We’ve been watching the effects of “oil gone wild” with great interest, especially since Aug 3 when it tagged our downside target and began its latest 25% spike. As we discussed at the time [see: The Not So Invisible Hands Guiding the Market], it has been TPTB’s primary tool for pushing stocks higher since the yen carry trade started fizzling in Jan 2016.
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The impact of CL ramps has been moderating, though. Apparently, even the algos understand there is an upper limit to this game. CL reached 49.36 on Friday, just a smidge below our 50 target.
The big question now, is whether it can properly flesh out something resembling a channel, and backtest the large white channel it left behind on the 16th.
We remain short on SPX, with Friday’s targets still in place.
continued for members…
One wildcard, USDJPY. It usually compensates when CL is on the outs, and it’s in a perfect position to do so this morning.
If it doesn’t spike higher, SPX should have no trouble reaching 2165 or even 2161.
Note that we still have a potential conflict between SPX’s rising purple channel and ES’s possible intent to complete a Bat Pattern and tag 2147 on Friday.
UPDATE: 9:43 AMSPX has reached the SMA20 at 2175.80. This is a good test as to whether they’ll let it float or jump in and “save” it as usual. Our analog suggests more downside.
USDJPY is holding the line, but hasn’t gone nuts — at least, yet.
UPDATE: 10:20 AM
Though USDJPY and CL are behaving themselves, VIX just came to the rescue of the flagging SPX — driving it back up to the SMA10 and a potential close of this morning’s gap. I’d want to cover our short on any sustained move above the white channel top around 2184.62.
I was watching VIX at the very moment it broke below the channel bottom it had briefly popped back above. It took less than 1 second to go from 12.73 to 12.62 — which was enough to send SPX back above the purple midline.
UPDATE: 3:43 PM
An entire day of threatening to break out — but never managing to. That’s a bearish sign — even if a mild VIX monkey hammering happens here in the last 15 minutes.
I’ll be updating some more charts this afternoon. Looking ahead to tomorrow, I will be out of the office most of the day. I might get back before the close, but it’s going to be tight. I should be able to post first thing in the morning.