Note: We’ll be doing a little site maintenance this evening.  The site, or your access to the membership area, might be down intermittently.  Thanks for your patience!

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Yesterday’s runaway rally has been ascribed to a number of things.  But, the only factors that really mattered were USDJPY’s 18-hr 1.8% intraday spike and CL’s nominal new highs (bringing the total ludicrous rally since Feb 11 to 33.4%.)  This is the equivalent of 660 SPX points in about 3 weeks time.

As we’ve pointed out countless times before, it isn’t just that CL keeps moving higher.  It’s when.  It’s essentially gone sideways since Feb 18.  But, the daily spikes higher are occuring just prior to or during “market” hours, thus providing the maximum algo-ignition benefit to stocks.  If stocks start slipping, you can usually count on CL to start pushing higher for no particular reason other than to prop them up.

After hours, CL can decline back to where it was without doing any damage to the ongoing rally.  ES is much more easily propped up in the low volume overnight session.  It’s a ploy that was constantly employed during 2014 and early 2015 with USDJPY.  And, it’s pretty darned effective.

With fresh crude inventory data coming in at 10:30AM, we’ll find out whether CL is able to provide further gains, or USDJPY will take over from here.

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I have to be out of the office this morning, but will hopefully be back before the close.  In the meantime, here’s an abbreviated look at what’s driving the “markets” this morning.

USDJPY has rallied 1.05% off its overnight lows, as the BoJ sells 10YR’s at a negative rate (0.24%) for the first time ever.

CL’s Nuff Pattern has extended its gains since early yesterday morning to 6.8%.  A Nuff Pattern, for those who don’t know, is where CL increases just ‘nuf to keep SPX on the rise.In this case, it was ‘nuf to spike ES 27 points off its after-hours lows.  Look for SPX to backtest the broken white channel midline around 1945 in its opening salvo.

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In our November 2015 update [see: Update on EURUSD], we noted that EURUSD had reached a potential bottom at 1.0592.

Today, EURUSD reached a key technical level, completing a Bat Pattern that should see it rebound strongly.  We’ve been anticipating this day ever since DX broke out three weeks ago.

It bumped along for 8 sessions before the ECB finally took action.  EURUSD soared 4.3% in a day.  But, as has so often been the case, Draghi’s actions were severely front-run and resulted in stocks selling off sharply [see: Draghi Disappoints.]

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After a couple of months of less than normal manipulation, February has been an exercise in just how far TPTB can/will go in propping up prices.  The chief culprit has been CL, which came within a few pennies of our ridiculous upside target Friday.

It ramped again off its overnight lows (+3.7% in 5 hours) allowing ES to turn yesterday’s 20-pt loss into a 2.50 point gain this morning.    continued for members… (more…)

We left off yesterday with a rather bullish forecast through the end of the month based on CL and USDJPY continuing to push higher.  They both have, and futures have responded in kind.

Note that CL exceeded the Feb 18 highs, invalidating a significant downside Fib Pattern, and will do the same to Jan 28’s when it reaches our 34.82 target.  If you’ll forgive a small pun, it’s been crude but effective.

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SPX plunged to just past our 1897 target yesterday, putting in a massive reversal that left it green on the day.  The reason, as most now recognize, was the 6% spike in CL.   We’ve been writing about this a lot lately [see: Manipulation Becoming Laughably Obvious.] But, of course, it’s no laughing matter.  The stock market isn’t a market anymore when central bankers or their lackeys can essentially set the level of the SPX or DJIA by throwing billions into the oil futures market any time they get a little nervous.

Today, we see another example of that.  On a day when durable goods order data are so far above expectations that it practically screams “rate hike,” we see the market rally again on the opening.  Why?  CL’s tag team partner: the yen carry trade.The USDJPY — which also rallied sharply yesterday — has continued on above the bottom of the purple channel from 2011, broken out of the falling red channel, and broken back into the falling white channel that has guided its demise since November — all, to turn around what could have been an ugly open.Not to worry.  The “market” has a lot of back-filling to do.

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Last call for our latest membership promotion.  Charter Annual memberships are available for half-price.  Best of all, your cost will never increase for the life of the site.  For details and to sign up, click HERE.

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Much has happened since our bottom call on Feb 11.  USDJPY shot up from 110.97 to 114.87 in 4 sessions.  CL spiked 31% in 6.  And, SPX tacked on 6.7%, climbing back on top of some key overhead resistance.

But, the underpinnings of the rally are crumbling.  USDJPY has lost nearly 88.8% of its gains — calling the yen carry trades health into serious question.CL — almost half of its (despite the rumors which sent it soaring being disproved.)  For its part, SPX has dropped a mere 20% — propped up primarily by intra-day CL and NKD ramping.

As the algo drivers continue to tumble, we can expect SPX to at least test our downside target floated earlier this week, and possibly drop through it.

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Without a doubt, there were plenty of fundamental reasons for oil to crash.  For an excellent summary, check out Jesse Colombo’s June 9, 2014 (as in you had ample warning) article HERE.

I’m also fond of the notion that it had a lot to do with the yen carry trade [what’s this?]  In order to sell the BoJ on devaluing the yen and, thus, supporting the YCT, The Powers That Be had to make it politically acceptable.

The cheaper the yen gets, the more expensive oil (which is priced in USD) becomes.  Remember, Japan was already reeling from higher energy expenses in the wake of the Fukushima disaster.  CL had been steadily climbing ever since the nukes went offline.

What better quid pro quo than to crash oil prices in exchange for the BoJ crashing the yen?

USDJPY rallied from 101 to 107, and SPX rallied from 1911 to 2134.  It had the added benefit of thumping the oil producing countries’ and Russian economies.

Tin foil hat, stuff?  For sure.  But, it’s an interesting thought…

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Final 24 hours for our membership promotion…  If you’re tired of taking cues from perpetually bullish talking heads, this is a great time to take the plunge.  Volatility is high, and we’re racking up some great results [see: HERE.]

Pebblewriter.com has provided uncannily accurate market guidance since our first post on May 2, 2011 where we noted a top was close (May 2 was the top) to our latest top call on May 19, 2015 [we were one day early, see: The Last Big Butterfly] and our latest bottom call on Feb 11 [see: USDJPY Finally Relents.]

We’re currently offering Charter Annual memberships for about half-off the usual price.  With a Charter Annual membership, your rate is guaranteed never to increase for as long as you’re a member.  For more details and to sign up now, CLICK HERE.

The next time someone tells you that the price of oil has nothing to do with the stock market, tell them that they’re dead wrong on two counts:

1.  propping up CL is all it takes to prop up stocks;

2.  given #1, the stock market can hardly be considered a “market.”

We started writing about this kind of manipulation months ago [see: CL Algo Madness.]  But, lately, it’s become laughably obvious.  This tells me that The Powers That Be are getting desperate.

This should not be interpreted as “the market is about to crash.”  I mean, it might.  But, it doesn’t have to.  As long as TPTB are willing to pay the price, they can keep the crap game afloat.  As we illustrated yesterday, it’s fairly straightforward.  It’s just not cheap.*

Fortunately for the guys who script this crap, funding is cheap.  Investors all over the world are now paying central banks interest for the privilege of investing in their bonds.

The Bank of Japan was the most recent grand prize winner.  Technically bankrupt, it has the most to gain — and, the most to lose when it collapses.

That’s right.  It will end in tears.  But, what central banker has the balls to stand up and admit it?  It’s much easier to continue easing, ostensibly for the sake of combating disinflation and promoting full employment.

With any luck, you’ll collect a $1 million advance for a book in which you can blame the meltdown on your successor and tell everybody just how courageous you were.

The ironic thing is that central bankers who made this manipulation possible in the first place.  By crashing oil [my personal tin foil hat theory, EXPLAINED HERE] they scared the crap out of banks, investors, oil companies, derivatives underwriters, etc. — exposing them to potential massive losses.

It got out of hand, and now those potential losses are becoming very real.  So, any rebound in CL is enough to get the algos all excited — which, of course, means the “market” gets and warm and giggly.

* As for the cost, consider that it took a 31.2% ramp in CL to produce a 6.7% rally in SPX.  And, lest you think these are isolated incidents, note that CL ramps featured in every single SPX rally or stabilization since Feb 11 — the day we called a bottom in CL [see: USDJPY Finally Relents.]

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A reminder, our membership promotion is in its last 24 hours.  We’re currently offering Charter Annual memberships at about half-off the usual price.  With a Charter Annual membership, your rate is guaranteed never to increase for as long as you’re a member.  For more details and to sign up now, CLICK HERE.

Final 24 hours for our membership promotion…  If you’re tired of taking cues from perpetually bullish talking heads, this is a great time to take the plunge.  Volatility is high, and we’re racking up some great results [see: HERE.]

Pebblewriter.com has provided uncannily accurate market guidance since our first post on May 2, 2011 where we noted a top was close (May 2 was the top) to our latest top call on May 19, 2015 [we were one day early, see: The Last Big Butterfly] and our latest bottom call on Feb 11 [see: USDJPY Finally Relents.]

We’re currently offering Charter Annual memberships for about half-off the usual price.  With a Charter Annual membership, your rate is guaranteed never to increase for as long as you’re a member.  For more details and to sign up now, CLICK HERE.

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Is there a way TPTB can erase the damage done over the past few months and have SPX resume its bullish ways?  Consider that SPX is back above the neckline of a large H&S Pattern, back above the midline of a rising channel dating back to the 2009 lows, and back above the midline of the channels that have guided the decline since last May.

The cost of getting here, however, was substantial.  USDJPY required a strong rebound (sorry, Japanese consumers and manufacturers.) Interest rates also had to rebound strongly (sorry, borrowers.)  And, most importantly, CL had to bounce an insane 31% off its Feb 23 lows.  Think about that next time you’re filling up the Family Truckster.continuing… (more…)