Isn’t it swell that the “market” can soar 33 points on nothing more than the repetition of bad news?  Despite the talking heads pleas, there is nothing fundamentally good about higher interest rates unless you’re a financial institution.  And, even then, there will be winners and losers.

The post-minutes algos kicked in as they always seem to — perhaps in an effort to assure those few human investors left that the FOMC’s utterances are always wise, always bullish.

In reality, it was our old friend USDJPY which was almost solely responsible for the melt-up — as it has been for well over a month.So, it’ll be interesting to watch what happens as it again approaches channel support this morning.  Will it hold again, or will TPTB allow a little off the top, just for appearances sake?

continued for members…

SPX really could benefit from a backtest of the SMA200 at 2064.59.  But, our initial downside target is a backtest of the nearest moving average – the SMA20 at 2076.53.   And, given that USDJPY and CL have reached channel support, that might be as low as TPTB will allow.  The channel below is very precise, meaning any dip below it is a pretty good sign of lower stock prices to come.The one possible hitch is DX, which has clearly broken trend after topping out yesterday.

UPDATE:  9:33 AM

Also keep an eye on VIX, which suggests at least the possibility of a nice drop should its channel hold.And, this megaphone in ES might also serve as a good guide.  Note that the SMA200 is reachable within its bounds if things get going very quickly.  And, TNX continues to melt down — though it has almost reached potential channel support.UPDATE:  10:45 AM

UPDATE:  11:01 AM

Should get a shot at 2076.53 here.It would help if USDJPY broke below the purple TL……or, CL retested its channel bottom.UPDATE:  11:47 AM

It’s actually kind of funny.  Bears are striking.  That is, everyone is refusing to sell — even as USDJPY is positively tanking.  The problem is CL, which bounced sharply this morning as the initial wave got underway.  No one believes it won’t just happen again, so why go to the trouble of selling?

We’ll keep waiting… If the rising red TL is respected, the backtest could be limited to the .618 at 2079.39.  So, we’ll watch for a bounce there.

UPDATE:  11:54 AM

There’s the .618.  USDJPY and especially CL suggesting we could get a bounce. The safe bet is to take profits on the short here.  But I believe we’ll get another leg down later after whatever bounce we get.  so, be ready to reverse positions. The most obvious target is to the 5-min SMA10/20 at 2081ish — which isn’t much.  It’s the potential to be much bigger that has me concerned about holding short through it.

UPDATE:  12:13 PM

CL dropping through support, so it’s back to short here.Just keep an eye on USDJPY, which could easily muck things up by pushing above the SMA20 on the 5-min chart.UPDATE:  12:27 PM

Not crazy about the way this is shaping up.  Unless USDJPY reverses back below the MAs very quickly, we’re probably heading for the top of the red channel. UPDATE:  12:30 PM

Out.  I’ll consider reshorting at the white dot and/or if USDJPY or CL starts helping out.UPDATE:  12:52 PM

I’ll retry that short position here at the top of the red channel.ES has been pretty consistent with its channel so far — though the SMA100/200 at 2082.95 might be too tempting.CL is below the white pennant……and USDJPY could potential backtest the .618 here – though admittedly it’s the weak link chart-wise. UPDATE:  2:06 PM

Painful, painful day of waiting and watching for something to happen.  SPX looks like it could go further, but ES just backtested its broken red channel. I’ll close the short position here unless ES can push through.

USDJPY is at least suggesting there’s more downside.And, VIX is clearly at a crossroads.UPDATE:  2:55 PM

It’s looking quite unlikely…  The only thing that still has me wondering is this alternate ES channel. UPDATE:  3:27 PM

I think this is the last hurrah.  Bailing on the short here as there doesn’t seem to be any catalyst for a downturn at this point – at least today.UPDATE:  3:30 PM

Last try.  Shorting here with tight stops. UPDATE:  3:40 PM

So far, so good.  Just need this TL to break…It’d definitely be bearish going into the close, as USDJPY has broken trend – at least for the moment.  Could easily pop back up to the channel after SPX closes.

If it doesn’t make it any lower before the close, it might be worth holding short overnight with the usual warnings about hedging, etc.  No economic data coming out in the morning, so might be a good chance to do some back filling.

UPDATE:  3:59 PM

For those unable to hedge or keep an eye on it overnight, I’d close out the short position at the close.