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If there’s one thing TPTB enjoy, it’s the opportunity to move markets over a long holiday weekend. Last Thursday, USDJPY and CL all plunged to key levels of support. As I wrote then [see: USDJPY Finally Relents]:
This morning, the plunge finally reached significant support: the .500 Fib and the bottom of the rising purple channel from 2011. USDJPY should bounce here. If you’re a bull, it must bounce here. The only question: is it too late?
Start out short, but look for an entry point there — keeping an eye on CL, USDJPY and NKD for signs of a turn. If it’s to happen, it’ll be because all three are screaming higher.
We closed the short and reverted to a long position at SPX 1825.01, assuming that TPTB would do what it took to support USDJPY and CL and, thus, keep the yen carry trade from completely imploding.
Bottom line, they did exactly that. Since then, USDJPY has recovered almost 3%… …CL has soared about 15%……and ES has bounced nearly 5%.SPX easily reached our initial bounce target on Friday, closing at 1864.37.
Assuming USDJPY breaks out of its falling channel (it’s a minor thing to ask, Haruhiko) then SPX should test the falling white channel midline at 1859-1863 (depending on when.)
With another 24 hours or so to make things right, can SPX break through significant overhead resistance? We’ll see.
I’m going back to my vacation and will post another brief update in the morning. I’ll be back to regular hours on Wednesday.
UPDATE: Feb 16, 2016
ES has given up some of its gains — but, only enough to backtest the broken SMA20.
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