This is the fourth time in a row that ES has pushed back into the rising channel from which it previously broke down. This one is more important, however, as it has the 50-day moving average in its sights.

As we discussed last week, all the stars are aligned should the algos wish to pursue our upside targets.

continued for members…

Note that ES is also back to the purple .786 line. A push above it opens up the channel top as can be seen in the daily chart.

The SPX is in very much the same situation, with a push back into the rising white channel and testing the purple channel’s .786 line.

As always, VIX’s breakdown is playing a pivotal role.

In fact, EURUSD doesn’t even need to break out in order to keep stocks on the rise.  But, it could. USDJPY has completed the backtest we discussed last week, with clear sailing to 167.25 at any time but likely whenever stocks have run into resistance.

DXY has backtested its SMA50 as expected, with a potential drop to the SMA200 if needed. Meanwhile, CL has pretty clearly broken down – but not a lot.  This is potentially very important, as it will drive the 10Y – which is still a source of concern for the bulls. It’s not a threat unless it holds the white channel bottom and heads up to new highs at, say, 48.59 or 50.The 2s10s model suggests the Fed could keep things in limbo through at least July and would then prescribe a drop into deeper inversion through the election.

Again, this outcome assumes that they would rather have what I believe they would view as the ideologically less appealing but safer and saner incumbent in the White House for another four years. Regardless of your political views, Biden has been a steady hand in terms of the economy. I believe the Fed would choose that outcome over the turbulence which often characterized the Trump administration (like many, I wish we had different choices on both sides of the aisle.)

On another note, I am taking a vacation between this evening and May 17. I will endeavor to post once daily, but there will no doubt be times/places where I cannot find good internet service.  When I can, I will post charts and very brief commentary.

For the few of you who often see their accounts lock up due to multiple login locations, etc. know that I will not be checking email during the day. I will check first thing in the morning after posting as well as in the evening.

GLTA