Today’s a bank holiday, but most markets are open — albeit with very low volume.  Thus, it’s a great day to slip in a little ramp job through resistance while no one’s watching.   VIX’s 8% plunge off Friday’s highs got things off to a good start.  But, has since bounced back and is approaching our upside targets.  continued for members… (more…)

Everyone expected the hurricanes to affect job growth, but I didn’t see many forecasts of an actual contraction. 

It remains to be seen what happens beyond the initial knee-jerk data.  But, for now, the currency markets are going crazy — with the dollar and USDJPY spiking higher in an attempt to offset the plunge (well…the 2017 version at least) in equity futures.

The positive side of this development is that gold, oil and gas are following our playbook nicely.

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Another day of melting up through resistance.  Even the bulls are starting to wonder what’s going on.

There is a little excitement going on in the dollar as it pops up through channel resistance.  Will it hold, or is this a head fake?

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I don’t like charting the Dow.  Of all the manipulated indices in a manipulated market, it’s the “manipulatedest.”   Nevertheless, I received a query from a member today and thought it’d be interesting to take a fresh look.

This comes as a shock, but it continues to be manipulated higher.  A year ago, I noted it had reached significant resistance at the 1.618 Fib extension of its drop between 2007-2009.  It had struggled to reach this level, requiring a breakout from the rising channel dating back to the age of dinosaurs.But, as luck would have it, Trump was elected and stocks tanked…for several hours.  The resulting panic prompted a response by USDJPY, CL and VIX that was so dramatic that DJIA broke out past the 1.618 extension and the rising red channel. 

Not even bothering with a backtest, it has since soared nearly 20%.  Is there anything that can stop it?

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Way back in February [see: Feb 13 Update on RUT] we noted that RUT had reached the top of a very long-term channel and was having trouble punching through.

The next few days are very important, as RUT has an opportunity to break above the yellow channel that dates back over 20 years.  If it can…it will leave the rising yellow channel in the rear view and won’t face overhead resistance until the purple 2.24 at 1493 and the 1.618 at 1514.09.

As it happened, RUT couldn’t break out.  It gained a few more points over the next two weeks, then reversed by 5.6%.  It tried again in May.  That attempt failed, too, resulting in a 5.2% drop.  But, it still wasn’t done trying.  In July it pushed through both the 1.272 Fib and the top of the yellow channel — only to tumble 7.1%.

This time was more serious, as the white channel dating back to its Feb 2016 lows broke down and RUT dropped through its 200-day moving average.   But, it wasn’t quite done.

In our September 19 Update, I pointed out that — due largely to a series of strong collapses in VIX — RUT was knocking on the door yet again. Would it be able to punch through this time?

I think it’s going to come down to what the USD does tomorrow. If DXY finds support between here and 88.68, then stocks could get a nice boost and maybe RUT can break out this time.  If not, and if oil/gas tumble further as we’re expecting, then a drop to the SMA200 around 1385-1392 would make a lot of sense, with 1296 next in line.

As it turned out, DXY found strong support the very next day — spiking higher and not looking back.But, oil and gas decided to spike higher, too.  CL suddenly popped above a long-term trend line (on bearish news) and RB aborted the plunge from its dramatic Aug 31 peak.  Oh, and VIX spent the next several sessions making new lows.  In other words, RUT had plenty of algo firepower this time, and popped through the yellow channel top where it just tagged our upside target of 1514.09.

So, it’s a good time to ask what’s next for the index — especially as SPX and ES have also reached overhead resistance.

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The dominoes are all lined up so nicely.  Who’s going to tip the first one over?continued for members… (more…)

Just a quick update to our last update [see: Sep 20 Update on Gold] as GC has reached our initial downside target.

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At the time of our last update [see: Sep 7, 2017 Update], oil had reached our 49.75 upside target, selected because it marked: (a) a trend line dating back to June 2014, (b) the midline of a large, rising channel, and (c) CL’s 200-day moving average.  I called for a reversal, and apparently wasn’t alone in my thinking. CL plunged over 4% the following day — a nice start to the 13% drop I expected.

Needless to say, this was a problem for stocks, which had just flubbed an assault on the psychologically important 2500 (SPX) and faced resistance of its own.  As has happened countless times before, oil futures bottomed out and spiked higher right as the market opened.  SPX gapped open with an 18-pt gain and, thanks largely to CL’s recovery, never looked back.

The only problem with this scenario was inflation.  Gas futures (RB) had closed August on a high note, the top of a channel dating back to Aug 2015.  I had called for a reversal at 1.78, reasoning that inflation would spike higher unless RB fell sharply.

With stocks counting on CL’s continued ascent, and the Fed counting on RB tumbling, was there a scenario that could satisfy TPTB’s needs?  There was, but it involved some last-minute theatrics and required the EIA to falsify its gas price data for the month.

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There was a time when VIX tagging 9.30 was momentous.  VIX’s all-time low of 9.31 was reached on Dec 22, 1993 and it subsequently soared as high as 89.53 (Oct 2008.)  This past December, however, marked a progression of lower and lower marks that culminated in a new all-time low of 8.84 in July.

Want to know whether stocks have topped out?  First, you’d have to ascertain when VIX will stop melting down.  We’ve seen 17 straight sessions below the bottom of our long-term yellow channel.  The only signs of life were the backtest of a rising channel that broke down in order to get SPX up over 2500.With important resistance coming up today for SPX/ES, might VIX be ready for another (easily-contained) pop?

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Years that end in “7” and Octobers are often full of fireworks.  Since we’re in October of 2017, might we finally get a respite from the melt-up?

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