Having been chastised in the past for not doing enough, today the ECB threw a little of everything at the problem of falling stock prices inflation that’s too low.  The Special High Intensity TLTRO (S.H.I.T.) in particular is nothing but a giveaway to banks who are, of course, the power behind the throne and the primary beneficiaries of the measures.

The result was a EURUSD that tested its former lows, only to bounce back to higher highs.  Will there ever come an ECB announcement that isn’t front-run by every trader on the planet?The question is often asked: “are central banks out of ammunition?”  Wrong question.  The correct question — the only one that matters — is whether they remain willing to manipulate the real drivers of the “market”: currently USDJPY and CL.

Futures initially spiked, but have fallen back to barely green on the day, clinging for life to the SMA100.  Part of the problem was that the spike took ES up to the .618 (2007.37) of the fall from the May 2015 highs to last month’s lows.  Poor planning on the algo-masters’ part.  But, the day is young.continued for members…

If the past is any guide, stocks will settle some before the algos kick in to drive prices to the desired level.  For SPX, the goal will be to get it back over the SMA100 at 1998.28 and keep it there.  They might allow a backtest of the falling white channel and/or the SMA5 200 around 1988.50-1989.75.  But, it isn’t necessary to the goal.

I’d start out with a short position here and see what kind of backtest we can get.  Once the SMA10 catches up, though, don’t be surprised if it suddenly finds support.Lower prices are being accommodated by CL, which just might backtest its white channel bottom and SMA100 this morning……if it can do so without breaking ES’ little white TL.If it rebounds there, it’s off the races for equities — proving once and for all just how wicked smart (sarc) these central bankers are.

UPDATE:  9:50 AM

I was wondering when USDJPY would kick in.  It’s almost as though they forgot about it.  Just bounced SPX up to the SMA100, where it’ll probably sit until the short-term moving averages catch up.  Back to cash. My thought is to go long on the initial SMA5 10 tag (probably at a backtest of the SMA100) and set trailing stops at the SMA5 20 minus a point or so.  It has generally been a successful strategy on FOMC/ECB days when nothing matters but validating the central planners’ vision.

As far as upside goals, the SMA200 is up at 2021.81.  Once it’s broken, TPTB can relax a bit.  I don’t know if they’ll top it today, but I wouldn’t be surprised if they tried.

We should expect them to top 2009.13 – the former high and the basis for any remaining bearish harmonic patterns.UPDATE:  10:12 AM

There’s the SMA100 backtest — right as the SMA5 10 arrived.  I’d go long here with the trailing stops described above.  The initial goal is the yellow .618 at 2010.72 — which will bust the existing bearish harmonic grids.UPDATE:  10:34 AM

Stopped out here on the SPX short.  Back to cash as it could drop to close the gap and backtest the broken white channel.UPDATE:  10:38 AM

USDJPY is dropping like a rock, sending SPX down to close this morning’s gap and then some.  I’ll try a long position here with tight stops.Sure enough, USDJPY and CL suddenly decided it’s time to rebound… …putting SPX and ES back on track for now.  Of course, they now have to bust through the SMA5 10/20 if they want to reach 2009.13. NKD certainly considers this to be support.  I’d be back to short in a hurry if it drops through that TL.UPDATE:  10:58 AM

NKD just broke down and USDJPY is pushing lower, so I’ll back to short for now.UPDATE:  11:05 AM

ES just reached channel support, so we could get a big bounce here.  Back to cash.Here’s ES’ purple channel tag.UPDATE:  11:11 AM

Here’s the problem the bulls are facing this morning.  CL can’t seem to get out of its own way.  The latest OPEC freeze rumors were retracted, and it desperately want to go lower.  TPTB don’t want it to, but there’s a lot of selling pressure.

That little white TL on CL is the only thing holding SPX up.   If it breaks, then SPX should be ablel to tag its SMA10 at 1976.04 and maybe even the yellow or white .500 Fib (1972.41 and 1963.29 respectively.)  The yellow grid is from 2134 in May 2015 and the white from November’s 2116.

UPDATE:  11:16 AM

I’ll try a short position here with those lower targets in mind.  Again, keep an eye on CL.  If it bounces off that TL, then shorts will be disappointed.I’d say CL is headed for 37.06.  Though it could bounce at the .500, which would allow ES to bounce at its SMA10 at 1978.80. UPDATE:  11:36 AM

SPX has reached its SMA10.  It’s acting like it wants to bounce, but USDJPY is thrusting lower and CL isn’t rebounding.  Back to cash for now.  Maybe just waiting for SMA5 10 – now at 1981.88 – to catch down.  Or, maybe trying for a backtest of the red channel line around 1981ish.  I’ll probably try short again around 1982.UPDATE:  11:43 AM

I think the bounce might be over.  Note that ES has backtested its purple channel bottom and SPX its red channel line.  Back to short here. If CL is going to tag the SMA100, it should do it in the next 30 minutes or so.UPDATE:  11:58 AM

CL just pushed back above that white TL, and SPX is pushing up past its SMA5 10. I’d dump the short and go back to cash if it doesn’t reverse back below. UPDATE:  12:00 PM

Dumping the short here, as CL is pushing higher and USDJPY is now joining in.  Might be back to short if it reverses at the white SMA5 20 around 1984.50, but for now, it’s acting like a strong rebound.UPDATE:  12:09 PM

Time for it to head back down if it’s going to.  CL must tag its SMA100 by 12:15-12:20 if it’s going to do so without breaking the white channel bottom.  Back to short here. UPDATE:  12:27 PM

CL is in no mood to tag its SMA100.  It’s spiking higher, which will drag SPX higher. Back to cash here.UPDATE:  12:32 PM

USDJPY taking it upon itself to push prices lower.  Back to short with tight stops, as the CL-driven algos clearly have a different agenda than the USDJPY’s at this time. UPDATE:  12:41 PM

There’s the yellow .500 rebound of the drop from last May 2015.  It could push lower to the white .500 at 1963.29 — either is legit.  Watching for signs of a bounce, but none yet.  Going to cash as a precaution if it starts bouncing.  NKD just took out Tuesday’s lows.UPDATE:  12:47 PM

ES wants to bounce here at its .500 and channel bottom, so it’s back to cash for SPX.  If ES slips back through 1968, I’ll switch back to short. DX seems to be saying this is the bottom, though it could always poke lower intraday.UPDATE:  1:03 PM

USDJPY is reversing at its falling SMa5 10, so I’ll assume SPX will, too.  Back to short here.Tight stops, as CL has a more natural turning point up at 38.02.  And, as mentioned above, the yellow .500 is a legit turning point.  Not my favorite, but they haven’t asked me.UPDATE:  1:20 PM

ES just got a big bounce off the white channel bottom.  Could be a line in the sand for ES traders.  In the meantime, CL is taking off again.  Back to cash here, though I suspect it’ll reverse at the falling white SMA5 20 around 1976. Maybe 1976 would allow CL to run up and reverse off its SMA5 200.USDJPY looks like it could easily drop to the .886 at 112.47. UPDATE:  2:07 PM

ES went up and stalled at the white channel midline, while SPX has been hanging at the SMA10.  USDJPY backtested the broken white channel, and NKD has stopped dead in its tracks.  I’ll take a chance on a short position here with the thought that we get down to 1963.29. Looks like CL finally got the memo — which is good, because USDJPY probably wants to close back above the white channel bottom.UPDATE:  2:23 PM

Could be just a delaying tactic, but CL just popped back above support.  Back to cash if SPX pops through the SMA50 now abount 1980. UPDATE:  2:34 PM

CL is dropping nicely, but now USDJPY and especially NKD are spiking higher.  Will give up on the short here, but would be happy getting back in on further CL and USDJPY drops.UPDATE:  2:50 PM

Kept waiting for a pullback, but no dice. SPX has reached this SMA5 200 resistance, even though ES has a little further to go.  I’d feel fine about going long if VIX would just break down.  It’s not, so I’ll take a short position here and see where it leads — potentially only a backtest. UPDATE:  3:15 PM

Just getting jerked around here, now.  Back to long as USDJPY is spiking and VIX is dropping below support. This last trade is under the supposition that we get a melt-up back to green for the day.  Tight stops in case it’s a head fake.

UPDATE:  3:35 PM

Getting kinda squirrely in here.  Back to cash for the day.I have to run a quick errand.  If SPX reverses back below the SMA5 200 at 1986, by all means short it into the close.  Otherwise, I’d stay in cash.  Will catch up later…