pebblewriter

Assume Crash Position?

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Screen Shot 2015-09-17 at 6.10.38 AMIf there’s one thing we’ve learned from the FOMC over the past 7 years, it’s that they care more about equity prices than anything else.  Anything.

So, it makes sense to question whether they’d risk it all by raising interest rates 1/8-1/4%.

The BoJ didn’t help matters by punting on an QQE expansion earlier this week — leaving the yen carry trade in limbo at the moment.  Knowing what’s at stake should it unwind, this leaves the Fed somewhat more likely, IMO, to hazard a small hike.

This is counter to everything I’ve been expecting for months, and completely contrary to the original intent of our USDJPY analog.  But, obviously last month’s dive to almost the .886 Fib was neither deep nor persistent enough to induce Abe/Kuroda to endure even more ridicule (if that’s even possible.) Maybe they need a little more convincing?

continued for members…

USDJPY isn’t taking any chances.  It’s up past the SMA200 and is perfectly capable of running up to the SMA100 at 122.499 if need be.2015-09-17-USDJPY daily 0548Ditto for CL, which is ready to leap past a channel midline if the alarm is sounded.2015-09-17-CL daily 0548As to SPX, we’ve stuck with these targets for a while, now.  If the Fed caves, gives Wall Street what it wants, the immediate upside ranges from 2060-2078.  If it shows a little tough love, instead, the downside is to at least 1894, with at least a 50:50 chance of 1856.2015-09-17-SPX daily 0548In between now and 2PM, look for SPX to oscillate down back from the triangle it’s formed over the past several weeks. There’s channel .236 support at 1991ish and channel bottom support at 1970ish.  And, the SMA10 is at around 1962.

UPDATE:  2:05 PM

No rate increase, so a dovish statement. Buy!

Bonds backtested…2015-09-17-ZN daily 1105as did stocks…2015-09-17-SPX 5 1112…the US dollar…2015-09-17 DX daily 1112VIX…2015-09-17 VIX daily 1112…EURUSD…2015-09-17 EURUSD daily 1112and, USDJPY, which is indicating that 120.11 is in the cards.2015-09-17-USDJPY 5 1112Unless Yellen screws the pooch in her press conference, this should be a great buying opportunity.

UPDATE:  2:54 PM

First serious resistance here at the white 1.272 and blue .382.  Nimble day traders might wish to try a short here.  Very tight stops are recommended, as it’s quite normal for algos to rule the roost during/after a FOMC presser. This means something as simple as the 5-min SMA10 or SMA20 can easily reverse any decline.  A backtest of the yellow .500 at 2000.86 might also make sense.

There are more interesting upside targets up at the yellow .618 at 2032.45 and the SMA50 (2041.81.)2015-09-17 SPX 15 1154I’d keep an eye on VIX, which has more than backtested the falling white channel. I’d expect it to bounce here at the channel top.2015-09-17 VIX daily 1154UPDATE:  3:15 PM

SPX has reached the yellow .500 as VIX backtested its broken triangle.  Id’ take profits on the short here and consider a long position if SPX climbs back above 2000.86.

2015-09-17 SPX 5 1215VIX:2015-09-17 VIX daily 1215UPDATE:  3:54 PM

Coming up on the close.  USDJPY has continued to slip thanks to the dollar’s weakness (lower interest rate forecast, incremental $$$ looking elsewhere.) 2015-09-17 USDJPY 5 1254 The NKD is also faltering, down 160 after being up in the minutes following the announcement.2015-09-17 NKD 60 1254

It’s a negative development, but I would imagine things will get “fixed” overnight.  Prices should be higher tomorrow, but I wouldn’t necessarily take a position overnight.  There will be plenty of room to play the upside if prices are rising tomorrow.

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