In yesterday’s post, we noted that the USDJPY had gone as far as it could without a breakout.  Indeed, overnight, the BoJ flinched.  In an interview recorded on June 17 but, not so surprisingly, not released until today, Kuroda confirmed that there will be no 20 trillion yen increase in QQE and, most definitely, no helicopter money.

Thus, the remarkable runup in USDJPY since the post-Brexit 98.99 lows has been undone, right?  Not exactly.Regular readers know that the absence of additional QQE doesn’t mean there won’t be plenty of additional currency manipulation.    And, remember, Kuroda is famous for his head fakes — saying one thing and doing the opposite a week later.

Let’s also not forget that it’s easier and cheaper, anyway, to manipulate other, more powerful algo drivers such as oil futures.  Witness yesterday’s spike in CL.  While the talking heads attributed it to a bullish EIA report, it commenced over an hour before the EIA data was released — as S&P 500 futures were plunging.  Just another day at the office for central banks.

continued for members…

Look for ES to sell off to the SMA10 at 2150……and, for SPX to shed an equivalent amount — initially to the bottom of the rising red channel at 2162ish.

There’s so much more potential downside, but TPTB have so far done an excellent job at propping stocks up with CL and USDJPY.  Yesterday saw VIX utilized quite effectively.  With both the ECB and BoJ punting, we’ll see whether they can keep the casino afloat.

UPDATE:  12:57 PM

Status update…  SPX is on track for the red channel bottom (which could expand.) The only potential hitches are USDJPY, which has reached its flag pattern bottom again… …and, CL, which I expect to dip below yesterday’s lows.  It is hinting at a bounce here, which wouldn’t be too surprising.  Any push back above the SMA5 20 is a warning to consider closing the SPX short.  At the very least, it will likely be used to slow SPX’s descent. There’s a decent chance that ES won’t extend to 2150.  The SMA10 is rising about 7 points/day, so will be at 2157ish tomorrow at this time.

Note that 2157 isn’t far from the dashed, white TL that could easily provide another bounce today as it did yesterday.  A little tricky, as that would conflict with SPX’s red channel bottom. This all presupposes that TPTB will be able to turn investors’ attention away from the central bank fails last night.  Maybe they will, and maybe they won’t.

UPDATE:  1:11 PM

As soon as I posted the above, CL started ramping.  I believe they’re simply trying to slow SPX’s descent, as it was starting to leak below the white TL.  However, I can’t rule out a bounce up to the SMA5 200 at the red channel midline around 2167.50ish either right away or closer to 3pm ET.  Scalpers might wish to take profits here, while swing traders should be prepared to ride it out. UPDATE:  1:58 PM

Getting close, if not already there.  CL is bouncing a bit, but USDJPY is going sideways.  Could go long here, and be prepared to reshort after whatever bounce we get.UPDATE:  2:13 PM

That’s better.  I’d look for a bounce here, probably up to the SMA5 200 at 2168ish.  If it doesn’t, then 2150 is the next downside target.  As always, look for a bounce from USDJPY and/or CL to signal any bounces in SPX.  I don’t see any just yet…UPDATE:  2:31 PM

CL is leaking conspicuously below the .886 Fib.  It either signals lower lows on SPX, or is a head fake by the HFTs to suck in some bears before a bounce (not uncommon, and my expectation at this time.) Stay frosty.

UPDATE:  2:46 PM

Looks like we’re going lower.  No bounce in CL or USDJPY to prevent it.  Back to short for 2156ish, ideally around 3:34pm.UPDATE:  3:28 PM

We’re getting a little rally going here.  CL, USDJPY, NKD, DX — all leaking lower.  VIX put in a minor decline, but this is mostly just spoofing ES itself.  Watch your stops.  A push beyond the SMA5 20 at 2162 would make me nervous. UPDATE:  3:45 PM

Pulling the plug on the short, as the VIX hammering is getting aggressive.  I’d be happy to reshort if it drops back through these levels. UPDATE:  3:59 PM

Just a couple of minutes left.  CL still looks like it’s heading lower, and USDJPY is lingering below the white channel bottom.  But, VIX continues to get bludgeoned.   Hard to get excited about holding a position overnight…  I’d suggest going to cash here at the close.