Wasn’t that amazing news regarding oil?  All that excess supply, sloshing around reservoirs, weighing down queued-up tankers clogging ports around the world — not a problem any more.  Our Peak Oil forecast?  Fuggedaboudit.

What?  You missed it?  Surely, you noticed equity prices melting up to new all-time highs on the back of spiking crude prices?  Anyone can see that.

The Nikkei 225 is up 13% in the 13 days since the US election (of a man who has pledged to dismantle the TPP) — even though the value of the yen has plunged 10% since election night lows and oil has spiked 16% in the past week or so.

You might be forgiven for wondering how all these machinations are so great for Japan, Japanese companies, and the Japanese people that they justify a 13% spike in equity prices.

When we talk about algos driving equity prices, that’s the rub.  Whether or not the OPEC deal comes together (I’m thinking not), the constant jawboning has driven equities higher anyway.  Long after oil plunges into the 30s, we’re looking at new all-time highs.

Like Uncle Seymour’s ill-advised political rant over Thanksgiving dinner, all-time highs can’t be taken back — no matter how unjustified they might be.

From a charting standpoint, new highs dramatically change things.  Though, it’s worth noting that they dramatically changed things in October 2007, too.

continued for members…

CL, having accomplished its mission, can settle back down below the yellow neckline and flesh out the rising red channel.

And, USDJPY can start setting lower, as well.  I expect it’ll happen in the context of a broadening red channel.

VIX should hold its depressed levels……at least until DJI is up over its 1.618 extension.

DX can start settling back in anticipation of the Fed rate hike.

UPDATE:  9:44 AM

The big question this morning is whether or not we’ll get any push back now that DJI has topped 19000.  I’m watching VIX, which is rising back to test the .886 at 12.39.  If they suppress it all day, then we’ll likely get a flat line in equity prices.  If it can rise back above, then there’s a possibility for a playable decline.The smart thing for TPTB to do is allow USDJPY and CL to settle lower until SPX and DJI test their previous resistance: DJI at 18,974 and SPX at 2193.81.  At that point, they could hint at another leg higher and complete the backtest.

Is it worth being long here?  I guess.  I don’t envision a big price move today — more defensive, in all likelihood.  But, there’s no harm in going/staying long if you use reasonable stops.  SPX has clearly spiked up out of the rising white channel, which should rectify itself at some point.

UPDATE:  10:44 AM

It’s not much, but it looks like they’ll allow that backtest of 2193.81 now, possibly to coincide with the SMA5 200 arrival there.  It’s a 7-11 point move, depending on when, thus worth shorting.

The potential fly in the ointment: DJI, which they might decide to hold at no lower than 18974.

VIX’s .886 continues to be the toggle.

I have to run out for a little bit.  Will be back around 11:45AM.  Watch those stops, as it appears DJI is bouncing at 18,974.70.

UPDATE:  2:40 PM

More oil silliness, coupled with VIX manipulation.  I’d cover here, though there’s a good possibility we’ll see a last minute dump like Friday.

UPDATE:  2:49 PM

Trying one last short here as ES just tagged its SMA5 200.

I really thought SPX might put in another leg down to slightly lower than this morning’s initial downturn.  I based it on CL’s apparent plans to flesh out the rising red channel — if not actually backtest the broken white channel.  Instead CL bounced at a TL (purple) from last Monday’s lows, then bounced through the yellow neckline and red midline and falling yellow TL — all in order that SPX would break out of a massive 4-pt decline.

I’d not give this much rope, as a rise beyond the SMA5 200 could easily go to new highs.

UPDATE:  3:33 PM

Covering here at 2201.78.

VIX and CL are too strong for the tiny number of bears who showed up for work today.

UPDATE:  3:39 PM

Total waste of a day, but SPX is at the .886 and its SMA5 200 is approaching 2193.81 as discussed earlier.  Why not short here?  Simply because ES is very close to breaking out.  Anything north of 2200.75 is a break out, and would likely put SPX at its highs of the day.

 

UPDATE:  3:47 PM

Now, I’d give it a shot, now that we have new highs and VIX is at support.  Back to short at 2204.01 for 2193.81.

Remember, we have an API inventory report coming out after the close.

The following two news blurbs came across the wire only 30 seconds apart.  One is titled “OPEC Oil Deal is Likely, Officials Say” and the other is Iran and Iraq Stumbling Blocks to OPEC Production Cut.”  In any case, the timing of the various reports released today was such that CL has broken out of the falling purple channel.  Whether or not it remains there after the API report is released (after the “market” is closed, of course) is anyone’s guess.

 * * *