Yesterday’s initial equity sell off was abruptly arrested by the usual CL, USDJPY and EURUSD ramp jobs — but with a couple of twists, which we’ll get to in a moment.

USDJPY sold off initially, but was propped up at a minor TL — which was enough given the expectation of a corrective retrenchment that would normally follow an uninterrupted rally from the bottom of a channel to its .786 line.CL set up a bullish rising wedge, which it promptly bailed on after “markets” closed.  It has since transformed that broken wedge into a bullish rising channel — coincidentally just in time for this morning’s open.

As of yesterday’s high, CL had risen about 9% in three days — all in order to drive algos that produce higher stock prices.continued for members…The twists were the EURUSD and the bond market.

The EURUSD had a huge day largely on continuing rumors/speculation that Greece is fixed.  As we pointed out yesterday, this is a continuing source of headline risk to all traders.  It’s reason enough not to play this “will they or won’t they” game at all.

The 10-yr is similarly either signalling a breakout in trend or setting up a big head fake.  Yesterday, TNX broke out of the month-old falling channel but stayed within a much larger falling channel.  Today, it broke above that one, and even briefly pushed above the May 12 highs (which were already the highest since mid-December.)

The hitch with using treasuries to manipulate stocks is that the mechanism was completely broken while rates were dropping.  That is, plunging interest rates have always produced stock “market” losses — except for 2014, when currency and futures market manipulation kept stocks on the rise.

Will it suddenly reconnect now that rates are on the rise?  Maybe, but it might not be so easy given that most traders now recognize this as yet another broken market.

With CL, TNX and USDJPY all breaking out, it seems a foregone conclusion that SPX will follow suit.  I continue to see it as too early, but cannot ignore the writing on the wall.  I would use the falling white channel as a guide.

Breakouts should be bought, retrenchments should be sold.  And, overnight positions should be hedged or left up to the manipulators themselves to sort out.

Confirmation is always a good thing.  So, at times like this morning when a breakout is accompanied by one in CL, it’s relatively safe to go long with tight stops.

Bottom line, the market (without quotation marks) wants to retrench here.  But, TPTB are throwing everything including the kitchen sink at it to keep it north of the white rising channel line.  It’s getting quite tipsy.  Caution on either side of the ledger is strongly recommended.

UPDATE:  10:50 AM

SPX’s spurt up through the white channel top reached the purple .618 and the SMA10, so those looking for a trade might try a short position here at 2121 for a backtest of the broken channel at 2112.  Tight stops recommended.

UPDATE:  12:08 PM

2112.65 on the backtest, looks good enough for me.  I’d take the profits from this morning’s short and let the algos take it wherever they want from here.  Should bounce higher off the SMA20, but who knows how this script reads!

The lower targets still make sense for all the reasons we’ve discussed before.  But, we’d have to see CL break back below the falling white channel top (which it’s close to doing)…

…and/or USDJPY back below the red TL from last week.