If you liked Tuesday, you’ll probably like today.  We have an apparent overnight ramp in RB and CL (to the same overhead resistance)……a dip in VIX (to the same support)……and, another close by DJI below its SMA200.This time, S&P futures are up 17.5 points (previously 12) and still haven’t broken out of the falling channel from Jun 13 nor above the IH&S neckline.It’s not hard to imagine the instructions arriving from the Hamptons: “just don’t let it crash!”

And, speaking of crashes…I saw a few very interesting charts this morning.  The first depicted a pace of corporate buybacks that was shocking.  According to BAML, corporate buybacks are practically the only net purchasers so far this year.  Imagine that.

The other put the rise in gas prices into perspective.  Most Americans are spending incrementally more on gas than they received in cuts from the recent tax bill. Take the lowest 20% earners and multiple the 8% of their income spent on gas in 2016 by the 30% YoY increase we’ve seen.  The 2%+ increase in expenses easily outpaces the zero-point-whatever benefit they received from the tax bill.  No wonder Trump is getting a little nervous.

Or is he?  If you’re the leader of the free world and have a direct line to the leader of every friendly OPEC member, is a tweet really the most effective way to get your message across?  Or, is it just possible the tweets are window dressing, intended for his supporters?  Just a thought.

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The overnight ramp job might feel like the real thing……if not for USDJPY’s breakdown.  If the wizards really wanted to complete the IH&S Pattern and send ES soaring to 2800, there’s no way in the world USDJPY wouldn’t have held the TL it’s been working on since Jun 25. Note the negative divergence between the pair (higher highs) and ES (lower high.)

VIX made a valiant effort.  And never say never, of course.  After all, SPX did bounce off the critically important 2.24 extension again.  And, holidays are notorious for nonsensical leaps over tall buildings. But, for the time being, this looks like a headfake.  ES 2743 and SPX 2741.50 are the (neck)lines in the sand.

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SPX reached our upside target quickly enough, but the reversal held off until the last hour of the day.Part of the problem, of course, was the CL/RB ramp.  The other was USDJPY, which popped through the previous high as expected.It won’t be enough, though, as the SMA200s are finally close enough to let volatility go where it wants.  The only questions are when and whether the SMA200s will hold.  ES’ SMA200 is only gaining about 1-pt per day, so there’s little value in delaying it any further.

The nice thing about the all-clear is that oil and gas should finally be free to make their moves.  Without quarter-end equity numbers to protect, we should get some good action.

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