More news in the oil complex over the weekend as the non-OPEC players threw in with their OPEC counterparts and pledged production cuts which, like OPEC’s, will likely not help in the long run.  In fact, they just might find the cure is worse than the disease.

Sure, it was enough to drive prices higher in the here and now.

But, stocks have shrugged it off.  As is our central thesis, higher oil prices might be good for producers, but it’s a negative for central bankers who — tasked with balancing the inflation/interest rate scales — will have a difficult time preserving stock prices at the same time.

Rising rates in conjunction with growth and reasonable debt levels — no problem.  But, that ship sailed about $15 trillion ago.

continued for members…

In addition, USDJPY reached our 115.592 target price and is reacting negatively.

The .618 should act, as at least an interim top until a push to 120.11 is needed.

Our analog, as updated on Friday, remains intact.  Our initial downside target is 2242ish, though, as discussed last week, my preferred target is 2210ish.  There is a slightly higher target Fib at 2261.80 which might need to be tagged first.  And, there’s still the possibility that today will be a positive day due to some timing uncertainty as previously detailed.

VIX has awoken again.  Our first objective is the red channel bottom around 13.72, followed by the SMA200 currently at 14.63.

And, I’d keep an eye on RUT.  It reached our 1391.99 target on Friday and subsequently broke the minor trend line guiding it the past week.  Initial target is 1366, followed by 1355.

ES is putting in what looks to me like a blow-off top, leaving the rapidly rising purple channel and all significant Fibs in the dust.  A return to backtest the rising white channel it recently broke out of would put it at 2204 — a little more than 50 points from here.  This would jibe with SPX’s 2210 target.

UPDATE:  9:53 AM

2262.05 should serve as a good entry for anyone who didn’t hold short over the weekend.  The next overhead resistance isn’t until 2278-2281, so I’d keep relatively tight stops on this short just in case we’re off a day on timing as discussed last week.

I need to hop on a conference call.  So, I’ll leave it at that and check back in after an hour or so.

GLTA.

UPDATE:  12:11 PM

Quick progress report…SPX is coming up on potential support — the purple channel bottom and the SMA5 200 currently at 2050.16 and rising.  This would be a logical place for SPX to bounce if it’s going to continue today’s very gentle (so far) decline. Swing traders could probably ignore it, while day traders/scalpers should have a chance to ride the bounce.  It appears SPX will backtest the falling SMA5 10 before reaching it, so there’s a decent chance that the bounce will be small or non-existent.  If you want to be completely conservative, go to cash at the SMA5 200 and either go to cash or long until momentum turns back again — as seen in the VIX, USDJPY or CL.

Note that if SPX is headed to 2242, it’s only 12 points below, with all week to get there.  That translates into several more days of very boring markets, giving up a few points per day.  If, on the other hand, it’s headed to 2210 with 4 days to go, that’s a little more spirited 11 points per day.  I’d have to assume, however, that most of that would come on Thursday the 15th — the day after the FOMC announcement.

UPDATE:  3:08 PM

Pretty incredible stall on the SMA5 200 tag.  It’s now up to 2252.76, so the tag can happen at a higher low than would have been the case several hours ago if CL hadn’t bounced higher rather of tagging the purple TL at the white dot.    If this goes all the way down to the wire and finshes at or near the SMA5 200 at the close, we’ll be stuck wondering whether it’s a head fake.  It’s certainly looking like one now.