The Fed is pumping $4.5-5.75 into the “markets” today and tomorrow — making it easy for stocks to ignore war, earnings, inflation, interest rates, etc.  The past two days have been almost carbon copies of one another:

1. sharp dip on the opening on bearish news to head-fake any bears left standing
2. relentless algo-driven melt-up for several hours (USDJPY and VIX based)
3. strong sell-off near the close to head-fake weak bulls into selling
4. ramp job overnight to punish them for selling

As usual lately, the reversals are coming at seemingly random spots.  But, a closer examination reveals what I believe is a calculated attempt to punish traders.   They’ll put the brakes on just short of Fib levels, blow through back tests, reverse before reaching established trend lines, and sell off immediately after making new highs — which leaves those of us who rely on chart patterns or technical analysis grasping for straws.

For a while, they were targeting only bears.  Now, it’s grown to include anyone who doesn’t simply buy every dip and hold long overnight.  The answer is simple: buy every dip and always hold long, right?  That strategy has certainly paid off better than trying to exploit any downside moves. The chart below shows just how treacherous trading has been for the past month.

The purple grid, including a completed IH&S Pattern that never failed at the neckline, was a total head-fake to bulls and bears alike.  It remains to be seen whether the red IH&S, also completed, will play out or whether we’ll churn some more.  The larger channels, BTW, have become almost meaningless lately.

History tells us that a crack in the markets is a question of “when” and not “if.”  In the past, whenever bearish capitulation was complete, TPTB have allowed (or engineered) a strong downturn that flushed buy-the-dippers into oblivion — the better to induce the Fed into continuing the gravy train.  Will this time be any different?

I will be out most of the day tending to family health matters.  Any prayers would be much appreciated.

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USDJPY reacted at the falling TL we discussed yesterday, but immediately rebounded to push stocks higher.  It plummeted overnight, when it didn’t matter to ES, and will probably rally up through its moving averages again today in order to facilitate the continuing melt-up.

As discussed yesterday, the dip at the close was yet another head-fake.  Is it any wonder volume has dropped to laughable levels?  It was followed by the USDJPY driven algo which kicked in around 4am ET.  Keep an eye on USDJPY this morning, as it just tagged a TL off the Jul 3 highs and might have trouble punching through during market hours.

Also in a position to break out or break down: ESU4.  It topped the IH&S neckline we’ve been discussing (also overnight, naturally.) It targets ES 2005.  But, remember, these patterns have been extraordinarily unreliable of late.

We have CPI at 8:30 and Existing Home Sales at 10:00.  No POMO today, but a big day tomorrow. GLTA.

UPDATE: 8:50AM

USDJPY in plunging, 10-yr rates are plunging, EURUSD is soaring — but ES is being propped up like there’s no tomorrow — defending that IH&S neckline after gaining 3.5 points on the news that (IMHO) we’re entering stagflation territory.

Looks like another day of the “market” being run by the programmers…

USDJPY continues to consolidate, with a likely 100/200 SMA cross coming up in the next few days.  This would leave the 10, 20, 50 in bearish alignment, all below the SMA 200.  Yet, the chart shows clearly that — even in the absence of increased QQE — the BOJ has zealously guarded the 101 price level.

ES continues to benefit from the daily ramps, while suffering none of the after-hours corrections.

Friday’s ridiculous melt-up came benefit of the algos, with no discernible dips on the way to a 88.6 retrace.  While an IH&S appears a possibility, hardly any of these patterns have played out lately.  The most likely next step is a continuation of the whipsawing that has characterized the past 7 months…

…driving SPX ever higher without any economic or earnings justification, on multiple expansion and Fed backing alone.

UPDATE: EOD

The close was weak, but a manufactured weakness as the obvious target of ES 1972.50 was easily in range…had USDJPY merely gone sideways. Seems like the market makers didn’t want any company on the upside, and forced the ES dip-buying crowd out with a USDJPY/NKD (on 4 whole contracts!) dip and the sudden withdrawal of large limit orders just beneath ES’s trading level.

Gotta say, this is getting really, really old: early morning dip (most of it coming in the after-hours, and not quite reaching the logical target) followed by a melt-up driven by easily manipulated USDJPY/NDX, 10-yr futures, VIX and of course the algos.   The question isn’t “is the market rigged?”, but “is there ever more than a moment when it isn’t rigged?”

Back in the saddle today, but lots of catching up to do.  Here’s the basic situation:

SPX fell to a TL and Fib that could legitimately serve as a bottom for this move.  On the other hand, a drop to the purple .886 — also a channel midline — would be more definitive.

We got the usual ramp job overnight, though it started very early in the afternoon this time.  It was good for a 16-pt bounce off yesterday’s bottom — completely based on USDJPY manipulation.  ES has almost reached the SMA20 at 1961.  SPX’s is at 1967.

The bottom, BTW, would have been more appropriate at 1940-1941 — a trio of Fib levels.  But, the algos don’t much care about Fibs…  If you’re a cash market trader who stayed short into the close based on the huge geopolitical events going on, you have HFT/algos to thank for screwing you over yet again.  It’s a big reason for why the “market” is broken, and volume has disappeared. Write your congressman.  Seriously.

No POMO today, but it is OPEX.  More later if there’s time.  GLTA.

Note: There will be no post today, as I have some pressing family medical issues to which to attend.  I’ll hopefully have a chance to do a wrap-up later this evening.

GLTA.

Note: There will be no post tomorrow, July 17, as I have some pressing family medical issues to which to attend.

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Watching the news on Fox/Time Warner this morning… I don’t know anyone in corporate at either shop, but know some of the studio folks very well.  Can’t think of a worse cultural fit…

Another 1am ramp job last night with ES spurting 6-7 points after USDJPY broke out on several shorter-term clouds.

The daily cloud still argues for a tough road ahead, as do the multiple moving averages just above.  The 10, 20, 50 and 200 are all between 101.7 and 101.92.  As always, it will come down to where the BOJ wants the pair to trade (if left to reflect market pressures, it would have plunged beneath 100 long ago.)

ES is pushing yesterday’s high which completed a Bat Pattern on the white grid and saw a reversal to nearly the .382.  Yesterday’s high also completed an IH&S; but, the subsequent reversal clearly did wiped out the right shoulder marked S1.  The question now is whether S2 — a much more appealing size/shape — might do the trick or we’re in for yet another head fake.

continued for members… (more…)

Nothing new since yesterday’s chart.  Retail sales disappointed, Portugal’s banking crisis is worsening, etc.  The futures shook it all off because Yellen is testifying today, and nothing else matters.  If it’s like past testimonies, the Q&A will reveal nothing new; and, if there’s any kind of sell-off, it will be aggressively bought via USDJPY ramping and VIX pummeling.

continued for members… (more…)

Sunday night ramp job (anyone surprised?) in force last night…  USDJPY, which collapsed Friday after ramping equities higher into the close, was pumped up from 101.23 to 101.52 by 3am EDT.

It’s another short-term bullish move in an otherwise still bearish longer-term picture.  But, the BOJ can keep this game afloat for much longer if they so choose.  And, the algos are definitely reinforcing its continuation.

ES fell in step and has tacked on 8 points since Friday’s close at the falling white channel top.  While the H&S Pattern isn’t officially kaput, it is hanging by a thread — especially given Yellen’s bullish testimony tomorrow and Wednesday.  In its place, an ever more convoluted IH&S pointing to 1982.

This morning, Zerohedge ran an updated Merrill Lynch chart showing retail investors piling into the “market” as institutions continue to exit.  Retail participation is, of course, a contrary indicator.  When mom and pop finally overcome their fears from the last crash and jump in with both feet, it’s a pretty good sign that the party is winding down.  Here’s the chart:

At the very least, we should se another test of the SMA20 (1959.40 in SPX.)  In a normal market, we would also test the white channel midline and perhaps the purple .886 at 1941.

ES just completed a Gartley Pattern on the white scale, but has potential to the white .886/grey .618 at 1941ish — also the TL from Apr 14.  I would wait to see what USDJPY is going to do, however.   It inspired the dip from 1948 to 1945, and would no doubt instigate any further decline.

Note that the irregularly-shaped H&S Pattern points to 1924 — the grey .886.

UPDATE:  11:55 AM

I have to duck out for a doctor’s appt, but a quick update first.  The bots have taken over (a shame, it was starting to feel like a real market there for a while) nudging ES up to a small IH&S target.

In the process, ES is back to the neckline of the bearish pattern, and has been bouncing between it and the SMA20 ever since.  The rest of the day should be head fakes of one sort or another — with a possible dip to around 1951.50 between 12:15-12:30.

Keep an eye on the USDJPY, NKD and the 10-yr futures, which have all established a bullish TL from this morning.  Breaks should be treated cautiously, but firm moves lower (higher in ZN) should be a sign of more downside we discussed earlier.

The bots’ target is most likely the SMA10 at 1964ish (what banking crisis!?)

GLTA.