We got new all-time highs as expected, yesterday.  Never mind that it took a breakout in USDJPY, a breakdown in VIX and a sharp rebound in WTI.  There’s even a clever bit of Fed positioning in the works for good measure.

continued for members…

Running a little late this morning, as I didn’t make it home from the airport until 2am.  I’m not sure how useful this will be on 3 hours of sleep, but here goes…

First, going around the horn reveals nothing particularly new.  VIX is being suppressed to new lows and is closing in on both the 2006 lows as well as the all-time lows from 1993.

CL is still rebounding after the near tag of our next downside target at 42.84ish.USDJPY has broken out of the falling white channel and above the SMA100……with the 120.11 price level in sight if needed.
This leaves SPX with a clear opportunity to reach the IH&S target and/or reach the next Fib level at 2422-2430.The two recent H&S’s (red and white) were not only busted, but the rising white channel’s breakdown has yielded higher highs which busted all remaining downside Fib patterns.

We’re left with a daily chart that looks like this.  The white 1.272 and 1.618 were both ignored on the way up via VIX bashing and CL/USDJPY ramping.  But, note the 1.618 was backtested twice.The weekly chart shows the battle that was waged over the yellow 1.618.  As we talked about way back when, the series of reversals at 2134 formed an IH&S that targets 2411ish.As far as the Fed trickery goes…I think they’re going to entirely bail on the next rate hike.  With the economic data being so weak (even soft data) and oil prices dropping like a rock, there will be little argument for a hike.  In fact, in commodity prices keep dropping, we might hear calls for renewed accommodations.

I’m looking at currencies, today, in an effort to corroborate this thesis…will let you know what I find out.

UPDATE:  1:33 PM

SPX has reached its first legitimate support here at the bottom of a small rising channel and the SMA5 200.  It should bounce here.  Any drop through 2396 should be shorted with downside targets of the gap close at 2376.98 and the yellow neckline backtest currently around 2360. Since we have a pretty clear line in the sand here, I’m going to focus on currencies for a few hours.  DX just backtested a long-term trend line a few days after EURUSD reached my upside target.  So, I think there are probably some good trades ahead here. UPDATE: 2:30 PM

A 3-pt bounce that went nowhere, followed by another bounce on the SMA5 200.  Not terribly inspiring.  But, again, the SMA5 200 (2396.90) is the signal to short given its intersection with the small white channel.If it seems like this is a very feeble attempt to break out…that’s because it is.  In fact, ES is making a bearish move here, breaking down and backtesting its SMA5 200 after dropping through a nice little trend line (purple) of support.UPDATE:  3:32 PM

Getting a little motion, here.  ES is breaking down.  I’d short here for 2389.33 — the red .618 — with tight stops.  If it drops through there, we have potential down to 2383 and then those targets mentioned above: 2376 and 2360.  Note the SMA10 is at 2390.49 — just above the .618. UPDATE:  3:45 PM

USDJPY has reached support, so SPX is likely to bounce here.  With 15 minutes to go, we could see a sharp rebound into the close — probably rebounding to backtest the broken white channel at 2397.31.