The last time SPX was in a position to make new highs, it fell 125 points instead.  If fact, it’s tested the May 2015 highs six times since then.  Any of those days, it was within a good ramp job of shooting up past 2134.  Is this one any different?

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First, note that SPX has successfully backtested the falling yellow channel (though it probably dipped a little lower than they had planned.)  It has also broken out of the falling purple channel.  It did this once before, but Brexit knocked it back down quite a bit.  It has now completed an IH&S Pattern within the right shoulder of a much larger IH&S Pattern targeting 2422.

And, it broke out of the small, falling white channel — busting the bearish Harmonic grid that had provided a path lower.

In short, there are no chart patterns or harmonics standing in the way of new all-time highs — which is what you would expect when central bankers are gearing up for more stimulative action and when the global Stimulator in Chief (Abe) was reelected in a landslide.

About the only resistance is the actual 1.618 extension at 2138.04.  It was this Fib level that SPX came up 4 points short of on May 20, 2015.  Technically, we could call the rise back to 2138 a truncated 5th wave and get ready for a huge decline.

But, I imagine TPTB have taken this risk into account and are planning a very big push to make sure it doesn’t happen.  Seen USDJPY this morning?

GLTA.

Not much new to report at this hour, as all eyes are on this morning’s employment report.  Another bust like last time would drive a nail into the Fed’s rate rise coffin.  While, a strong report might give pause for thought.

The biggest chart development yesterday was in oil, which tumbled sharply.

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Yesterday, SPX reached our initial target and came up just short of our secondary before a convenient API report sent CL spiking higher.  The algorithms were in fine form, dragging SPX higher as well. From yesterday’s post:

Look for SPX to try to contain this morning’s losses to the channel bottom.  I expect new lows, with the SMA50 at 2076.59 and the SMA10 at 2072.28 as the next mostly likely targets.

USDJPY continued its streak of intraday ramp jobs.  And, again, it settled lower after the stock “market” closed.continued for members… (more…)

SPX had little trouble reaching our downside target yesterday.  As we noted before the open:

Today, we see a capitulation of the USDJPY ramp job that dragged stocks out of their post-Brexit malaise.  It should be enough to allow SPX to finally backtest some of its moving averages, the closest being the SMA20 at 2082.

SPX tagged 2080.86 before the usual CL and USDJPY ramps prompted an 11-pt rebound into the close.But, the ramp jobs didn’t last.  And, in fact, their continued weakness suggests much lower lows to come.

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We’ll start with a peek at the Big Picture posts for each month so far this year, and wrap up with a look at what to expect going forward.

The Big Picture, January 5, 2016

On Jan 5, I was focused on the fact that USDJPY had dipped below the critical Fib line at 120.11.

Did you feel it?  Something big happened yesterday, and it had nothing to do with China, Saudi Arabia, Iran or Donald Trump.  Of course, I’m talking about USDJPY, which closed below the key Fib line at 120.11.  Is it important?  Well, the last time it dipped below this level, stocks were in the midst of a 12.5% plunge.

With SPX at 2020, I identified two important levels of support: 1984 and 1962.

With USDJPY below 120.11, and CL potentially plumbing new depths, 1962 should be doable.  After that, we’ll have to see what tricks TPTB can come up with to maintain the purple channel.  If they don’t, then we’re obviously in for much more downside than we’ve seen in a long, long time.

The following day, SPX dropped below 1984.  The day after that, SPX plunged through 1962 and didn’t stop until it reached 1812 — a 12.9% (versus 12.5%) drop from the end of the year highs.

The Big Picture: Feb 8, 2016

By Feb 8, I was crash watch.  USDJPY had dropped below the bottom of a huge, 15-month old huge channel, with devastating results for stocks.

Now, as USDJPY drops through the channel bottom again, the “market’s” fate rests on whether or not the central planners will elevate the USDJPY yet again.

SPX, already down nearly 15% from its peak, had completed a huge Head & Shoulders Pattern that threatened to send the index tumbling another 17%.

When the FOMC increased rates two days later, it completed an even more bearish H&S Pattern.  On Feb 11[see: USDJPY Finally Relents], I wrote:

USDJPY, along with CL and SPX, should bounce here.  If you’re a bull, they must bounce here.  The only question: is it too late?   [Keep] an eye on CL, USDJPY and NKD for signs of a turn.  You’ll know, because all three will be screaming higher.

CL, USDJPY and SPX all reversed sharply that day.  CL screamed 50% higher (currently about 100% higher) in about five weeks, producing a 12% rally in SPX and a 17% rally in NKD.  It was a massive, highly successful intervention that cemented CL’s role as the primary driver of stock prices.  I set a target at 2000 for SPX by Mar 12.

The Big Picture: Mar 14, 2016

SPX had already reached 2000 by Mar 4, over a week ahead of schedule.  The FOMC and BoJ were both due to announce next steps the week of Mar 14.

And, now we face the question of whether SPX will reverse strongly or merely take a breather here.  With Kuroda announcing any BoJ policy changes tomorrow and Yellen doing the same on Wednesday, “markets” remain in the hands of the central planners.  Wouldn’t it be nice if they’d just publish future stock prices while they’re at it?

Given their success in rallying SPX off its Feb 11 lows, it seemed they were more likely to break out than down.  I placed targets of 2050-2065 around Apr 1 and 2087 (later increased to 2098) by Apr 22.

The central banks obliged.  SPX reached 2065 by Mar 30 and 2087 by Apr 18.  SPX topped out two days later at 2111, 13 points beyond our upside target.

The Big Picture: Apr 27, 2016

This was another post centered around the coming FOMC and BoJ actions.  SPX had managed a rather extreme rising channel that was built entirely on CL and USDJPY intraday rallies.  But, I had little faith in the BoJ’s ability to keep the USDJPY rising.

That’s probably about it for this leg.  If you’re a contrarian and can hedge overnight and don’t believe BoJ has any ammunition left, this would be a great place to short.  I still believe the yellow .786 at 2065 is in play…

If there’s a silver lining for bears, it’s that tilting the rising red channel over a bit theoretically presents an opportunity for a backtest of the SMA200 down at 2014 (the red dot above.)  Though, it sounds ludicrous to talk of a 73-pt drop in the next day or two.

The following day, the BoJ Screwed the Pooch, and SPX began a 3-week decline to 2025, not quite to the SMA200.

The Big Picture: May 5, 2016

On May 5, I focused on a potential bottom for SPX, identifying a backtest of the broken white channel at 2039 as the most likely scenario.

It could happen any time between now and then, and it could even wait until Friday or Monday.  But, the point is to backtest and, thereby, firmly establish support in order to legitimize another push higher.

SPX would backtest the white channel top the next day, bounce 35 points, test it again on May 13 and 17 before finally dropping below it on May 19.

The Big Picture: Jun 14, 2016

This post was all about the FOMC’s rate decision the following day.  My thoughts on the matter:

Tomorrow, I expect the Fed to punt.  I expect the dollar to try and sell off, but be propped up by central banks when the yen carry trade unwinds a little more.  And, I expect oil to rise to compensate.  As always, I don’t recommend trading on Fed announcement days.  But, if SPX sells off, and if you’re very careful not to get whipsawed, I’d look for opportunities to short SPX, possibly down to 2017 or even 2000.

As it turned out, a steep rally in CL kept SPX on the rise through June 23, at which point it dropped through 2000 (and the falling white channel) to 1991 before beginning the biggest, sharpest V-shaped recovery we’re seen in quite a while.

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The EOTWAWKI Sale

Final 48 Hours

There’s something deeply satisfying about being short when the buy and hold crowd is freaking out over the massive (their word, not mine) 5% Brexit drop in the S&P 500. And, that’s what pebblewriter.com is all about — catching most of the moves most of the time, regardless of which way it’s going.

Ordinarily I wait until the actual end of the month to start any kind of membership sale. But, we’ve had a pretty good month so far [CLICK HERE]; and, I have the feeling there are a lot of folks out there who are truly confused about what’s going on.

Be confused no more. Sign up for an Annual Membership at over half-off the first year or, even better, a Charter Annual Membership where your rate is guaranteed to never increase for the life of the site.  Don’t delay, as this promotion ends on July 2.

CLICK HERE here to Sign up Now!

* * * * *

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.

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With SPX having recovered almost two-thirds and FTSE all of its Brexit losses (from their inflated pre-Brexit ramp job heights) by the end of the 2nd quarter, The Powers That Be can pat each other on the back.  The crisis has been averted, the “markets” are safe, and life is worth living again.  Mission accomplished.

After the quarter officially ends, maybe USDJPY will go back to wallowing around on its way lower.  After tagging our downside target last night (a few hours late) it has managed to maintain the positive channel, and should manage to do so for a few more hours.CL, which had gained a stunning 9.1% in order to rescue stocks, is down 2.8% since yesterday’s top call.  Congrats to all who were foolhardy enough to heed the call.SPX hit its .618 Fib yesterday, a sharp 4.3% spike off Monday’s lows but landing at a spot that should produce a reversal.

This has been a very difficult month, with chart and Fib patterns trashed at every opportunity by the folks who are really running the show: your friends and mine, the central bankers.

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The “market” is good at melting up.  The mainstream media will roll out all sorts of fundamental reasons for the rise: Brexit fear easing, oil market tightening, etc.  But, it still boils down to ramp jobs in CL and USDJPY – both of which are up strongly since Monday’s lows, and both of which are being driven higher by central bankers who are desperate to erase the damage from the Brexit. continued for members... (more…)

There was some indecision about how low was low enough.  But, in the end, TPTB didn’t let us down.  From yesterday morning’s Stopping the Bleeding:

When ES, which has already reached its SMA200, starts popping strongly, we should have our indication.  At that point, CL and USDJPY should be strong candidates for long positions… I see this morning as another Feb 11 — where CL and USDJPY will be instrumental in forcing a turnaround once the SMA200 and/or yellow channel top are reached.

USDJPY started ramping first thing yesterday morning, and didn’t stop until after the “markets” closed, when it reset so it could do it all over again.  Net gains so far:  112 pips, about 1%.And, CL popped at precisely 2:25 PM, and has since settled into the kind of channel that algos love.  Unfortunately, it has led CL straight to a channel midline that could prove problematic.  Net gains so far: 4.3%.

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Meanwhile, EURGBP reached our second target and is digesting its gains.ES is currently up about 24 points, which coincidentally is enough to get SPX back to its SMA200 at 2020.29.After that, we’ll have to see whether USDJPY and CL can break out.UPDATE:  9:39 AM

SPX just reached the SMA200.  I believe CL and USDJPY will probably kick it up over the threshhold, so would hold long until we see some weakness settle in.  Note that ES’ SMA200 is just ahead at 2015.15. UPDATE:  9:49 AM

Seems to be petering out here, as ES’ just tagged its SMA200, which technically is on a backtest.  Back to cash.  If this is like most other algo-fueled rallies, SPX will sit here until the SMA5 10 arrives, then start inching higher again. UPDATE:  10:06 AM

SPX should dip to tag the SMA5 10 as it pushes through the SMA200.  Nimble traders could try picking up a few points, but it hardly ever reaches the target as it’s so widely anticipated. 

In fact, it”s so widely anticipated that it’s morphed slightly over the past month or so.  We sometimes get a dip, indicating the backtest is imminent, but which doesn’t quite make it to the backtest target before being swept up by the SMA5 10.  It is carried to a slightly higher high to shake out those playing the dip. 

After they’re stopped out, then it dips to the backtest target to screw over those who played the breakout, arriving there at about the time as the SMA5 20.  If that all sounds kinda confusing, just know that it isn’t usually worth playing.

This one’s a little tricky, as it involves letting ES drop back below its SMA200 and then getting it back on top.UPDATE:  10:43 AM

This might be as good as we get.  I’d take the profits and revert to cash until we get a sense of whether it’ll rebound or not.  If it dips below the SMA5 20, I’d want to stay short. Here’s one potential problem TPTB are facing…

…and, here’s the other one.And, here’s the upshot for ES — a flatter rising channel that shows 10-12 points of downside to the bottom and the SMA5 200 at 2001.UPDATE:  11:00 AM

I could be crazy, but I think we might get some more downside here.  SPX is clinging to the SMA200 on USDJPY’s continuing spike, but CL is dropping like a rock.  I’d short here on any drop through 2020.29. UPDATE:  11:04 AM

Shorting here for that red channel midline at 1981.  Tight stops, of course.  I’d put the odds of it working out at 40:60.  It would have to get down through the short-term moving averages and the gap close at 2003.85.UPDATE:  12:36 PM

CL has pushed beyond the SMA50, seemingly willing to go wherever it takes to keep SPX propped up above its SMA200.  I’d revert to cash here, and only go short if it drops back below 2020.29 — which it probably will do after tagging the SMA5 200 at around 2026-2027. It seems to me that EURGBP is going higher after backtesting this little flag pattern.  And, USDJPY is running out of steam.

UPDATE:  3:15 PM

SPX pushed back up through the SMA200 and is closing in on the SMA100.  I’d love to short here, as the rebound is really overdone.  But, they’ve run USDJPY and CL up to current levels without reservation.  I can easily see them resetting overnight and doing the whole thing again tomorrow.   Short here only if you can watch or hedge the position carefully overnight. Note that CL has completed a backtest of the rising purple channel midline.If they’re ever going to flesh out this channel, it has to reverse here.UPDATE:  3:41 PM

Apparently, it’s really important to TPTB that they breech the SMA100 as well.  SPX just pushed back up through the SMA5 10 and is closing in on the MA on strength from USDJPY and CL and VIX monkey hammering.  Back to cash. They’re painting this as an amazingly positive close, but I just can’t bring myself to go long into the close.  Maybe if it weren’t such a sham…  But, honestly, consider the event risk.

UPDATE:  3:51 PM

I’d take one more stab at shorting here and see if SPX can get some profit taking going in the next 9 minutes.  Again, I’d not hold short unless you can handle the risk of another gap higher in the morning or otherwise hedge or watch your position carefully.  Likewise, I’d not hold long. There’s a lot of uncertainty out there still, and there’s no way of knowing whether this V-shaped bounce has run its course.  I see EURGBP heading up to .84111 very soon, possibly this evening.

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A quick heads up: I have an appointment out of the office this afternoon at 1:20pm.  It should only take about 1 1/2 hours but I’ll be out of touch during that time.  Also, I’ll be switching servers for the site this afternoon, sometime after the close.  The site will probably be down for 30-60 minutes at some point.

The EOTWAWKI Sale

There’s something deeply satisfying about being short on a day when the buy and hold crowd is freaking out over the massive (their word, not mine) 5% drop in the S&P 500.  And, that’s what pebblewriter.com is all about — catching most of the moves most of the time, regardless of which way it’s going. 

It might be the end of the world as we know it; but, doesn’t it feel fine to greet each new trading day prepared for whatever the politicians, central bankers, algos or talking heads can throw at us?

Ordinarily I wait until the actual end of the month to start any kind of membership sale.  But, we’ve had a pretty good month so far [CLICK HERE]; and, I have the feeling there are a lot of folks out there who are truly confused about what’s going on.

Be confused no more.  Sign up for an Annual Membership  at over half-off the first year or, even better, a Charter Annual Membership where your rate is guaranteed to never increase for the life of the site. 

CLICK HERE here to Sign up Now!

 

Today, we should see the rest of the move we anticipated last week — followed by an attempt to reverse course or, at least, stop the bleeding.

Note that EURGBP, having nailed our initial target on Friday, is almost to our secondary target.  Our forecast from last Wednesday [see: The Eve of Destruction]:And, the action since:Likewise, SPX nailed our initial downside target on Friday, and should reach the next this morning.

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