If there’s one thing the people of Japan can count on, it’s their Yellen equivalent screwing up whatever he tries………
The high window opens on SPX today and runs through to Monday 3rd October. During this period Stan and I are expecting to see a very significant high made that would then be followed by a decline that would be considerably larger than the modest retracement just completed. We are looking for a likely full retest of the all time high, with an eye on higher targets in the 2203, 2206/7 and 2210 areas.
On the daily chart SPX confirmed the break back over the daily middle band with another close above it yesterday. This opens a possible test of the daily upper band, currently at 2202. I’d generally expect to see a retest of the middle band from above today or Monday, and that is currently in the 2161 area. SPX daily chart:
Haruhiko Kuroda is clearly the Dennis Gartman of the central banking world.
Last night (based on the time zone in this once-great republic of the United States), the news came out that although Japan wouldn’t be making interest rates even more negative (yes, this is the topsy-turvy world we live in…….more negative) they would be introducing “yield control”, whatever the hell that means.
After a few moments of initial panic, the market liked what it heard and did precisely what Kuroda wanted: bid the US dollar up mightily versus the Japanese Yen.
Well, the big news tonight was what Japan would be. Here’s the skinny from our friends at ZH:
Disappointment on rates (no change)
- *BOJ MAINTAINS POLICY BALANCE RATE AT -0.100%
But it appears BoJ unleashes its reverse twist idea…
- *BANK OF JAPAN TAKES ADDITIONAL ACTION
- *BOJ TO INTRODUCE QQE WITH YIELD CURVE CONTROL
- *BOJ SCRAPS AVG MATURITY TARGET OF JGB HOLDINGS
- *BOJ TO BUY JGBS IN LINE WITH CURRENT PACE (disappointing)
All charts and video today done last night or this morning for subscribers at theartofchart.net.
SPX spent much of Friday under the 5dma, but rallied to close on it, so the three day rule was not triggered. Bears have a second and last chance today to close more than two handles below the 5dma, currently at 2138.10. If they can then the rule states that we see a retest of the current retracement low at 2119 and likely go lower. If they can’t then the retracement low may well already be in and SPX likely rallies into the high window that opens on Thursday 23rd September, ideally retesting the current all time high or going a bit higher into the 2210 target that Stan and I are looking at. SPX daily 5dma chart:
I’m concluding latin post title week with a phrase which means ‘before all else, be armed’. This market could get very interesting over the next few weeks, hard as that might be to imagine after the last few weeks. We must all be careful not to get caught on the wrong side of a trade that goes the other way hard. The mini-crash almost exactly a year ago followed an August daily band compression that was smaller than this one.
Decent market information is a useful weapon too of course, Stan and I are analysts rather than clairvoyants but on a good day it can be hard to tell one from the other. I’m particularly pleased with this video that I recorded last night for our Daily Video Service subscribers at theartofchart.net, which has given me a very nice morning and a great start to the holiday weekend. I’ll go through the calls on the companion bonus charts below, which were used in the video and then posted for subscribers afterwards. I’ve not included the ES and TF charts as I was mainly relying on the NQ chart for equity index direction, for reasons that should be obvious on the video and chart: (more…)
The next G-20 Summit Conference is approaching on Sept 4-5 in China, which is interesting if only because the Chinese Yuan has weakened precipitously vs the USD in the past week or so.
On Aug 22, USD/Yuan was “trading” at 6.59, but today it is trading at 6.68, which is just a few ticks from its July 13 multi-year USD high (Yuan low) at 6.71.