Sorry, Mr. Powell. No can do. There is no way to prop up stocks if interest rates continue to rise as rapidly as they have. And, there is no way to prevent interest rates from rising rapidly unless you are willing to put a lid on inflation.

And, there is no way to put a lid on inflation (at least in the short run) unless you’re willing to crash oil/gas prices over the next six weeks. And, sorry, but we all know what that would do to stock prices. Just the thought of it has done plenty.

The guys behind the curtain have prevented a breakdown so far, but the short-term indicators have slowly turned negative over the past couple of weeks. What’s it going to be, Mr. Powell? Pick your poison.

continued for members…Where things stand now… While ES is technically still broken out of its falling red channel, it is now 2 days into a bearish 10/20 cross.

And SPX hasn’t broken out at all. In fact, there’s an excellent chance that its falling white channel will expand as shown below.Meanwhile, day 2 of VIX’s bullish 10/20 cross. Right now, USDJPY is the best hope for a stick save if it’s able to shoot up through the purple target. But, there are problems with USDJPY breaking out, as we’ll discuss when I finish yesterday’s currency post.

There are obviously problems with oil and gas continuing higher. It is their YoY rally which has created the looming inflation/interest rate problem in the first place. It remains to be seen whether crashing VIX and spiking USDJPY higher could offset a sharp decline in oil/gas prices. If we look at USDJPY v TNX, we can see that the rise in yields began well before the upturn in USDJPY (rise in USD, decline in JPY.) But, they’re both on the same trajectory at the moment.

I’ll continue this thread in yesterday’s update on currencies, as it starts to delve into the relationships between them, interest rates and inflation.

UPDATE: 3:30 AM

I must be coming down with something. Since last week’s shoulder operation, I haven’t been able to sleep all that well – about 4 hours most nights. Yesterday, it caught up with me and I zonked out until about 2am. I see the market finally cooperated with our forecast.

This re-entry into the falling red channel reinforces the odds of a tag of the dashed rising white TL.  I’ve marked the red .786 (since we got a red .618 bounce) but the white .618 at 3734 would also make sense, ideally on Monday 3/8.Having not suffered a breakout, SPX’s chart is mercifully cleaner and its downside case somewhat stronger.Ok, back to the currency update. I had a chance to do some calculations, which should be helpful.