The Middle East Heats Up: Mar 26, 2015

After officially entering the Yemen conflict, Saudi Arabia has blockaded of the Red Sea Strait. Oil has officially left the falling white channel, but reversed at the .786 Fib…2015-0326 CL v DX 0639…and DX’s response has been just as muted — so far.  But, it’s going to have to rise appreciably if they’re going to stuff oil back in the box where they need it. — which, for now, means in a range between 44.45 and 52.48.

The falling white channel .786 line should do, with the channel top (where it intersects with the rising purple channel .786 at 98.5ish?) available if needed.  Remember, the purple channel is the more dominant, dating back to Aug 2014 when USDJPY broke out.

The problem TPTB face is that they’ve used algos that incorporate the occasional bounces in oil to drive stocks higher for the past several months. Witness the many instances we’ve documented where prices shot up during the session, only to be reset overnight.

We’ve discussed the need to delink SPX and oil now that it’s in a desirable sweet spot.  The Middle East situation might just do the trick, since higher oil prices will now be linked to a increased risk.

For a discussion of the rationale behind all of this, see: Those Wacky Central Bankers.  Just slip on a tin foil hat, first.  And, remember, just because they’re manipulating the “markets,” it doesn’t mean you’re not paranoid.

2015-0326 DX 60 0619The S&P futures were off as many as 23 points overnight, but are currently back to the SMA100 at 2044.

2015-0326 ES daily 0619Yesterday’s action saw SPX plunge through each of our downside targets in fairly quick succession, finally landing precisely at the one that left traders in the biggest quandary.  From yesterday’s members section:

The most irritating target would be the TL off the Oct 15 low — currently around 2060.3.  It also stopped the Feb 2 and Mar 13 declines, and would be a stick in the eye to everyone who considered Bullard’s October 16 stick save dirty pool.

Yesterday’s downside targets remain in place.

continued for members


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