Yesterday’s meltdown made perfect sense — up to a point. As USDJPY broke down through support level after support level, it was finally clear it was heading for 116.50 — the bottom of the red channel dating back to Nov 2014.
We’ve written about this channel extensively, as it represents the line in the sand for USDJPY and, more importantly, for global equities [see: The Only Charts That Matter.] Quite simply, a drop through 116.50 means no more upside for stocks. From Jan 19:Everything was progressing according to plan when TPTB panicked and booted CL out of its thrice-failed trajectory into the stratosphere. The impact on stocks is perfectly illustrated by NKD, which was only 10 points away from its obvious .618 target when the excitement began. See if you can spot the moment.CL continues ramping this morning. How high will they push it? As high as they need to in order to distract carry trade investors from the USDJPY debacle going on.
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