If the rally over the past two months was the Trump Rally, will they call this the Trump Slump? It’s been over three months since we had a bearish cross in the moving averages, though the follow-through hasn’t been very impressive…yet.
We remain short with our downside targets essentially unchanged from last week.
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We came within 0.7% and 1 day of our analog’s forecast top before things started rolling over yesterday. Our latest iteration had 2298 on Jan 5, and we hit 2282 on Jan 6. 
Now that we’re here, it’s a good time to review the rest of the forecast, and see if our last downside targets still make sense.
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Friday was one of those days that perfectly confirmed how rigged this market has become. As I wrote in Moving Averages Rolling Over:
Our initial target is the SMA5 200 at 2263.63, followed by the SMA10 at 2259.44. The SMA20 is just below at 2258.84. Unless SPX makes nice gains in the next six hours, its 10/20 cross will happen today as well.
SPX reached 2264.06 before the ramps in both USDJPY and CL kicked in and VIX got hammered down to a 10 handle. The net result: the SMA10 and SMA20 both ended up at exactly 2260.62. So, technically, no rollover just yet on SPX.
This was predictable, and follows our conversation later in that post:
…when a bearish 10/20 cross is about to occur, we often get a sudden rise in SPX, followed by the drop a few sessions later. When this occurs, it’s because those in the know (CBs and other insiders) are positioning themselves ahead of time. They do this by running stops and getting short (or at least hedging) while others are scrambling to cover.
Today’s action will be telling, not only in terms of SPX’s support mechanisms (USDJPY — which did roll over — backtested the rising white channel as expected) but our analog, first posted last August, which originally forecast a top for Jan 5.
I will be taking the day off today, as we had a death in the family and I have relatives coming into town. Nothing important has changed since Friday’s charts. Our downside targets remain unchanged.
GLTA.
Yesterday was another one of those days when the folks minding the store got a little over-anxious. A simple backtest of SPX’s 10-day moving average never happened because CL and NKD started ramping prematurely. Could it have been the bearish moving average crosses that got them so nervous?
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It was over five months ago that I first suggested our current analog [see: A New Analog Aug 3, 2016.]. It was unlike many of the past ones in that it suggested a tortured path to higher prices. As of yesterday, we were within 1% of our upside target, with today being labeled a likely high.
The most notable development overnight was that USDJPY finally broke down. To paraphrase Ron Burgundy, this is kind of a big deal. After a month-long very steep post-election ramp job, and another month of less-steep ramping, this is a trend break that shouldn’t be ignored.
Will we get another gasp higher as our analog allows, or is the party finally over?
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VIX has been spanked by over 14% since Friday afternoon, aiding a bounce in stocks that breaks plenty of chart pattern rules. Yesterday, it did more than backtest the falling white channel. It broke down, back into the channel overnight — all in order to ensure another gap higher today.
Combined with well-timed bounces in USDJPY and CL, we’ve seen backtests develop in SPX that would ordinarily mean a downturn. It wouldn’t be such a big deal if they weren’t setting up in practically everything I chart.
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A very Happy New Year to our members this morning! I wish all of you a prosperous 2017!
The New Year is off to a bang with oil and USDJPY spiking higher and VIX backing off after tagging our SMA200 target.
In other words, more of the same…so far.
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