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Lots to talk about this morning. Yesterday, ES dropped below the H&S neckline we discussed the night before [see: The Only Charts That Matter], but rebounded above it by the close. SPX came close to making its way back to its neckline; but, in the end, it failed. So, technically, it’s been triggered.
We were mainly short throughout the session until reaching 1820, at which point we were testing the Oct 2014 lows. This turned into a stop-hunting exercise as I noted in the 10:09 update:
There’s an excellent chance they’re going to run some stops at 1820.66 before any serious bounce occurs.
SPX pushed below 1820.66 to 1812.29, where it then rebounded by 63.86 points before running into the top of the falling channel it’s been in since Dec 28.
The culprits in all this action were, as usual, CL and USDJPY. CL dropped through the bottom of the falling red channel before TPTB realized how damaging this was, and then rebounded by a massive 5.6% off its overnight lows. Naturally, it had rebounded to well above the channel bottom by the time the US markets closed.For it’s part, USDJPY dropped through the bottom of the large red channel during the night with little effect on futures — which are simple and cheap to prop up during after hours. But, when it plunged below the channel bottom during the trading session (yellow arrow) carry trade investors took notice and sold hand over fist until it rebounded.continued for members…
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