Friday was one of the more interesting days we’ve had for a long time.  It wasn’t that we experienced a snapback rally — we’ve had plenty of those.  Rather, the plunge across the board aptly illustrated l the dilemma the Fed and other central banks face with respect to propping up markets.

With an imminent rate increase likely off the table — at least in June — the US dollar will have a hard time maintaining its strength.  If DX continues falling, then the yen carry trade will continue to falter.  Even though oil futures have become more powerful in driving stock algos, USDJPY still matters (as we saw on Friday.)

They can continue to drive CL higher, but that will simply increase inflationary pressures — which will make the continuation of ZIRP/NIRP that much more alarming.  To be clear, I don’t see any way they get out of this conundrum without stocks taking a hit or consumers taking a hit.  I guess we know which way that usually plays out…

This morning, CL is again demonstrating its ability and willingness to prop up stocks.continued for members…

It has been joined by USDJPY, in a less enthusiastic effort.The potential exists for USDJPY to rebound further.  It has a bundle of moving averages up around 109.34-109.38, and plenty of room to get there if it breaks out of the falling channel.  The only caveat is that Friday’s plunge didn’t quite reach the .886 at 106.216.  So, there’s always the potential for further losses.  Even the .886, in my opinion, doesn’t look like a great turning point.  From a harmonic standpoint, it works.  But, the channels suggest it could drop below early May’s lows.

Even though futures are currently showing nice gains, SPX did complete the .886 tag as expected on Friday.  So, we could easily see those gains evaporate in order for USDJPY to reverse.

The US dollar, itself, looks like it’s barely hanging on to very tenuous support.

If you bought NKD at Friday’s lows as I suggested, this might be a great time to take profits.With CL, ES and SPX all haven reached .886 rebounds, today is likely to involve consolidation of Friday’s rebound.  And, depending on how Yellen spins the employment picture this afternoon, we could see another leg down in the next few days — particularly if USDJPY doesn’t rebound.

A reminder, I am out of the office today at an offsite and won’t be able to post any more today.  I’ll potentially be back this evening, but more likely tomorrow afternoon.

GLTA.