It’s a morning chock full of interesting charts — the perfect setup for the day we’ve been looking for a pullback [see: A Nod to Black Monday, It’s Alive, etc.] Of course, SPX has continued to melt up since then, so the original 2536 target is looking pretty far-fetched at this point.
The first interesting chart is the Nikkei, which took a break from its straight-up channel to tumble 935 points.
The culprit, of course is USDJPY. It fell below its SMA10 and SMA20, which was no big deal when it occurred within the rising channel. But, the channel appears to be breaking down, which is quite another kettle of sushi.
Ordinarily, CL and RB would start ramping higher in order to offset the USDJPY drop. But, they’ve all been ramping together, lately. As we discussed yesterday, there are repercussions when this happens.
The price of oil in yen is up 76% since Jan 2016. Heating oil is up 80%. Japan, as broke as they come, is facing a decision: shore up the economy or the stock market.
Speaking of oil, did anyone catch the interesting Financial Times article about the Saudi oil reserves misdirection? It’s behind a paywall, but ZH excerpts it nicely. Orbital Insights is calling BS on the kingdom’s inventory report, suggesting there’s a lot more still in storage than the jawboning Saudis would have us believe.
The next most interesting chart is VIX. Members will recall we placed a rather lofty target on its chart for today.
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