FOMC algo-fest meltup. Yee-haw.