Our theme song for the day is the pop song What’s Up? from 4 Non-Blondes in 1992 — not for its title, but for its popular refrain “what’s going on!?”

It’s a bit of a departure from my usual jazz or standards, but I think it perfectly captures the mood on the Street right now.  With a rate hike now virtually certain (according to Fed presidents and pundits), do current valuations make any sense?

If they’re to be believed, the rate increase is a done deal.  Will Wall Street throw another fit like yesterday?  More importantly, will TPTB do a better job of propping things up?  They’ve been trying their best to convince the muppets that higher rates are a good thing.  Here’s their chance.

We’ll start with DX, which fell precipitously yesterday after Draghi’s flopped attempt to cheapen the euro.continued for members…

As we pointed out yesterday, it fell to the red .618 – Fib support.  There’s better support where the SMA100 and 200 sit, but the .618 could hold.

And, the USDJPY could well push back into the broken red channel.

And, the NKD’s rising red channel and red TL and moving averages could hold and see it push through overhead resistance at its SMA200 at 19515. And, CL could get a strong bounce from current levels or, better yet, the purple .886…If all that happens, then SPX could hold at the white channel .236 line, or failing that, the SMA50/100 combo just below at 2034ish.

Right now, the futures are saying a 2-pt gain.  So, I’ll assume SPX is heading higher — with our initial goal the SMA200 at 2064.83 and secondary goal the purple midline around 2076.  But, I’ll be watching like a hawk for the first signs of weakness.

UPDATE:  9:38 AM

So far, so good.  If/when SPX gets to 2064-2066, I might go to cash — at least initially.  I think this initial push is mostly short covering, and could fall apart quickly.

But, it could just as easily push through on strong support from CL and USDJPY — which have been pretty quiet thus far.Another key chart to watch is EURUSD, which is fast approaching its 100/200 day MAs. UPDATE:  9:48 AM

SPX pushed through the SMA200 — mostly on NKD futures and VIX — and is nearing the purple midline at 2076.  Not convinced it’ll get there, so I’d recommend extremely tight trailing stops here.CL is starting to weaken, and USDJPY is going nowhere, so we’re probably close to the first pullback.  The purple midline would make perfect sense (see 60-min chart above.)

UPDATE:  9:55 AM

I’m assuming it’ll either pop on up to 2076-2080, or backtest the SMA200 at 2064.83 first.  If it reverses and finds support at the SMA200, I’d be comfortable taking another long position for the next 12-15 points.

Note that this push was all short-covering, stop-running on the backs of NKD and VIX.  CL and USDJPY have been extremely quiet.  So, if/when they wake up and start moving, we’ll have a better sense of what to expect.

UPDATE:  10:12 AM

I’d keep a tight leash on this, as CL is still very non-committal and might want to drop down and tag that .886.We’re in melt-up mode here, and I’ve never been real comfortable with this kind of algo-driven rally. UPDATE:  10:31 AM

UPDATE:  11:07 AM

If it reacts, odds are it’ll dip down to the rising 5-min SMA20 — currently at 2071.  If it punches through, then the white channel midline at 2089ish would make sense.

UPDATE 12:04 PM

Pushing a little lower here.  Decent chance it’ll decline to the 5-min SMA100 or 50  — though will perhaps wait until they cross the SMA200 at 2064.83.UPDATE:  1:12 PM

SPX just reached the white channel midline at 2089 — my highest target for the day.  If you’re still along for the ride, I would strongly suggest selling here and going to cash for the weekend.Stocks are supposed to reverse lower after a bounce from the .236 to the midline.  Ideally, they’d drop all the way to the channel bottom.  In this case, it would suggest 2019 or lower.  But, we’ll not make any such assumptions at this time.  It should be perfectly clear to everyone just how easily TPTB can prop up this “market.”