Fun While it Lasted

Futures sold off sharply overnight when rumors surfaced, indicating the coming GOP tax plan will feature temporary tax cuts for corporations. Powell’s rumored appointment was fuel to the fire. The dollar dropped like a rock, which sent USDJPY plunging below technical support. As it so happened, it was the sell off that was temporary.

ES, which reached 2585.5 as SPX tagged our 2587.55 target, spent the rest of the night in intensive care. As I write this, DXY and USDJPY have recovered most of their losses and ES is back to even.In the old days, when central banks didn’t guard against every little dip, ES’ drop to its .618 at 2563.50 would have presaged a similar retrenchment for SPX (2565.18.) With multiple targets at 2565 and below, what are the chances?

continued for members…After that recovery, ES’ purple channel remains alive.This leaves SPX with an opportunity to adhere to the rising red TL and pop above 2587.55. If it drops through the TL, the downside targets are 2565.18, 2561, and 2536.31. Rounding out the rest of the gang…DXY, which seemed for a while to have given up on the channel top, is technically still in the hunt.USDJPY continues to push higher.

CL is essentially flat at resistance.RB is up slightly, but is looking vulnerable.And, VIX is in position to help stocks by dipping below the purple channel bottom.

UPDATE: 10:00 AM

Making it official…UPDATE: 2:10 PM

FWIW, I’ve looked over the tax bill and see no way in hell it’s going to pass as is. It has something for everyone…to hate.

SPX’s initial plunge was nearly erased by a plunge in VIX. At the moment, SPX is backtesting the TL, sitting just below the support of the SMA5 200. ES is back inside the rising purple channel, meaning it’s back on track – at least for the time being. The trick is knowing whether or not it’ll stay there overnight. I can’t count the number of times we’ve seen SPX/ES close at resistance, only to pop above it after the close.I have to run a quick errand. I’ll be back before the close.