Sometimes, I take no joy in being right. Such was the case yesterday, when CL’s utterly nonsensical rebound led stocks to new highs.
…just watch CL’s rebounds during today’s session. I promise you that one will occur every time SPX starts plunging just a little too fast.
The rebound was good for 20 points on SPX, and 30 points on the eminis. Even if TPTB bought every single contract on the push through the SMA200, it would amount to only $324MM in margin (which central banks needn’t pay, of course.)
That, in turn, pushed $150B in e-minis 0.75% higher (about $1.125B) and $20 trillion in the S&P 500 0.75% higher (about $150B.) Not a bad return on your money for a little harmless intervention.
It even had help, as USDJPY pushed up through channel resistance to aid the breakout. It still has ample room to help, particularly if the white midline holds.Today, the big number is 2097.71 — the last major Fib level before the 2134 highs are tested. Remember, this is the .886 Fib of the drop from 2134.72 to 1810.10. Once it’s topped, the next target is 2134 itself, and then the 1.618 extension of the drop from 1576 to 666 at 2138.04.
But, at the moment, it appears that USDJPY and CL are backing off their overnight thrusts. So, I’d sit on the sidelines at the open, at least until it’s clear whether today is the day. When TPTB push past it, they want to be able to stay past it — and not suffer a big decline as occurred at 2134.UPDATE: 9:51 AM
SPX just reached the purple 1.618, having tagged 2097.71 and 2100 on the way. I’d put in a short position here with tight stops in case they decide to allow a reaction for appearances sake. Initial target is the gap close at 2094ish at about 12:10 PM.UPDATE: 9:58 AM
CL continues to inch higher toward a breakout. Watch your stops.CL is testing its Mar 18 highs. It hasn’t been higher since Nov 30, 2015. I suspect it’ll be content to make a new high, then back off.UPDATE: 11:45 AM
A gap close continues to look likely at around 12:10 PM or whenever the SMA5 100 crosses 2094.66.CL has backed off its incursion into the rising white channel, but remains in position to re-enter it if SPX needs supporting.And, USDJPY remains available to help in either direction – either finishing the run up to the white .886 at 109.505 or testing the white channel bottom around 108.93.UPDATE: 12:11 PM
SPX just closed the gap and came with a few pennies of the SMA5 100 at 2093.99 versus 2093.94. Since CL is still slipping lower, I assume there’s a little more to go — though maybe just a few cents to complete the SMA5 100 tag. I’d keep an eye on USDJPY, too, as it might be heading for the channel bottom. My gut is that it would facilitate a tag on SPX’s SMA5 200 at 2088ish.An (almost) legitimate reversal here would be at least to the yellow .786, which is way down at 2065.25 — about where the SMA10 is at the moment. Though, there are plenty of other things that could support it along the way – such as a backtest of the white channel SPX broke out of yesterday.
CL and/or USDJPY could obviously abort such a move any time they like. But, maybe — just maybe — TPTB will allow some semblance of a normal market reaction to reaching a major Fib such as 2097.71.
SPX has bounced back to the gap close and seems like it’s destined for a SMA5 20 backtest at 2095.60ish. I’d close the short here, and be prepared to pick it back up on the way down, assuming it reverses there. I believe it will, but have been suckered many times into suffering bigger reversals while thinking they were just a little bounce.CL bounced at the red midline, meaning this could be a more important reversal for SPX.UPDATE: 1:09 PM
CL is breaking out, so I’m bailing on the short position. I’ll leave the door open to another leg down, as this could be a head fake. But, it’s not looking like one just now.Updated CL and USDJPY… ES is the only chart still hinting at a possible reversal here. Maybe if it drops through the SMA5 200 again…UPDATE: 2:07 PM
I’ll probably hate myself for doing it, but it’s back to short here on USDJPY’s renewed dip. Of course, it won’t pick up steam unless CL drops back through the white TL and red channel midline. UPDATE: 2:17 PM
And, just like that, USDJPY is breaking out again. I can only assume they’re trying to delay the .618 tag down there at 2085.26 — which if the current falling red channel were to hold would occur at the close.On the bearish front, CL just dipped below the white TL and red midline. Very confusing and conflicting happenings… I’ll hang in there with the short, but I’m not feeling all warm and fuzzy about it.
UPDATE: 3:42 PM
SPX keeps melting higher, on nothing in particular really. But, VIX just dipped below a TL of support — suggesting that higher prices might be in the offing. I continue to believe we’ll see a leg lower, though it’s looking less and less likely to happen today.
If you can stomach the risk or hedge your position, I’d stay short overnight. Just know that crude inventories come out in the morning, and there’s often a ramp leading up to the actual number. It could trash an unprotected short position, and has many times in the past. As mentioned earlier, SPX has retraced .886 of the drop from 2134 to 1810. It should reverse here. In an unrigged world, it’d retrace to at least the .618 at 2010.72 — a 90 point drop from here. the SMA200 — which was never backtested — is just above there at 2014.
But, the world is quite rigged. So, we have to guess which approach they’re going to take. My bet is that there’ll be at least a small reversal here — the 5th time we’ve tagged the top of the purple channel. But, it’s hard to know for sure.