Look no further than the Fed for the confusion reigning on Wall Street. It was only a few weeks ago that they were preparing us for multiple rate hikes, as we were far from the neutral rate. Then, the story shifted, indicating we were just below the neutral rate. Yesterday, they leaked a story to the Wall Street Journal that they were gravitating toward a wait-and-see approach.
The problem isn’t that the Fed can’t make up its mind. The problem is that the current Fed, just like its predecessors, is data dependent. And, the data they depend on is the stock market.
There’s no mystery regarding the timing of the leak. The S&P 500 had fallen 179 points in two sessions. It was about to undergo a death cross, as the futures did this morning. Even worse, it was within a few points of completing the Head & Shoulders pattern we’ve been watching develop over the past month.
In the end, ES and SPX came within 10 points of our next downside targets before promptly reversing course. SPX came within a point of closing its gap from earlier in the morning. The question, now, is whether the coast is clear.
As usual, we’ll watch the algo inputs closely. VIX reversed at our next upside target rather than breaking out.
And, USDJPY enjoyed a timely bounce at our next downside target. 
Even CL and RB are surging sharply. Will it be enough to keep the rally going after the gap is closed? Don’t be so sure.
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