Leadership Up in the Air

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Yesterday’s runaway rally has been ascribed to a number of things.  But, the only factors that really mattered were USDJPY’s 18-hr 1.8% intraday spike and CL’s nominal new highs (bringing the total ludicrous rally since Feb 11 to 33.4%.)  This is the equivalent of 660 SPX points in about 3 weeks time.

As we’ve pointed out countless times before, it isn’t just that CL keeps moving higher.  It’s when.  It’s essentially gone sideways since Feb 18.  But, the daily spikes higher are occuring just prior to or during “market” hours, thus providing the maximum algo-ignition benefit to stocks.  If stocks start slipping, you can usually count on CL to start pushing higher for no particular reason other than to prop them up.

After hours, CL can decline back to where it was without doing any damage to the ongoing rally.  ES is much more easily propped up in the low volume overnight session.  It’s a ploy that was constantly employed during 2014 and early 2015 with USDJPY.  And, it’s pretty darned effective.

2016-03-02 CL 60 0600With fresh crude inventory data coming in at 10:30AM, we’ll find out whether CL is able to provide further gains, or USDJPY will take over from here.

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