At the very least, we should se another test of the SMA20 (1959.40 in SPX.)  In a normal market, we would also test the white channel midline and perhaps the purple .886 at 1941.

ES just completed a Gartley Pattern on the white scale, but has potential to the white .886/grey .618 at 1941ish — also the TL from Apr 14.  I would wait to see what USDJPY is going to do, however.   It inspired the dip from 1948 to 1945, and would no doubt instigate any further decline.

Note that the irregularly-shaped H&S Pattern points to 1924 — the grey .886.

UPDATE:  11:55 AM

I have to duck out for a doctor’s appt, but a quick update first.  The bots have taken over (a shame, it was starting to feel like a real market there for a while) nudging ES up to a small IH&S target.

In the process, ES is back to the neckline of the bearish pattern, and has been bouncing between it and the SMA20 ever since.  The rest of the day should be head fakes of one sort or another — with a possible dip to around 1951.50 between 12:15-12:30.

Keep an eye on the USDJPY, NKD and the 10-yr futures, which have all established a bullish TL from this morning.  Breaks should be treated cautiously, but firm moves lower (higher in ZN) should be a sign of more downside we discussed earlier.

The bots’ target is most likely the SMA10 at 1964ish (what banking crisis!?)

GLTA.

USDJPY and NKD are pointing higher…

 

…but, ES has yet to show its cards. (more…)

USDJPY is back below the SMA200.  The assumption has been that the BOJ would maintain the pair in the 101-103 range going forward, but this development is clearly making traders nervous…

 

…as is the strong reversal in 10-yr notes back into the falling channel.

 

Taking a look at VIX, it’s not hard to imagine a reversal of the market’s bullish fortunes.  Yet, TPTB have done a very good job of keeping the rally on track in spite of the glaring technical discrepancies.  I imagine SPX will get a bounce at its SMA10 down at 1967.

NKD is finding support from the channel it has been tracing out since its break out in late May.

 

UPDATE: 12:40PM

ES and SPX are both closing in on their SMA20’s (1951 and 1957), with ES’s .618 nearby at 1952.29 and SPX having already tagged its.  USDJPY is aimed at the .786 (101.45) or .886 (101.34), and NKD seems intent on 15200.  So, there’s a pretty good chance that ES/SPX reach their SMAs if the dip buying algos don’t get impatient.

 

 

 

USDJPY backtested its SMA200 this morning, leaving equities vulnerable to a pullback.

The short-term picture:

I wish everyone a safe and enjoyable holiday weekend!

The employment report boosted futures back to the point of resistance we discussed yesterday — the white channel top.  Stocks still face the decision of whether to reverse or break out.

We often reach these points on the eve of holiday weekends, when volume is particularly low and TPTB can push it wherever they like.  I can’t remember the last time the “market” didn’t break out.  But, we should always be alert to the possibility that a big player will take advantage of the low volume/volatility to launch a bearish sneak attack a la this past New Year’s.

It’s not likely though.  SPX gains on the days following all CME equity holidays in 2013 totaled 80 points, or about 5.6%.

 

In addition to the white channel top, there is potential Fib resistance at both the purple 1.618 as well as the red 1.272 or 1.618.   Note the floor under prices this past week.

Quick note on the payroll report itself…Not to throw a wet blanket on the report, but the total jobs increase of 288K includes almost 800K part-time jobs — the most since 2003.  Full-time jobs declined by 523K.  Real wages declined for the third month in a row.  Combined with the growing inflation we’re seeing, the stagflation argument is picking up steam.

 

 

Break out or break down?  TPTB love holiday weekends, as they can push prices through resistance more easily while everyone’s on holiday.

The bots are pushing USDJPY higher; but, a muted impact so far on ES.  Traders might be nervous after yesterday’s weak close (on an otherwise strong day for no reason whatsoever) that saw SPX return to the 1.272/1.618 Fib level we discussed.

Many of us have noted the shenanigans going on in VIX in the last minutes or even seconds of trading.  By slamming VIX lower, an algo forces prices higher — one of many manipulations occurring in the “markets” these days.

For those who haven’t seen it, yesterday’s Nanex article explains what’s going on:

There is a new High Frequency Trading  (HFT) Algo afoot, probably designed to measure, or cause system latency. This algo sends extreme bursts of 1-share orders in a symbol to two different exchanges: Nasdaq and BATS. The result is a system-impacting surge of quote updates, similar to quote stuffing, but accompanied by an extremely high number of 1-share trade executions. These trade executions often consume the entire SIP output line, as indicated by continuous sequence numbers with no gaps. continued…

 

 

SPX just completed combo Crab and Butterfly Patterns at the purple 1.272 and white 1.618 at a channel midline.  It’s a Tuesday, and a big POMO day.  But, under normal circumstances there would be a reaction here to at least 1961-1963.

These days, “normal” means sideways until the close, followed by a 7-pt dip around 3am which is quickly reversed on nonsense ADP numbers at 8:15 tomorrow morning.

I spoke to an old friend the other day.  Paul and I go back to the 80s when we were baby brokers at Mother Merrill.  Neither of us could remember a phase like this, when even the slightest dip was immediately and aggressively bought and algorithms turned charting the daily price action into an exercise in drawing a straight line.

We were pretty sure there hadn’t been a time back then when the worst GDP print in 5 years produced only a 2-pt dip, followed by a 13-pt rally like last week.  And, we were almost certain that banks used to lend money, not just speculate with government funds on securities whose actual value need never be reported.

Paul was on-board with the whole NKD/USDJPY algo idea.  But, we both came to the same conclusion: even if Yellen, Dimon, Blankfein, et al held a joint press conference and announced they were, in fact, manipulating the market higher, would anyone care?  I can’t see Occupy Wall Street braving pepper spray over daily all-time highs.

The reality is that anyone who might even consider shorting might as well have a bright red target on their back.  They’ve been driven out of the “market,” which I’m fairly certain was the plan.  Who knows?  Without shorts, maybe the government and MSM will even go back to telling the truth about the economy once in a while.

UPDATE:  1:00 PM

And, there, in the 20 minutes it took to jot that down (and, that dramatic 1.79 point plunge) a new all–time high!  Thanks, USDJPY.

 

 

 

As we discussed Friday, USDJPY closed below its 200-day moving average for the first time since Nov 13, 2012.  Back then, SPX was about 30% lower (1376) and the Nikkei was 40% lower (9,230.)  The big question before us:  now that Abenomics is coming apart at the seams, can we also expect the boost Japan’s QQE has given stocks to unravel?

Remember, even though Abenomics as an engine of economic revitalization is failing, the BOJ is still actively propping up equity prices and suppressing the yen.  It remains to be seen how players in the yen carry trade will react to the SMA200 breech.  Some will bolt; but, the biggest carnage would come with a drop below the 2014 floor of 100.746.

It’s worth noting that USDJPY has also completed a bullish (for the pair) Gartley Pattern, with the tag of the .786 occurring yesterday.  Given that it’s the last day of the 2nd quarter, the bots should be out in force — putting a little wax on this clunker of a “market.”

 

While Friday’s close was unsettling and we saw the first tiny wave of panicky action in quite some time, TPTB still have their sites set on SPX 2000. There is no law that states a move below the SMA200 must produce follow through.  Chart patterns and technical analysis that are normally quite reliable have been busted more times than I can count this past six months.

There are many ways to prop things up if they so choose.

No POMO today, and more horrid news out of Japan.  As we’ve been discussing for quite some time [see: Sayonara Abenomics] Abenomics is doomed to fail. Last night, we received more hard evidence:  consumer spending plunged 8% and inflation soared to 3.4% — well above Abe’s 2% goal.  More easing is supposedly off the table, and another 25% tax increase is on the way.  No way to run an asylum…

Bloomberg does a good job of summing it all up HERE.

The Nikkei futures are off 200 points, and USDJPY is currently down .30, trading well below the SMA200 and nearing the .786 Fib level (101.24) we discussed the other day.

Oh, did I mention there’s no POMO today?

 

UPDATE: 3:10 PM

45 minutes left, and no run at the SMA200 (101.713) yet?   Uncharacteristic big swings in equities in what is usually traction mode time for SPX.  Either USDJPY gets its butt in gear real quick or it could be a ugly close.

Why?  The last time USDJPY closed below the SMA200 was Nov 13, 2012.  NKD was 9,230 (now 15,120) and SPX was 1376 (now 1948.)