The “market” is good at melting up.  The mainstream media will roll out all sorts of fundamental reasons for the rise: Brexit fear easing, oil market tightening, etc.  But, it still boils down to ramp jobs in CL and USDJPY – both of which are up strongly since Monday’s lows, and both of which are being driven higher by central bankers who are desperate to erase the damage from the Brexit. continued for members...The key event this morning should be the EIA report due out at 10:30 ET.  Recall that last time the API reported tighter than expected inventories, the EIA came out the next day with much less bullish data.

ES is up about 15 points, potentially a wave 4 rebound — but, given that it sliced through the SMA100 and SMA200 without a care, I don’t hold out much hope for 2042 to hold.  If the EIA data supports yesterday’s bullish API report, look for CL to pop up through its SMA10 and SMA20 and support SPX reaching its .618 at 2066.66.  Otherwise, we should see a pop to near 2050 around the open, and more defending the opening gains throughout the day like yesterday.UPDATE:  9:35 AM

There’s the top of the rising white channel.  SPX should back off and wait for the SMAs to catch up.  Back to short here, though if it’s like yesterday, it won’t be much.The supporting cast…  USDJPY is perfectly positioned to either break out (if CL can’t rise to the occasion) or break down (if it’s not needed.)CL is in wait and see mode. ES’ red channel.UPDATE:  10:11 AM

CL is breaking out, so it’s back to cash for me.  They usually run CL up in advance of disappointing reports to cushion the bad news.  But, it could also be a case of inside info or folks believing the API data, so we’ll not assume one or the other. 

Note that USDJPY is taking advantage of the rise in CL to seek better support.  If CL plunges after a negative report, count on USDJPY to soar.  And, the SMA5 200 would be much better support for a bounce.

UPDATE:  10:45 AM

The EIA backed up yesterday’s API report, reporting that inventories fell by 4.1 million barrels.  CL popped up above the SMA20, where it’s holding.  And, SPX is continuing to crawl higher toward today’s secondary target.  If it’s going to backtest at all, it should do it on the news (buy the rumor…)  So, I’d hang in cash for a little while just to see whether it falters any. UPDATE:  11:37 AM

With SPX almost to our .618 Fib target, ES just tagged its SMA10 and VIX backtested its SMA100.  I’d short here. UPDATE:  12:29 PM

Because…fundamentals?

UPDATE:  1:03 PM

Looking at ES, which seems very content sitting at or just above its SMA10, I can’t help notice that the top of the rising red channel it broke out of (in order to go parabolic) crosses the SMA10 right near the SPX close.  Are they really going to just hold it here for the rest of the day?  Yeah, probably so. 

It means there’s little upside to holding short for now.  And, with tomorrow being the end of the month and quarter, we’re likely to see more of the same — unless it gaps down a little in the morning before rallying into the close.   With the SMA5 50 arriving on the scene, they might let it slide a bit here.  But, I’ll be looking to close out our short unless it drops through the SMA5 50. UPDATE:  2:36 PM

More of the same…   except that CL just reached a nifty reversal spot for those looking for a trade.  As it reverses, it should give SPX and ES a reason to decline a few points.  USDJPY is helping, but could help more if it would just go ahead and dip to the purple channel bottom at 102.408. By the way, I have to duck out a little early today.  I’ll have to wrap up around 3:20pm.

UPDATE:  3:00 PM

IMHO, CL is a very compelling short, though it might not do much until after the month/quarter-end.UPDATE:  3:24 PM

Gotta take off now.  I’d close the short at 2066 or, if it’s maintaining any downside momentum into the close, wherever it gets to below that.  With tomorrow being the month/quarter end, it’s unlikely to dump any further.  But hold overnight at your own peril.

I hope to post more later this evening.