There’s one theme that’s characterized this “market” for the past six weeks since Brexit: push a little here, pull a little there — always just enough to keep it on an upward trajectory.

Yesterday, it was a USD breakout [see: Manufacturing a Breakout] that kept prices high enough into the end of the month. Nicely done, Fed jawboners. But, what’s next, now that the dollar is up against strong resistance?

Did it surprise anyone that the Fed jawboner du jour (Evans, non-voter) walked back all that hawkish bravado, promising low rates forever?  Like Fischer yesterday, he made it clear that the only data upon which the Fed is dependent are stock indices.

“If necessary, we could normalize policy much faster than currently envisioned and still keep the pace gradual enough to avoid a disorderly change in financial conditions.”

For those who missed it, Stanley Fischer’s comments on Bloomberg yesterday:

“Well, clearly there are different responses to negative rates.  If you’re a saver, they’re very difficult to deal with and to accept, although typically they go along with quite decent equity prices.  But, we consider all that and we have to make trade-offs in economics all the time and the idea is the lower the interest rate, the better it is for investors.”

There you have it savers, insurance companies, pension plans, banks, and pensioners.  Sorry you can’t earn anything on bonds — the bedrock of your portfolio. At least you’re not paying interest like Japanese and European investors — not yet, anyway.  Take comfort in the fact that stock investors are reaping the rewards of your sacrifice — a fair trade-off, no?

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The daily DX chart shows the SMA200 just above.

While the daily EURUSD shows the SMA200 just below.

USDJPY is nearing its overhead resistance.

CL continues to drop, breeching the SMA100 this morning.

And, VIX, which had ample opportunities to dip lower and support stocks, curiously didn’t.

None of this is very good for stocks, as is evidenced by ES’ 2.50 point deficit this morning.  Unless those SMA200s are busted, or CL turns around, we’ll have no new highs today.  I’d start out short, as the momentum is with the bears at the moment.

Although SPX held the falling red channel midline yesterday, it is a falling channel — hardly the thing that new highs are made of.

To be sure, there’s enough room in each of those indices to keep SPX from tumbling just yet.  But, the writing’s on the wall.

UPDATE:  9:49 AM

That didn’t take long.  CL has decided it’s better to be a team player, just bounced above the SMA100.   SPX is back above the red midline.  Today is another one of those lovely EIA Inventory Report days (10:30 ET) so this move could easily fizzle.

UPDATE:  10:00 AM

Pending home sales just came in hot (+1.3% vs 0.7% exp.)  Won’t do much to help Evans’ case for low rates forever.  SPX is back below the midline, as CL’s pop has, indeed, fizzled.

UPDATE:  10:31 AM

Inventories came in higher than expected at 2.3MM vs 1.3MM exp.  CL is testing the SMA50 at 45.62, leading SPX to drop as well.  Note that at this point, CL’s white channel backtest would be at about 44.79 and SPX’s rising purple channel bottom at 2167.29.

Perhaps significantly, VIX just gapped above the yellow TL that has marked many tops (and a couple of bottoms) lately.

My guess is that they’ll use what room DX has left to rise to moderate the effects of CL’s decline to the white channel top, at which point a CL bounce will take over for the then falling DX.   This could presumably keep SPX from tumbling through the purple channel bottom while CL is allowed to stabilize.

Watch USDJPY for a rise to 104.24 and, if necessary, an intraday breakout. 

UPDATE:  11:01 AM

SPX just reached the purple channel bottom on VIX’s push through a little TL connecting the tops of the last few days.  I think we’ll get a bounce soon, especially as CL is within .20 of the white channel backtest. 

UPDATE:  11:12 AM

I think that’s probably close enough on the CL backtest.  I’ll look for CL to rebound strongly here, leading SPX higher as it does.  Back to long.  We’ll obviously keep a close eye on CL for any signs of failing to launch.  If you play oil futures, this is a good buy signal — though reasonable stops are always a good idea.

UPDATE:  11:20 AM

The bigger picture on CL shows the channel top backtest.  The close up shows that it could drop another few pennies, but this should be about it.  Obviously, backtesting a falling channel top means that it could continue lower along with that channel.  It’s not likely, but it could happen.  We’ll look for a strong CL rebound as an indication of the actual plan.

Note that VIX has dropped back through the red TL and is headed for the yellow one.  A drop back through 13.62 would be nice confirmation of this buy signal.

UPDATE:  12:02 PM

SPX just slipped below the earlier lows.  Back to short as a precautionary move.  CL’s bounce has been quite modest so far.

UPDATE:  12:17 PM

There’s the .886 retracements for both SPX and ES — primarily on DX weakness and VIX’s continuing rally.  This is the next level of support, followed by the former low at 2160.39, a couple of purple fibs at 2157.47 and 2152.85, and finally, the SMA50 at 2148.41.

UPDATE:  12:33 PM

CL just broke down through the earlier low, officially tagging the white channel top this time.  It’s been accompanied by a breakdown in USDJPY, DX and higher highs in VIX.  In short, this is a critical moment for SPX, which could be on track for our downside target — the purple .786 at 2157 — and, ultimately the 2138 backtest we’ve wondered about for the past month.

2160.39 is the key — though the extent of CL’s bounce will likely tell us everything we need to know.

As before, I’ll take a stab at a long position here.  But, I’m not terribly optimistic as long as DX and USDJPY are breaking down — which they are at the moment.  Very tight stops are advised.

 UPDATE:  12:59 PM

VIX is still rising, and CL is still settling lower.  Even though DX is getting a slight bounce here, I think we’re going lower still.  Even if I’ve drawn the white channel slightly off, CL only drops when TPTB want (or, at least, will accept) lower stock prices.  The only exceptions to this is after hours action and when USDJPY is spiking to try and compensate.  Back to short with tight stops.

A few days ago, I put up an alternative channel for ES — which has been signaling lower prices for the past week.  Based on the recent tops, the falling red channel suggests ES 2152 — also the red .786 by the close today.  

This would correspond with 2153ish on SPX — which would mean a breakdown of SPX’s falling red channel, but would line up nicely with its purple .886 at 2152.85.  It’s a bit of a puzzle as to the ultimate target.  Maybe the disagreement means the real target is SPX 2138.  In any case, until CL or USDJPY starts bumping higher, it’s pretty clear we’re going lower.

UPDATE:  1:35 PM

That’s what I get for using the words “it’s pretty clear.”  SPX is back on top of the SMA5 10/20 after they finally caught down to it.  CL, USDJPY and DX are all levitating — if only slightly.  VIX dipped down to near the red TL, threatening lower.  Suddenly, it’s not “pretty clear” at all.

I still like the lower target, but am becoming less confident by the second.  Given that even the biggest rebounds begin with such a move involving the SMA5’s, I’d tighten up those stops here.

UPDATE:  1:41 PM

Looks like it’s breaking out here on CL strength, VIX TL breakdown.  Back to long.  But, again, I’d be cautious. After being jacked around all day, I’ll believe this move when VIX is back below the yellow TL, now at 13.65… …CL is screaming higher…

…and, USDJPY and DX can break back above their TLs.  Without all of those things falling into place, the next change of direction is likely a head fake.

UPDATE:  2:08 PM

Purple channel backtested.  If it’s going to reverse and go lower, it should be here.  Back to short with tight stops.

UPDATE:  3:15 PM

SPX is going to push out of the red channel here on VIX manipulation.  Nothing else is signaling the same, so it’s questionable whether or not it’ll stick after testing the SMA5 100.  I’d hold short for now.

UPDATE:  3:20 PM

No support from anything else, but VIX is getting hammered and is forcing SPX back above the SMA5 100.  I’d ditch the short position, just in case it gains some momentum.

Note that CL is still languishing beneath everything, and USDJPY and DX aren’t providing any lift whatsoever.  The next resistance is the red midline at about 2171.40 as VIX approaches its SMA5 200 at 13.38 — also the purple TL.

I’m fairly confident that this move will fall apart.  Obviously, it’s ludicrous that some games with VIX can derail a nice little correction.  But… It. Happens. All. The. Time.  It’s especially prevalent around the end of the month.

UPDATE:  3:39 PM

Last shot at a decline of any note.  DX, USDJPY, CL are all saying a downturn here.  But, VIX has a little further to go to reach support, so it’ll probably push it up to the red SMA5 200 at 2173.82.  Either way, I’d try a short position here, and hold it overnight on a hunch that the month-end rebound doesn’t extend.  As always, don’t try this if you can’t handle the overnight gap risk.

 VIX has bounced 4 times off that purple TL.  Maybe a 5th?

The purple .786 at 2157.47 still looks like a good bet to me.  And, to reiterate, CL is not rebounding — which it nearly always does if USDJPY and VIX aren’t doing the job — which they’re not.  There are countless things that could drive it higher, not the least of which is TPTB’s desire to avoid the H&S Pattern playing out.  At this point, it’s more a hunch than anything.

If we take a step back, it’s possible to draw a channel that is at least as legit looking — if not more so — as the rising purple one.  I’ve shown it below in red.  Given that a slightly lower low today would have taken SPX to the falling red channel bottom — also a H&S neckline — it’s understandable that it would bounce where it did.  

I’m going to think on this a bit more and see if the cobwebs clear.