Oh, I get by with a little help from my friends
Mm, I get high with a little help from my friends
Mm, gonna try with a little help from my friends
Faced with another do or die moment, equities survived another brush with a breakdown – with a little help from the Fed, of course.
Now, 234 SPX points later, it has cleared most of the overhead hurdles and is back on track to behave the way we would usually expect given that Friday is OPEX and the end of Q2 is not far off.
Just for the record, the spike had little to do with retail sales – which served only to boost ES back above its 10-day moving average and the yellow TL connecting the 2018 highs.
continued for members…
The bigger picture shows that SPX will clear its yellow channel midline and the TL from 2019 highs on the open.
The falling red channel never really materialized, but its “top” will likely come into play anyways since it’s also a backtest of a TL from Mar 23 (formerly the rising red channel, now broken.) 
We speculated last week that VIX might backtest its broken white channel at or below its recent lows, with the SMA200 and .886 the obvious choices. Following yesterday’s drop, it seems like an easy get. 
Note, however, that the SMA10 has crossed above the SMA20 – a bullish cross that is bearish for stocks. 
The SMA10 crossed below the SMA20 on Apr 1 and has remained below it ever since. If we see new highs in SPX, it would almost certainly involve a resumption of the bearish alignment and probably a breakdown below the SMA200 at 25.03 and yellow TL (currently 24.72ish) as well.
If VIX makes new lows, the .886 at 19.86 would be a juicy target – the first return to the teens since Feb 21 (note the gap at 18.21.)
But, it’s too early to assume the Fed will push things that far. It had the opportunity last week and took its foot off the gas. Suffice it to say that Powell’s testimony these next two days is key. As long as the SMA10 remains above the SMA20, we will see lower lows in equities.
CL and RB have joined in the game, with CL breaking out of its little falling red channel – but backtesting the rising white channel midline. 
This would normally be bearish, but we have to recognize that it could backtest it all the way up to that gap close at 41.05. 
RB similarly has a red TL backtest ahead of it at around its former highs at 1.25.
USDJPY is meandering around the broken white channel bottom – not really needed at this point after failing to follow through on its breakdown.
It was enough, though, to send NKD up a stunning 5.7% from yesterday’s lows.
The EURUSD and DXY continue to tread water.
The 10Y has bounced on the general giddiness surrounding the markets and, in particular, the positive retail sales report.
But, the 2Y has remained stuck at 20 bps. 
…resulting in the 2s10s returning to the safe zone – not a breakdown but not a breakout.
UPDATE: 12:34 PM
Interesting pullback that has put ES back below its SMA10 and yellow TL and SPX (which reversed at that red TL/channel bottom backtest) back below its yellow TL, channel midline and SMA10.
Note also that DJIA is stalling here at its SMA200 and SMA10.
VIX got a nice bounce off its purple TL and white channel midline. 
And RB and CL have backed off their earlier rallies, with CL indicating a much shallower falling channel, shown below in purple.
It’s too early to say whether this pullback will last. But, note that AAPL has failed to break out after climbing to its .886 retracement.
UPDATE: 3:45 PM
We’ve had a couple of head fakes, but so far today’s rising channels to the .886s are holding. 
Note that SPX’s SMA50 should be at or above its .618 tomorrow. Our original thesis was that stocks bounced yesterday in order to give the SMA50 time to work its way higher.
