Friday was one of those days that perfectly confirmed how rigged this market has become. As I wrote in Moving Averages Rolling Over:
Our initial target is the SMA5 200 at 2263.63, followed by the SMA10 at 2259.44. The SMA20 is just below at 2258.84. Unless SPX makes nice gains in the next six hours, its 10/20 cross will happen today as well.
SPX reached 2264.06 before the ramps in both USDJPY and CL kicked in and VIX got hammered down to a 10 handle. The net result: the SMA10 and SMA20 both ended up at exactly 2260.62. So, technically, no rollover just yet on SPX.
This was predictable, and follows our conversation later in that post:
…when a bearish 10/20 cross is about to occur, we often get a sudden rise in SPX, followed by the drop a few sessions later. When this occurs, it’s because those in the know (CBs and other insiders) are positioning themselves ahead of time. They do this by running stops and getting short (or at least hedging) while others are scrambling to cover.
Today’s action will be telling, not only in terms of SPX’s support mechanisms (USDJPY — which did roll over — backtested the rising white channel as expected) but our analog, first posted last August, which originally forecast a top for Jan 5.
I will be taking the day off today, as we had a death in the family and I have relatives coming into town. Nothing important has changed since Friday’s charts. Our downside targets remain unchanged.