USDJPY’s Turn

SPX plunged to just past our 1897 target yesterday, putting in a massive reversal that left it green on the day. The reason, as most now recognize, was the 6% spike in CL. We’ve been writing about this a lot lately [see: Manipulation Becoming Laughably Obvious.] But, of course, it’s no laughing matter. The stock market isn’t a market anymore when central bankers or their lackeys can essentially set the level of the SPX or DJIA by throwing billions into the oil futures market any time they get a little nervous.

Today, we see another example of that. On a day when durable goods order data are so far above expectations that it practically screams “rate hike,” we see the market rally again on the opening. Why? CL’s tag team partner: the yen carry trade.The USDJPY — which also rallied sharply yesterday — has continued on above the bottom of the purple channel from 2011, broken out of the falling red channel, and broken back into the falling white channel that has guided its demise since November — all, to turn around what could have been an ugly open.Not to worry. The “market” has a lot of back-filling to do.

continued for members…

Look for SPX to backtest a little this morning. If it can hold the rising red channel, that would be at 1922ish.UPDATE: 9:33 AM

Shorting here at the purple channel top at 1937.36 with tight stops. If I’m wrong, the .886 is just above at 1940.35.UPDATE: 9:48 AM

This might be all we get for now, as NKD has reached trend line support. Back to cash at 1930.75. UPDATE: 9:54 AM

Shorting again here at the ES and USDJPY backtest. NKD should manage to get down to the SMA5 200 at 16060 and SPX to 1927 or 1923. CL has come backtesting of its own to do. If this little TL breaks, we should see it test the SMA10 or SMA20 at 31.05 or 31.01. The rising white channel bottom is lower at about 30.80. UPDATE: 10:02 AM

Reached 1927 target. Back to cash here as the website is acting up. A reminder to everyone who trades throughout the day: sign up to follow @pebbletrades on Twitter. It’s the quick, easy way to communicate when Hostgator hiccups as it has twice in the past two days.

UPDATE: 10:06 AM

Back to short on CL breakdown.UPDATE: 10:12 AM

There’s the red channel bottom tag. SMA5 200 at 1922.95 is iffy, as USDJPY and CL are bouncing. I’d take profits here and revert to long with tight stops just in case.1923 would have been a gimme if CL hadn’t started bouncing prematurely. It’s now backtesting the broken white TL — so, anyone’s guess.NKD is also backtesting a broken TL.

USDJPY was backtesting, but has jumped back above it.UPDATE: 10:21 AM

SPX has pushed up to the SMA5 10. If it’s going to reverse, this is the spot. Back to short with tight stops, as CL is back above the white TL and might be headed higher.

UPDATE: 10:27 AM

It’s not playing out. Back to cash on CL and USDJPY moving higher.Either NKD’s decline is a head fake, or we’ll be back to short very quickly.UPDATE: 10:30 AM<

USDJPY and CL are both reversing. ES backtested the SMA5 200 again. Back to short here. Maybe it’ll punch through this time, as SPX SMA5 200 and 50 are about to intersect at 1921.75ish. Is this another go-nowhere head fake? Perhaps. But, CL could have stayed above the white TL, and USDJPY the red, and NKD its red. The overall signal is one of further losses, even if the stock jockeys don’t want to accommodate it.

UPDATE: 10:48 AM

By ramping USDJPY higher, TPTB hope to draw traders’ attention away from CL’s current decline. So far, it’s working.

We’ll see what happens after CL makes new lows. I think the initial goal is a test of the .618 at 31.26, then the SMA10/20 — ideally, without taking SPX out of its red channel.

Once CL bounces there, then USDJPY can settle back down and ride its solid red TL into the close. UPDATE: 11:06 AM

SPX has reached the white channel midline, which is providing support at the moment as CL is inches above its SMA10. If it doesn’t bounce here, I think it will pretty soon — perhaps as the SMA5 50 passes by. I’d go back to cash here and wait it out for now. My problem with this as an important bottom is the ES chart, which seems to me to be indicating a drop to the purple channel midline at 1910 around 1PM. It’s another 15 points that I’d like to capture if possible.UPDATE: 11:14 AM

USDJPY is breaking down, but is likely to tag the rising red TL at the SMA5 100 (now 112.408.) CL is bouncing to compensate.UPDATE: 11:25 AM

Here’s the downside scenario, should it unfold today. CL, NKD or USDJPY could easily trash it, but it makes a lot of sense. ES tp 1912.57 by 12:55 and 1906 by 2:45, and SPX to 1915 by 12:45 and then 1909.

If it’s going to happen, it should reverse here. Back to short at 1932.14.UPDATE: 11:51 AM

CL is trying to blow up our channel. Back to cash here if it breaks through the white TL.UPDATE: 11:55 AM

It’s pushing through, so I’ll bail on the short for now. Will go back if it reverses, as it’s probably a head fake and will tag the SMA10 on a backtest of the broken red wedge.Head fake or not, NKD is playing along and USDJPY is thinking about it. NKD and USDJPY’s breakout — and, SPX now above its purple channel and SMA5/10 exiting — it sets up a backtest of the purple channel.

UPDATE: 12:03 PM

Back to short as CL is reversing. It might be futile, as USDJPY and NKD are back above ST support. But, we often get a reversal at 12:09, which is coming up. And, if CL can’t hold this bounce, then SPX should be able to push lower. UPDATE: 1:03 PM

Beating my head against the wall here… CL isn’t playing nicely, so it’s back to cash until it does.My guess is that SPX is going to try to complete a little Gartley Pattern up at 1936.37, at which point it will either reverse or break out. I might try one more short up there if we get any signs of a reversal. Otherwise, today looks like a lost cause for big moves.UPDATE: 1:18 PM

One last shot at shorting today. ES has been a series of broken channels, TLs and multiple failures to dip down to even obvious support. Today’s session is making a mockery of chart patterns — all thanks to CL (u 3.2% from this morning’s lows) and USDJPY.UPDATE: 1:30 PM

Bailing. Back to cash.

Note that the red .886 is just above at 1940.35. If it reverses there, and the reversal is accompanied by a tumble in USDJPY, NKD and CL, I’d consider shorting. Otherwise, it looks like the SMA50 will be tested up at 1946.70.

UPDATE: 2:55 PM

So, here’s what I think is going on… a drop down to backtest a flag pattern of sorts at around 1936-1937.Then, a push up to probably just beyond the SMA50 at 1946.71 in order to stop out a bunch of shorts there.

CL is backtesting the SMA50 at 32.73, after which it’ll probably go up and tag the top purple TL around 34 — ideally breaking 34.21 and potentially 34.82.Meanwhile, USDJPY could run up and tag the midline of the falling white channel at 116,69 — the purple .382 and bottom of the broken red channel. But, the real prize is 120.11, the .618 from the 147 to 75 decline and the .618 of the 125 to 110 plunge since last June.There’s a lot of supposition in there. But, it’s the move that makes the most sense to me now. If BoJ cooperates, then SPX could be back to our 2000 target (yellow dot) by Monday.It’s about 27 points/day, but as the chart shows there’s a lot of pent-up mojo at the SMA50 just above at 1946.71. This will be the 4th attempt to break out, and apparently TPTB don’t care how obvious their manipulation is. They have a world to save.

ES, by the way, has a clear target at 1971 by tomorrow morning. Will it happen? Who knows. That’s why so many of us have been reduced to scalping and day trading. There’s no way to predict when the MIT dropout will start mashing the big red buttons marked “RAMP CL!” or “RAMP USDJPY!”If you’re tired of scalping and day trading, here’s your chance: 56 points in two days, another 50 by the end of March. The only hitch is it’ll require CL or USDJPY to continue higher in total contradiction to the realities of the global economy. Good luck!

When SPX does top 1946.70, don’t be surprised if it sells off into the close. Odds are, they’ll close it on a down note so you’re not comfortable going long overnight. They don’t really want you and me riding along.

UPDATE: 3:42 PM

Breaking through the SMA50. Shorting here with very tight stops. BTW, ES just completed an IH&S targeting 1990ish.UPDATE: 3:55 PM