When you live by the algo, you have to be prepared to die by the algo.  With only 10% of daily equity volume being driven by fundamental, discretionary, carbon-based investors, 90% of the volume is subject to the whims of the silicon-based traders.

This morning, we have the S&P 500 trying very hard to hold 2500, but VIX and the JPY are both creeping higher due to geopolitical risks (a hydrogen bomb, now?)  There’s only one tool left in the algo shed: CL.  And, unless it settles back down tout de suite we’ll see September CPI pop above 2% — not exactly on the central planners’ play list.

So, what’s more important — holding 2500 or averting inflationary headlines?

continued for members…

RB, after playing cat and mouse with its SMA10/20, is clearly breaking out.  But, will it last or is it the usual end-of-the-week head fake?  CL has done the same with its SMA200.  With only a week left in the month, there’s not much time left to moderate the inflation effect.

ES is currently off about 6, but was down almost 10 points before RB and CL began ramping.  Since SPX closed at 2500.82, it hasn’t much wiggle room. USDJPY and VIX are no help at the moment.  USDJPY’s having trouble holding the SMA200 and VIX is creeping higher (though, remember, a common ploy is to let it creep higher overnight so TPTB can crush it after the open.) This leaves our 2490.87 target in pretty good shape, with plenty of lower targets in case it doesn’t hold (the most likely being 2462-2468.) And, if SPX doesn’t hold, will they ramp the crap out of CL/RB?  I don’t think so.  They can always smash it over the weekend without much damage being done to stocks.  But, it’s pretty hard to say.

Quick housekeeping note: I have to be on the road this afternoon, so will only post until about 11am ET.

UPDATE:  11:50 AM

Final charts for the day…  SPX, ES, DXY and USDJPY are all below their SMA10 (USDJPY its SMA200.)  I’d want to be short as long as that’s the case — at least until our targets are hit.

It seems as though TPTB are going to allow that to happen, as CL and RB are giving up their earlier ramps.  I’d be cautious holding equities short over the weekend.