As we expected, the BOJ’s Kuroda announced no new stimulus last night. It hasn’t stopped them from nudging the yen a little lower (intraday), just to stave off any ill after-effects. USDJPY is within .06 of completing a Bat Pattern (121.61.)
The dollar is bouncing a little higher in its backtest……taking CL down a notch before its next run. In other words, everything looks set to proceed as we expect, with most of the excitement to occur next week.
If this all seems a bit convoluted, remember that oil, the yen and stock prices are firmly joined at the hip — and, not by accident.
As first laid out in March [see: Those Wacky Central Bankers], our working theory has been that oil prices were intentionally tanked by central bankers in order to accommodate the yen’s continuing decline which, in turn, accommodates the all-important yen carry trade which has fueled continuing asset bubbles worldwide.
Side benefits included kicking Russia in its oil-producing яйца and keeping interest rates everywhere under control (no inflation with oil tanking!) Our Saudi Friends are no doubt delighted at the ensuing setback for US shale industry which has been relocated to the clearance aisle on the off chance that Big Oil intends to go bargain hunting.
As discussed extensively on Wednesday [see: The Last Big Butterfly] the S&P 500 has reached a critical juncture from a Harmonic and chart pattern standpoint. As in 2011, it is completing a generally reliable Butterfly Pattern at the same time as an impressive rising wedge.