It’s another election day. As always, I find myself wondering if anything will come of it. Get the money out of politics, and maybe…
In the meantime, enjoy this little clip from satirical genius George Carlin — who insists that if you do vote, you don’t have anything to complain about.
Yesterday’s call for a reversal in USDJPY and NKD was spot on. It remains to be seen whether US stocks will follow suit.
USDJPY hit the large scale .786 and reversed back below. A mild, bullish reversal to the yellow .500 Fib at 111.55 would undo most of the post-QQE expansion rally — when ES was 1970ish. While a garden variety reversal to the .618 would point to 105.57, undoing the Oct rally altogether.
Needless to say, the impact of the carry trade has been greatly skewed to the upside. That is, USDJPY rallies nearly always get a 100% response from stocks. While, USDJPY declines tend to take place in the after hours, when ES is more easily propped up and the impact is muted.
Since our capitulation call on Oct 15, I’ve wondered whether we’d see another Feb 2014-type rally.
Cue USDJPY for emergency hockey stick operations. All Fed presidents, report to CNBC. Mr Buffet, please report to makeup. Should be a heck of a bounce from here.
In fact, the past two weeks have been even more aggressive — aided, of course, by the Fed, the ECB and the BOJ. The tougher call is whether the rally can continue in the face of USDJPY/NKD digesting their gains.
Next, some key levels and what the future might hold for SPX.
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