USDJPY took advantage of yesterday’s FOMC minutes algo melt-up to tag our 107.50 target.  That is, almost tag it — coming up 2 pennies shy.  Maybe it was a meaningless coincidence, or maybe there’s going to be a little shake and bake this morning.  Ditto with 10-yr notes futures, which at 126’285 came up just shy of the 126’310 target.  Caution is warranted.

SPX stopped just shy of the .886 of its drop from 1977 that began Tuesday — smack dab in the middle of the moving averages.

The circumstances continue to remind me of Feb 5, 2014.  Though it’s hard to ignore the resemblance to the algo-rally on Oct 3.  IMO, this is a wait and see kind of day.  I’ll be taking my cues from VIX and USDJPY.

 

UPDATE: EOD

VIX tagged our .786/channel top combo target, which suggests stocks might have bottomed for now.

We are nearing potential resistance on the 10-yr: the .886 of the drop from May to September, 2013.

The big picture…

Closer up:

An intra-day reversal at 126’310ish could be beneficial to stocks.

From a yield perspective, we popped through a channel midline and an .886.  It could be an aberration occasioned by the FOMC algo bonanza yesterday.

But, if TPTB somehow loses their grip, it fits with the much lower potential.

 

 

 

 

 

 

 

 

 

SPX just tagged our 1931.95 target.  We should see a reversal here.  As always, keep an eye on USDJPY, which should rejoin the rising purple channel shortly.  Where it goes from there will, of course, determine SPX’s course after the reversal.  I imagine we’ll see a lot of chop, given the FOMC minutes coming out later today.

As to USDJPY, the .786 Fib at 107.50 remains an attractive target for any selloff.  Note it’s also the purple 1.618 and red 1.272.

I’m enjoying an irritating bout of sciatica this morning, so I’ll sign off for now and go find a bottle of muscle relaxers.  No changes to yesterday’s analysis.  A bounce here might or might not last.  GLTA.

As we mentioned yesterday, the key was and remains the USDJPY — which definitely did not play along as was necessary in order for SPX to break through the SMA50.  It has since retraced .786 of its rise from 107.997 and is backtesting a broken TL of support.  It might be done, or it might be heading lower to flesh out the rising purple channel at the .886 or a double bottom(my preferred view) .  The sentiment is quite negative at present, and stocks shouldn’t rally meaningfully without it.

If it can reverse strongly, then our upside targets are good to go.  Otherwise, not so much.

 

UPDATE:  4:30 PM

USDJPY did, indeed, tag the bottom of the purple channel – overshooting a double bottom just a bit.

In so doing, it demonstrated just how difficult it will be for stocks to rally without the yen carry trade’s cooperation.  It’s anyone’s guess when/whether USDJPY reaches our 107.50 target, but I think there’s an excellent chance of doing so when we tag SPX 1931 (the bullish case) or our next lower target.

continued for members… (more…)

The key remains the USDJPY, which slid overnight after retracing to the .886 but has recovered in the past hour.

It will get SPX up over the white channel midline, and might provide it the opportunity to test some of the higher resistance such as the H&S neckline (1978)– assuming it can blow through the SMA50 at 1975.

continued for members… (more…)

As we discussed yesterday, the key to SPX’s path forward was USDJPY — which nailed our .618 intermediate target yesterday before reversing. It retraced a whopping 78.6% of its drop from 110, and now sits at the .786 channel line where it should at least take a pause or, more likely, reverse here at 109.63.

Stocks also behaved as expected.

Though the charts would clearly indicate further downside to the white .786 or even .886, I wouldn’t rule out a 2/5/14 type reversal here — particularly if bonds and the yen are monkey-hammered into submission  .If so, it would likely see a quick decline to the .786 at 1929.28 and reversal to backtest the SMA100.

SPX reversed strongly at the .786 a la Feb 5 and closed in the green.  Thanks to the overnight ramp job, SPX should open at around the SMA100 (1958.78.)

No doubt, many investors will rush in at this point, which might be a risky move. There’s definitely pop and drop potential today.

continued for subscribers… (more…)

SPX hit both of our next downside targets yesterday: the SMA100 and the .618 at 1948.51.  The key continues to be the USDJPY, which — along with NKD — had its most significant sell-off in months yesterday.  It moved below the acceleration channel midline, and could fall to the white .786 before the channel is in danger.

The close-up shows the immediate target of the .618 at the SMA20 9108.05) and the bottom of the channel at 107.50.

If the pair is allowed to settle further, there is easily more downside potential in SPX.  It closed well below the SMA100 and just below the .618 — ending up at a TL connecting the 6/24/13 and 2/5/14 lows. The 2/5/14 low was, IMO, an aberration — reversing before it should have thanks to a similarly (seemingly) unimportant TL.  Though the charts would clearly indicate further downside to the white .786 or even .886, I wouldn’t rule out a 2/5/14 type reversal here — particularly if bonds and the yen are monkey-hammered into submission.

continued for members… (more…)

Thanks to multiple interventions related to quarter-end window dressing, the S&P 500 has been prevented over and again from reaching the SMA100.  Today is lining up to finally be the day, but keep an eye on USDJPY and NKD — as another stick save is always a good possibility.  Just above the SMA100 is the .500 Fib at 1962 and below it is the .618 at 1948.  Either would make a good target, depending on when it happens.

The “market” continues to be highly managed.  So, it’s not so much a matter of what panicky investors might do, but what TPTB have in mind.

GLTA.