Pushing Traders’ Buttons

The good news for traders is that the recent volatility has been somewhat predictable and, thus, tradeable.  The bad news is that CL and USDJPY-driven manipulation is alive and well.  We got a great reminder just today, when the latest unfounded rumor of an oil production freeze from a supposedly knowledgeable insider saved SPX from breaking down.

A quick peek at SPX shows a fairly tight rising channel with minor retracements along the way.  It originated back on Feb 11 when we called a bottom in CL (it was) and USDJPY (it wasn’t.)   And, it topped out just past our Feb 18 upside target of 2065, at which point it started going sideways. 2016-04-12 SPX 60 0945

The nifty thing about sideways movement is that it often sets up Head & Shoulders Patterns.  Such is the case here.  Only, the folks in that windowless room pushing the big red “RAMP USDJPY” and “RAMP CL” buttons have steadfastly prevented any H&S patterns from playing out.

The chart below shows several that were either prevented before they could get going or were interrupted midstream by very deliberate moves in CL and/or USDJPY.  We’ll focus on two in particular, labeled in red and yellow.

2016-04-12 SPX 15 0943 Many members were puzzled that SPX could rally even while USDJPY was plunging in value.  Yet, as the chart below shows, every single SPX bounce was enabled by a USDJPY bounce — even when it was just intraday.

And, some were downright sneaky, like #3, where USDJPY popped back above a broken trend line.  The stunt was repeated with bounce #5.  Bottom line, it didn’t matter much what happened to USDJPY overnight, as long as it was on the rise heading into the daily trading session.2016-04-12 USDJPY 15 0943CL presented a similar pattern — bouncing at coincidentally convenient times.  Note that SPX’s pattern of sharp reversals at one of the H&S neckilnes was foiled only twice:

  • when CL dipped below its SMA100 and the midline of its major rising channel (#4 & #5)
  • when CL fell back below an important trend line of support (#7)

2016-04-12 CL 15 0943When CL gapped back above that yellow TL, SPX was only too happy to pop back above its yellow neckline and tack on 30 points.

SPX fell back below the yellow neckline again just this morning.  For whatever reason, something about another IMF downgrading of global growth rubbed investors the wrong way.  No problem, as within minutes, CL popped back up past its SMA200 on the afore-mentioned production freeze rumors.

Since it topped the SMA200 at 41.10, CL has clung to its rising SMA5 10 in order to keep SPX on the rise.  It’s only in the past 20 minutes or so that CL has settled lower, no doubt in order to facilitate an SPX close on the white channel top rather than above or below it.2016-04-12 CL 5 1248Remember when making good investment decisions meant studying earnings reports, deciphering economic events and evaluating management and competitors?  Not one of those things matters anywhere near as much, anymore.  Successful investing has become all about anticipating when those USDJPY and CL buttons get mashed, and very little else.






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