It’s been a dizzying drop for the dollar since falling through support last April.  This morning, it reached our next downside target from last June [see: All About the Dollar.]

Back then, DXY appeared likely to bounce sharply.  But, the bounce was short-lived, and DXY has failed several subsequent tests along the way.

Has it finally found lasting support, or is there more downside ahead?

continued for members… (more…)

Futures are up a few points on lower lows in VIX and a partial recovery in oil prices.Traders will no doubt be considering the repercussions of Harvey.  The expected impact on gasoline production has sent RBOB higher by as much as 12.7% in the last four sessions.

While, oil prices fell up to 1% overnight, testing the bottom of a rising channel for the 7th time since June.  Time is running out for the channel to break down in August.

continued for members… (more…)

SPX dithered and dallied yesterday, but in the end tagged our downside target before the supportive forces of rising oil and falling VIX came to the rescue.

Today, we’ll be watching for signs of policy changes from the brain trust gathered at Jackson Hole.  Currencies, which have been active all week, are already responding.  And, S&P futures have regained the SMA10.  Will they hold?

USDJPY, which has been limping along for the past week – is back above its own SMA10 and is clearly in supportive mode.  We would expect no less.But, oil, which came to within .06 of yesterday’s downside target before bouncing back above its SMA10 (sense a trend, here?) is already dragging — strange behavior considering all the anxiety tied to Hurricane Harvey.

continued for members… (more…)

Yesterday was an exercise in propping up equities until the close, which clearly pointed to a continuation of the slide.  Thanks to oil’s pump and VIX’s dump overnight, however, the futures were able to break out of their funk and are now sporting a 6-pt gain going into the open.

This leaves the downside from SPX’s recent backtest in limbo — which, of course, is the whole point.

continued for members… (more…)

Ordinarily, when a channel breaks down and is backtested, it means more downside. SPX nailed our backtest target yesterday.  And, sure enough, the futures are currently off about 12 points.Yet, we’ve seen way too many instances over the last couple of years where a backtest overshoots and the broken channel is rejoined after, say, VIX is crushed or WTI or USDJPY is ramped higher.

Indeed, VIX remains within striking distance of last week’s 11.25 lows and CL, which broke down overnight, is suddenly bouncing as we approach the open.With major currency moves still ahead of us, can this backtest hold or are we in for another of those V-shaped recoveries?

continued for members…
(more…)

SPX came with an inch of our downside target yesterday before the meltup began.  Given the ramp job overnight, it’ll probably do — especially since VIX is in a prime position to keep the ramp alive.  The algos love it when a rising channel breaks down, and it’s almost certain to happen this morning.continued for members… (more…)

We’ve had a  nice run, of late, as SPX, CL, VIX and USDJPY have all tagged targets where expected.  As meltdowns go, this one has been very well behaved.  Even the bounce we anticipated on Friday played out as expected, with the capitulation waiting until the final hour or so or trading.

if SPX can remain below the SMA5 20, there’s a clear shot to 2415 at the bottom of the red channel.  Otherwise, we’ll get jerked around for the rest of the day with the promise/threat of a drop hanging over our heads for hours and hours.

Today should see the rest of that particular leg complete, though the target has moved just a bit.  And, as we noted on Aug 10 when we first laid out these targets, there is considerably more downside if this low doesn’t hold.

continued for members… (more…)

There’s an old saying: “live by the sword, die by the sword.”  No one was complaining when algos, prompted by a soaring USDJPY and plunging VIX, nudged stocks ever higher.  Now that they’ve exacerbated SPX’s drop — almost (shudder) 2.5% off the highs — will investors be as enamored?

SPX’s sharply rising channel broke down on Wednesday with a close at our initial downside target.  Yesterday, SPX tagged our next downside target, bounced around for an hour, then proceeded to break below a larger channel dating back to Dec 30, 2016.

Needless to say, this was a more serious breach and leaves the door open for the downside targets we posted last week.

continued for members… (more…)

SPX landed right where we expected yesterday, the bottom of a sharply rising channel that — were it to continue — would levitate the index to 2500 by next week.  That, of course, was before things got crazy in the currency markets.

I’ve been pretty adamant that EURUSD overshot in its recent push past our 114.70 target.  I still don’t buy the idea of the ECB tightening any time soon.  The most recent ECB minutes appear to confirm this viewpoint.

The appreciation of the euro to date could be seen in part as reflecting changes in relative fundamentals in the euro area vis-a-vis the rest of the world” but “concerns were expressed about the risk of the exchange rate overshooting in the future.”

The EURUSD sold off further on this and other choice comments……with the net result being another breakdown for ES.

Fortunately for equities, CL reached our downside target this morning and stands ready to prop stocks up — at least in the short run — with a nice bounce of its SMA50 at 46.46.  But, with both EURUSD and USDJPY tumbling, will it be enough?

continued for members… (more…)

VIX toyed with important support all day yesterday, keeping equities in the dark as to the next steps.As a result, ES spent the entire day continuing to dip below its SMA10 and SMA20 — even closing below a nice little trend line off its earlier highs as VIX refused to dive below the all-important yellow channel bottom.

It was all for naught, however, as the usual ramp job stepped in around 1am.  It should allow SPX to tag yesterday’s 2470.58 target on the open.  After that, however, the picture gets a bit muddled.

continued for members… (more…)