“You have brains in your head.  You have feet in your shoes.  You can steer yourself any direction you choose.  You’re on your own.  And, you know what you know.  And YOU are the one who’ll decide where to go…”            Dr. Seuss

*  *  *  *  *

Lately, the markets are so nonsensical that they might have been lifted straight from a Dr Seuss book.  We’ve had manipulation all along, but it’s been quite a while since it was quite this bad.

SPX spiked up through its 10-day moving average on Jun 29, two days after the post-Brexit lows, and hasn’t tagged it since.  It hasn’t gone that long between SMA10 tags since November 20, 2014.  Then, the 14% spike following Bullard’s hints re new QE kept it above the SMA10 for 23 sessions.

Will we finally get that long-overdue pause, today?

continued for members…

CL says yes, quite definitively — as long as it doesn’t bounce back from its lows this morning, as it so often has.Even VIX agrees — backtesting the falling purple channel on Friday.

All we need is for USDJPY to break down through the flag pattern/channel.SPX should finally be able to reach its SMA10, now that it would represent a higher low.It’s a very ugly chart – a backtest that well exceeds the price at which it broke down.

The real impediment is DX, which is now entrenched above its SMA200 and has backtested the bested .618.  With all the talk about further BoJ easing, and renewed talk of a Fed rate hike, it might be there to stay for a while.Watch for ES’ white/flag to break down.UPDATE:  9:46 AM

So far, so good.  Got caught up here at the purple channel midline (still assuming the red channel expands to something more like the purple channel), but it should break free as soon as USDJPY breaks down.  Note that ES will need to drop slightly below its SMA10 in order for SPX to reach its, unless it waits until tomorrow — when the SMA10 will be higher yet.  2155 is the .886 retracement of the rise off of last Thursday’s 2153.50 lows.  I’d be surprised if ES’ SMA10 doesn’t provide at least a preliminary bounce.UPDATE:  10:15 AM

ES is trying to get down to its SMA10, but of course, reall live guyers have no interest in selling — knowing that it’s likely to bounce back in a big way.  Naturally, USDJPY just started selling off in order to force it the rest of the way.  All in a day’s work for the algos… FWIW, CL is also lingering at the day’s lows, and could drop down a little more if needed.  There’s no support until 43.03.This should about do it for SPX for now.  We’re likely to see a bounce up to the falling SMA5 10 or 20 around 2167 – 2170.  However, there’s no guarantee.  If USDJPY keeps falling, SPX and ES could go the rest of the way right now.  I wouldn’t go long until USDJPY recovers back above the SMA50 and white channel bottom.UPDATE:  11:11 AM

ES just tagged its SMA10, and USDJPY is angling back to the white channel bottom.  There appears to be a 50:50 chance of a bounce here, so I’d look for a bounce, probably to the SMA5 20 around 2165.  Not much of a bounce, but since it’s ES SMA10, it could always go beyond to, say, the purple midline at 2169ish.VIX and CL argue for the rest of the drop to go ahead and occur now, so I’d be cautious regarding this long position.  It could fizzle quickly, particularly if USDJPY can’t make it past the purple TL and/or VIX holds its SMA5 10.UPDATE:  11:40 AM

Just got the SMA5 20 tag at 2065.09.  I’d revert to short and stay there unless SPX can push back above the SMA5 20.  The only complication is the timing — looks like 2161 would work much better at the end of the day.  I assume it’ll be a bottom like last Tuesday’s – a series of sideways slightly lower lows until the target is reached at the proper time. UPDATE:  3:50 PM

Lots of shucking and jiving, but little actual movement.  Hard to say for sure, but there’s a very good chance of the dip to 2161 either at the close or in the morning.  Note, however, that today’s dip will register as a tag of the SMA10 as it prints at the end of the day.  So, holding short is not without risk.  Note that VIX is particularly problematic at this point.  As always, only do it if you can handle the risk or hedge/watch your position.  Otherwise, I’d ditch it on any move up through the SMA5 200 at 2167ish.