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.

NKD reached and reversed off the .886 as expected.  I see no reason why it won’t return to at least the .786 at 15,931.

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.

For starters, how about a backtest of some moving averages?  The nearest is the SMA10 at 1974 (near the white .236 at 1976), followed by the 50 and 100 at 1968 and 1964.  The .382 retracement is down at 1946, closer to the SMA20 at 1937.Note that the Oct 15 low neatly backtested the 1.272 at 1823.  For those who’ve forgotten, 1823 is the 1.272 extension of the drop from 1576 to 666 between 2007 and 2009.  It was essentially ignored by SPX on its way higher, so a backtest — and failure to move lower — would have to be considered quite bullish.

It would also suggest a move higher to the 1.618 at 2138.  Note that 2138 is also in the proximity of the purple 1.618 established by the October swoon.  IF it is to get there, we should surely expect some pullbacks along the way — though I’ve suspected we’d need to get past the elections first.

If we survive a pullback to, say, the SMA100 at 1964 or SMA10 at 1976, we’ll focus on the purple 1.272 at 2073.