S&P 500 futures tagged our next lower target overnight, the .618 Fib retracement at 2930.12. Notably, they tagged the SMA100 but just missed the SMA50 down at 2906.56. Most importantly, they missed the channel midline which I have felt was critical in determining whether or not we’ll see a bounce into the end of Q2.

continued for members…

It’s easiest to see on the SPX chart.  Note that the longer the tag is put off, the higher the SMA50 will get.  It would make sense for a day or two to pass, if only to allow SPX to remain above the .618 – but, that’s pure speculation on my part.

VIX supports the dip to a lower low with plenty of upside beginning at 47.2ish… …as does CL.If we adjust the Fib grid on CL to reflect last week’s 40.44 as Point A, we can see that the .382 retracement lines up nicely with the purple 1.618 at 27.38.

And, just below that is the 26.05 lows from Feb 2016 as well as the .236 line of the falling white channel which broke down in April.

It’s really hard to see on the daily chart, as the bounce has been so sharp. It’s much easier to see on the weekly chart.ThinkorSwim is having issues this morning. Just before the open, I found that charts would update but I couldn’t switch timeframes without getting a spinning gear “waiting for data.” Will resume posting when it starts working again…

Also, I need to step out for an appointment between 10:30-12:30.

UPDATE:  9:55 AM

Ok, back in business with the charts.  On the bond front, the 10Y remains in the doldrums… …as the 2Y holds its recent levels.

This has brought the 2s10s a little lower to 49 bps – about as low as you can get without calling it a breakdown. UPDATE: 1:10 PM

An excellent place for this bounce to reverse itself if it’s going to…

SPX has backtested its 2.618 and SMA20.Though ES is pretty much in the middle of nowhere.CL has reached the top of the falling red channel.RB has backtested a channel line and TL.And USDJPY is backtesting the rising white channel bottom.

Last, VIX is backtesting its SMA100.Arguing against a reversal here, of course, is OPEX – coming up Friday. Once these bounces get going into OPEX, they can be hard to stop. With ES and SPX back above their SMA200s, stocks are running before the wind.

Caution is advised.

UPDATE:  2:30 PM

I guess the Fed saw what I saw…and decided this would be an excellent time to announce they’re buying corporate bonds.  Next overhead resistance is now ES 2.618 at 3076.93 (SPX 3085ish.)

https://www.federalreserve.gov/newsevents/pressreleases/monetary20200615a.htm

The Fed can buy down to BBB- (rating as of Mar 22, the day before the Fed went all in.) The current BBB rate for corporates is 2.76%. So, how is it that corporations need another bailout?  Is 2.76% too expensive for them?

The target issuer, I suppose, is a corporation that lost its investment grade rating after Mar 22.  BBs go for abot 4.99% and B for 6.73%. CCC is paying about 14.27%.  Still nothing compared to what consumers with less than perfect credit have to pay…

UPDATE:  3:36 PM

And, just like that, SPX is back down below its 2.618, but don’t be surprised if it closes slightly above. Silly Fed…they forgot to stipulate today’s closing price.

UPDATE: EOD

Once again, the Fed saves the market. For now.