It’s always makes me a little nervous to call inflection points.  Despite how many you get right, there’s always the fear that you’ll get one horribly wrong.  Of course, when something fails to reverse, that’s valuable information as well.

So, we’ll take a quick look at the USD, which sliced right through our latest downside target and is hurtling towards our next.continued for members…

USD’s troubles, of course, have been driven by relative euro strength.  Investors are convinced that the Fed has no reason to hike further and that the ECB’s reduction in bond purchases are a sign of coming tightening.

This might be.  However, I think Draghi has no interest in tightening — while the Fed is very much interested in establishing more cushion between fed funds and zero so they’ll have more maneuvering room next go ’round.

Still, the EURUSD has broken out.  So, we have to respect it reserve any shorting until it shows signs of a reversal.

USDJPY, which broke out of the falling white channel in Jun, just backtested it.  The Fibs on this chart are indecipherable, so a close up is provided below.  It can always backtest lower, as was our original forecast before the breakout.  But, so far, it is respecting the yellow channel midline as originally suggested back in April.

As we go around the horn, we can see that CL slightly exceeded our upside target, and is currently backtesting it.

VIX tested the yellow channel bottom, but its reversal has been modest so far.I believe this sets up SPX for a backtest of the 2453 former top.  We’ve been expecting this for almost a week now.  Perhaps now that July is officially in the record books…

I have several meetings set up today with folks who are bound to have some interesting thoughts on Fed goings on.  I hope to have more perspective to add later this evening or tomorrow morning when things slow down a bit for yours truly.

In the meantime, watch for the VIX-inspired meltup in equities.  If it fails, 2453 looks good. And, consider shorting oil here (with tight stops.)  The YoY comparison suggests it’s time.