SPX spent all day being forced lower in order to reach the midline of a rapidly rising channel, only to face a 50-pt drop in the overnight session after Chinese economic data and, more importantly, a plunging USDJPY did a number on the gains of the past week.
With USDJPY back below the critical .618 at 120.11, the BoJ has a choice to make: watch the past year’s gains vaporize, or devalue the yen further to support the “market.”
While the overnight drop in the futures might be dramatic, it’s important to note where SPX’s channel support lies.
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