The FOMC announcement came and went with less excitement than usual.  Most market participants expected no change, and that’s essentially what we got.  Aside from a 13-pt VIX-induced spike in SPX which fizzled into the close, there were no fireworks.

Tonight, the BoJ is likely to upstage the Fed.  The yen carry trade, the principal driver of higher stock prices since 2011, officially ran out of juice over a year ago.  Intraday rallies have been quite helpful on a regular basis.  But, the USDJPY has been locked in the same falling channel since October 2015.With SPX at new all-time highs and CL no longer providing much algo support, will the BoJ finally take widely expected action to weaken the yen?

continued for members…

Our upside and downside targets for SPX remain the same.  The rising purple channel almost broke down yesterday, and might yet do so in favor of the falling white channel.

I don’t expect either major target to be reached today, as the BoJ’s action (or lack thereof) is still an open question.  I also don’t expect the falling red channel to amount to anything.  It’s more a placeholder than anything else.As usual, much will depend on CL — which is finding support at the gray .382 (41.88) noted yesterday and has SMA200 support just below at 40.92.  It popped out of the falling white channel again, bullish for the time being.   But, it’s not breaking out yet, and has been back and forth across 41.88 quite a few times in the past 24 hours.USDJPY continues to fall within the white channel that’s falling within the red channel.  It’s overall quite bearish.  But, we continue to get intraday rallies that support stocks — in between the nightly resets to lower levels.UPDATE:  9:36 AM

SPX is dropping through the purple channel bottom — a signal to short.  The white .618 at 2157.38 remains the next downside target. UPDATE:  9:56 AM

The algos are at it hot and heavy this morning.  Check out VIX’s smack down, which sent SPX back up through the purple channel bottom.  I expected SPX to reverse at the SMA5 200, but it just slipped up past it to the SMA10.  CL helped, by spurting up past the .382.  This could be a very wonky day, with loads of head fakes and no clear direction.  Swing traders might want to sit this one out.

Note that ES has now averted at least 5 H&S Patterns. UPDATE:  10:07 AM

SPX has backtested the SMA5 200, which is a safe place for it to wait things out.  I think I’ll exit our opening position and sit on the sidelines for the time being.  I’d reconsider if it drops back through 2166.  But, for now, it looks like they intend to prevent any downside. UPDATE:  10:12 AM

Back below the SMA5 200, so I’ll take another stab at the white channel bottom at 2158 or .618 at 2157.38. Though, ES indicates SPX might be headed for the .786 at 2152.42. VIX is on the rise, and CL is back below 41.88.  I just won’t give it as much latitude this time. Note that the other tool being used this morning to put the kabosh on downside is NKD.  It keeps popping above the SMA100 every time SPX starts to tumble.UPDATE:  11:16 AM

The SMA5 10 just arrived, and the algos took the opportunity to jump up above it on VIX hammering and a little CL spike.  USDJPY and NKD are still sliding, so I think this is probably a head fake.  We’ll see what happens when the SMA5 20 arrives in a few.UPDATE:  11:21 AM

SMA5 20 just arrived.  USDJPY and NKD are rising, so I’ll assume they’re going to try and pop above it.  But, european markets are closing, so we could see SPX back off.  Watch your stops.  If it does pop out, we still have the purple channel bottom and white channel midline (2164.20ish) as overhead resistance, so I think there’s minimal danger involved in riding it out — particularly given our 2166 entry point.

There’s a reason CL was allowed to fall back into the falling white channel.  I believe they’re setting up a SMA200 tag, with a big bounce back as high as the purple channel bottom at 45, if need be, to offset any disappointment regarding the BoJ action.

UPDATE:  12:12 PM

SPX just reached the 2164.20 point I mentioned above.  It might well leak a little higher in order to tag the SMA5 100.  We should see a reversal here if it’s going to, though I can’t discount the possibility of a SMA5 200 tag at 2166 in 30 minutes or so. UPDATE:  12:44 PM

UPDATE:  1:03 PM

SPX is likely heading up to the SMA5 200.  I’d step aside here in case they have a more robust bounce in mind.  Can always re-short if it doesn’t play out…Again, VIX is driving this bumper car.UPDATE:  1:20 PM

Last chance for a reversal lower.  Back to short, with tight stops.UPDATE:  1:28 PM

Well, it was worth a shot.  Apparently not meant to be.  Unless it reverses right here, right now, I’m back to cash, and will focus on some other charts that need updating. UPDATE: 1:48 PM

I guess this settles it once and for all — and, clarifies who’s behind today’s propping up of the “markets.”

UPDATE:  2:12 PM

This is probably a lost cause…  But, note that VIX is back down to the purple channel bottom.  Each previous tag was good for a 10-12 pt reversal in ES.  It’s the distance below current prices that our 2157 target is.  I’ll take another shot at shorting here and see if it works again. USDJPY is obviously on a whole different wave length.UPDATE:  2:36 PM

The BoJ is nothing if not determined.  Getting tired of swimming upstream, back to cash. UPDATE:  2:57 PM

If you’re a glutton for punishment and want to take a flyer on Kuroda disappointing, here’s your entry point.  My gut tells me this is the right move, but of course it’s insanely risky.  And, I’ve been wrong more than right today.  So, do the smart thing and stay on the sidelines. 

(If you intend to ignore that last remark, keep an eye on VIX and CL.  FWIW, I think VIX makes a recovery here and CL heads for 40.92.)

UPDATE:  4:00 PM

For my currency speculators out there, here’s my best guess at where USDJPY ends up.I also think CL falls to 40.92, SPX to 2157, and VIX rallies to 14.20 or so.  But, that’s making a key assumption that could very well fall flat, namely that the BoJ will disappoint.

Stay tuned.