No one believes Draghi anymore, but everyone’s too polite to call him on his ridiculous statements regarding his policy’s effectiveness.  Note the EURUSD’s spike higher this morning. If the falling white channel holds, it’ll be because central banks hold it there.  We’ve already seen the Fed turn backflips in order to support DX’s rising channel from May.

And, does any of this really matter, if the folks scripting the “market” have things well in hand?

continued for members…

Yesterday, it was all about VIX again. The continuing push below the month-old white TL was enough to get SPX back out of the falling red channel again.  Of course, this morning, it’ll be right back within it. ES, on the other hand, will backtest its falling red channel again.  The one it broke out of already.  So, it remains a tale of two “markets” – with ES broken out and SPX not.  One is correct.  But, which one?CL has been a great help, breaking out of the falling red channel and establishing a new, more bullish uptrend.

And, USDJPY, by breaking out of the falling red channel and going sideways for the last 24 hours, has at least done no damage to stocks.

NKD has formed a nice little H&S Pattern targeting 16500ish — about where the SMA100 is. Will they allow it to play out?  Lately, NKD declines have been used, along with VIX pops, to power SPX lower when necessary (backtests, etc.)Last, RUT broke above its .886 yesterday on VIX’s smackdown.  Now, to see if it can hold…

Look for ES and SPX to hold their SMA10s at 2176 and 2176.79 today.  Anything lower, and ES’ yellow TL should kick in as it always seems to: about 2174.35.

Today’s response to the ECB decision should tell us whether 2138 by Monday is even a possibility.  Clearly, investors are disappointed that the ECB isn’t dropping cash from helicopters or buying equities (something Draghi says the ECB hasn’t even discussed – calling bullshit on that one!)

So, stocks have every reason in the world to decline, and would if we didn’t have this happening in USDJPY……and, this in CL……and, this in VIX.

As long as SPX remains below the purple channel midline, 2138 is a possibility.  But, the fact that it keeps bouncing up above it by the close makes a short position dicey, to say the least.

I’d look to get long again around SPX 2176.79.  If the important SMA10 doesn’t hold, then we might get some excitement going.  The next support is down around 2167 – the bottom of the rising purple channel.  There, it’s only 31 points to the 2138 backtest, presumably on Monday.  After staring at these charts every day, I’m still only 50:50 about it.

I have some things to attend to today, so will probably peel away about midday.

UPDATE:  11:15 AM

ES reached its SMA10, but SPX came up a little short.  While it was vacillating between a breakout and another leg lower, the EIA report came out, confirming yesterday’s API report of a huge 14.5 MM barrel inventory drawdown.

VIX plunged .50 in seconds ( a deep retracement of yesterday’s purple .886 tag) and SPX raced up to close this morning’s gap.  At this point, SPX is back at the purple midline that it’s had so much trouble breaking above.

For anyone not still short from yesterday, I’d short here with relatively tight stops.

UPDATE:  3:41 PM

SPX has made a couple of attempts to get down to 2176.79 — the SMA10 based on yesterday’s close.  But, it might not.  Its low for the day was 2177.49.  If SPX closes right here, the daily SMA10 for today would be about 2177.46.  So, it’s entirely possible that they’ll consider it close enough and move on.

It certainly appears as though VIX is readying itself for another last minute hammering – which would get SPX back above the red channel top.  I get tired of saying it, but don’t hold overnight unless you can carefully monitor your position, hedge it, or stand the possibility of a gap higher overnight.

Of course, with 20 minutes to go, there’s still a chance that ES will dip down to its yellow TL at 2175 and SPX will close at 2176.79 today instead of tomorrow morning.  TPTB have pulled out all the stops to prevent a serious decline after the ECB bombed this morning.  They hate to admit it when the “market” pukes on their press conferences.  Maybe allowing a small decline into the close would be a good way of reinforcing the importance of additional easing…

CL, having “broken out,” has run out of room and should return to test the white channel bottom (43.50ish) it missed the other day.