The BoJ continues to battle what’s left of the market over the rate on benchmark 10Y bonds.  Earlier today, it again stepped in to put a lid on rates at 0.10%.

Some analysts assume Kuroda will take steps to normalize rates in order to relieve pressure on banks and create some headroom for future easing.  To this, I say “fat chance.”

First, with its enormous debt burden, Japan needs higher rates like a fish needs a bicycle.  Second, higher rates would bolster the yen which we all know craters equities.

While it’s possible Kuroda will utter some mumbo-jumbo that sounds logical enough, there is simply no way he will do anything to endanger the patient — already on life support.  the only analysts who don’t understand this are the ones who don’t understand the yen carry trade.

The USDJPY has already backtested the broken rising channel from 2010.  Yet, it has also backtesting the broken falling channel from 2015.  As such, it is truly in limbo.  And, as long as central bankers can maintain equity values by doing essentially the same thing they’ve been doing, they will.

Speaking of which…guess which algo bait helped stocks recover from Friday’s tumble?

Algos weren’t too thrilled with CL’s breakdown, but are willing to forgive and forget now that it has tacked on a couple of percent (as usual, in the after-hours.)And, as always, VIX was only too happy to plunge in the last few minutes of trading.

All together, it’s a delicate balance that has the algos seeming a bit wary.  With more and more carbon-based investors reigning in their equity exposure, can TPTB keep all these plates spinning?

continued for members…

RB clearly broke down overnight.  Ideally, the SMA200 will get tagged in the next day or two.  But, As we discussed last week there’s decent support at 1.9975.SPX’s best near-term target is the red TL at around 2800-2802.

UPDATE:  12:00 PM

Many times, the low for these carefully scripted declines arrives at 12:34.  In any case, it’s getting close to the initial support, with the .786 at 2800.07, the previous high at 2801.90 and the red trend line at 2802.50.

Wherever it bounces, it should occur when VIX reaches its SMA200 at 14.37.  If VIX pops through 14.37 (or the .618 at 14.43) then things could get ugly. UPDATE:  12:50

VIX just popped up to slightly beyond its SMA200 (14.45), while SPX slumped below its support and ES came within a point of its analogous TL.  I assume VIX will reverse here, meaning SPX/ES will bounce.  SPX’s initial target should be around 2807.  Important to keep an eye on VIX…

A reminder of our next targets in case VIX pops through 14.43 and SPX remains below 2800:

SPX’s SMA20 is at 2788, the channel midline at 2775-2780, the SMA50 at 2761, the channel line at 2751 and the SMA20 where it crosses the 2.24 at 2703.62 (currently at 2694.99.)

UPDATE: 2:12 PM

UPDATE:  3:45 PM

Down to the wire, here, and things aren’t looking so great for the bulls.  CL/RB have backed off their earlier highs, VIX is threatening to break out past its SMA200, and USDJPY is waffling.  This could go either way.  But, I still like the idea of COMP dropping sharply to complete its SMA200 and channel backtest.

The FAANGs continue to look dicey, which might clear the way for lower prices overall.  Having said that, we could still see VIX slammed in the closing minutes and/or overnight.  And, USDJPY is still unsettled.  So, remain short only if you can deal with the overnight gap risk.

And, NKD looks very vulnerable here.  Having broken the latest TL of support, it could tumble quite a bit if the SMA200 doesn’t hold.

If SPX doesn’t go on to make new lows, here, there is bounce exposure up to the SMA10 at 2815.96 — which the SMA5 200 should reach early tomorrow morning.