Cue the Looney Tunes music.
Another day, another stick save. Had the 40-pt drop in futures that the Cohn news precipitated occurred when ES was already down 24 points, we probably would have seen 2662 tagged or even exceeded.
As “luck” would have it, the news hit after the markets closed — which is to say, after the earlier stick save. Note the fortunate timing of VIX’s reversal (the yellow arrow.)
Since the Cohn news, both VIX and USDJPY have been heavily managed. The 44-pt overnight drop has been pared to 19. VIX’s shot across the bow at 5:31am and USDJPY’s ongoing recovery are an insistent reminder to would-be bears that all is well in the “market.”
Speaking of Cohn, would the last grown-up to leave the White House please turn off the lights? My jaw hit the floor when I read about the likely replacements: Peter Navarro and Larry Kudlow.
Peter Navarro is the guy who, when he was appointed head of Trump’s Trade Council last year, prompted The Economist to describe his views as “dodgy economics.” No doubt he’s really, really good at telling Trump what he wants to hear. But, wouldn’t it be better if he were good at telling Trump what he needs to know?
Larry Kudlow — you either love him or hate him, depending on your politics and your views on supply side economics. But, he’s the guy who in May 2008 insisted the impending Great Financial Crisis was a “non-recession recession.” Probably enough said about that.
If, as Trump insists, there are untold multitudes of smart, talented people begging for a job in the White House, I hope he’s able to find one.
continued for members…Going around the horn… Because VIX hasn’t made much of a rise off the white channel bottom, it doesn’t have much room to drop before breaking the trend. Thinking out loud…the drop into Day 22 might not be as dramatic.
The dollar continues to hang out in no-man’s land — in a perfect position to break down, but waiting for something.
While USDJPY broke out of the overnight plunge, it remains well below the falling white channel midline. In other words, in a position to contribute to a lower DXY.
Yesterday, EURUSD’s initial push through resistance failed. It hinted at another one overnight, but failed again. Waiting is no fun.
UPDATE: 12:08 PM
Funny thing happened at ES’ SMA10 and gap close: a reversal. Not too surprisingly, SPX held at its 2.24 earlier this morning. It’s approaching it again, but this time with VIX on the rise. If SPX drops through it, it raises lots of possibilities.
We have support at the SMA20s, of course. But, after that, there’s a decent chance of a backtest of the channel bottom. The Fibs suggest ES 2665.75 or 2657. But, again, only if SPX drops through its 2.24.
