The EOTWAWKI Sale
Final 48 Hours
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Were you frustrated a few times last month? If you’re anything like me, you found the degree of market manipulation downright stunning. But, we were presented with some great opportunities — from the 5% Brexit correction to Wednesday’s CL short, and several USDJPY shorts.
I’ll have last month’s results up this morning, but in the meantime, take a look at USDJPY. As expected, the rising purple channel broke down last night.
Our bonus chart from 7:30pm last night…
…and, the same chart this morning. 
We’ve talked many times about how USDJPY has been reduced to a tool for manipulating stocks (just yesterday, in fact.) Consider NKD, which has been building a sharply rising channel all week since Brexit. USDJPY needed to reset last night, ideally to flesh out the less steep white channel I expected to take form.
Note the tags on NKD’s channel bottom, labeled 1-3. And, note the placement of the same labels in USDJPY. Which was the tail and which was the dog?
There are a number of charts which indicate SPX should take a breather, now that the month/quarter are over. But, will it? It’s been a hell of a ride since popping back up above the DO NOT CROSS channel top on Tuesday, its first of three gaps higher this week.
I’ll be watching to see when USDJPY drops the rest of the way to 102.3 — a pretty sure thing.
CL, which is now off 4.2% since our top call on Wednesday, suggests we’d be safe shorting here — particularly if it doesn’t pop back above the purple channel midline. With the holiday weekend just ahead, it’d be pretty easy to undo whatever damage TPTB allow today.
continued for members...
UPDATE: 9:47 AM
CL has reached the channel midline, and USDJPY is breaking down. I’d feel safe shorting here, but would cover if CL pops above the midline. Ideally, it will back off and drop to the SMA50 at 47.57, allowing SPX to backtest at least the SMA20 at 2082.05.
UPDATE: 10:00 AM
CL just popped through the midline, and USDJPY reversed up to the top of the red channel. I’m tempted to ditch the short, but I see that ES just tagged a very important channel and TL. I’ll probably regret it, but I’d give the short position just a little more rope.
UPDATE: 10:17 AM
CL and USDJPY are still pushing higher, so I’ll assume they’re shooting for ES’ .886 at 2103.77. Back to long here, but ready to short again if CL and USDJPY reverse or ES gives up on topping the TL. This should fill SPX’s Brexit gap and get it back to or slightly above 2113.
UPDATE: 11:11 AM
SPX just dropped through the rising SMA5 10 and 20 on a sharp CL reversal. Back to short here, though it’s probably a head fake. ES still hasn’t dropped through its SMA5 10, now at 2096. Correction: I was looking at ES’ 15-min chart. It has dropped through its SMA5 10 and 20 and is approaching its SMA5 50 at 2094.
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BTW, for those wondering about the Big Picture post I had going yesterday, I’ve moved it to a new post that I hope to finish and get posted sometime in the next hour or two. My apologies for the delay, but I just had too many interruptions yesterday.
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UPDATE: 12:12 PM
ES is about to tag its rising SMA5 50 and a little TL off the overnight lows. SPX has a little further to drop in order to tag its SMA5 50, now at 2101.66. It would correlate with ES’s red channel bottom at 2094ish. So, we’re getting close to the point where they have decide whether or not to bounce to new highs.
If they don’t bounce here, then there’s a lot more downside, as described above. CL and USDJPY are both in a position to plunge, but could obviously wait until after stocks close. The trickiest close would be if we get a nice sell-off into the close, in advance of a 3-day weekend. Stay tuned.
UPDATE: 12:27 PM
ES just reached the bottom of its rising red channel. I’d cover here if CL or USDJPY bounce. But, neither one is just yet.
UPDATE: 12:32 PM
ES is popping, so SPX shouldn’t be far behind. Back to cash here, though I’d short again on any reversal back through the SMA5 50 — which I do expect to occur.
I’m going to sign off for a while and finish the big picture post. Again, I’d short on a drop through the SMA5 50, with an objective of the red .786 at 2092.97, and if that doesn’t hold, the SMA20 at 2082.05.
UPDATE: 1:13 PM
USDJPY is breaking lower, perhaps to get SPX to reverse. I’d take a short position here with tight stops in case it’s a head fake — about 50:50 from where I sit. Given the SMA5 100’s trajectory, I’d thinking they’re shooting for 2099.17 — a backtest of the white .886.
UPDATE: 2:30 PM
CL just shot higher, breaking out of the falling white channel. I assume it’s because ES’ SMA5 200 hasn’t reached the falling purple channel yet. If CL can delay it a few minutes, then ES can tag the MA and the purple channel bottom at the same time. Silly, I know. But, that’s algos for you…
If that’s not what they have planned, then I’m probably going to dump the whole thing and work on getting the Big Picture posted. This is way too much trouble for 6-7 points. We’ll watch for CL to backtest the white channel now.
UPDATE: 2:55 PM
I can hardly stand it any more. It appears they’re waiting for ES to reach 2089.97, which would allow a SMA5 200 backtest without having to break the Fib. I’m ditching here, and would only re-short if it dropped through 2097ish (ES 2090.
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Comments
7 responses to “A New Day”
Speaking of logic and fundamentals, global stocks (especially U.K.) went higher after U.K. lost its triple A rating on Monday. How can U.K. stocks rose after a rating downgrade? People can argue that the effect of Bexit is an unknown. They can even spin that it might be a good thing. But the rating downgrade is a fact. Remember the result of rating downgrade of US in 2011?
The sad truth is that logic is no longer at nor, often, even near the top of the list of factors that matter.
So the best vourse of action is to always buy dips? Since the tools available to ramp the mkts r more than the1 or 2 errogenous events that may occur to create a selldown?
That’s about the size of it. EXCEPT for the fact that we do get pullbacks from time to time that, judging from the last year, can be rather extreme. With SPX breaking above 2138, TPTB will be working extra hard to prevent those going forward.
Pb..usdjpy going down nowadays hardly have an effect on spx, but when the dollar is up, which brings up usdjpy, spx follows it up when it shld be down due to the strong dollar…this is madness
Welcome to MY hell. Logic is often out the window, and fundamentals only matter when they’re convenient. Look to CL, which just spiked through overhead resistance. That’s all the algos care about right now. It practically doubled since Feb 11 in order to drive SPX 300 points higher. It works. USDJPY has been reduced to a bit player, which isn’t to say it can be resurrected if CL’s rise becomes too inconvenient.
Indeed.