Slugging it Out in Japan

With plenty of focus on various headlines and markets, the last thing most U.S. traders are worried about right now is a foreign currency. Thus, consider this a friendly reminder to keep an eye on the Dollar/Yen currency cross, seen below on the daily chart. As this chart goes higher, the Yen weakens, since it is the denominator.

And we know from recent history that the Bank of Japan has serious issues with this cross going above 160, to the point where they have staged interventions, meaning they sold foreign currencies/assets in exchange to prop up its own domestic currency. Typically, these interventions have short-lived impacts. But the BoJ still exhausts its "tools," anyway. 

At some point the market will likely totally shun the intervention and leave the 160 level in the dust, which means the Yen will weaken precipitously, disrupting global markets in various ways. 

However, just as with The Fed and Treasury here in America, the instructive point is that all of these interventions and meddling into markets and the economy to this extent is extremely unnatural. Yes, we have always had a "mixed" economy with public and private sector aspects. But to attempt "manage" each and every decline in asset prices, be it stocks, bonds, home prices, or currencies (not to mention oil on the upside) is a recipe for disaster in due time. 

Tonight we have AVGO earnings of note, another big test to see if the AI bubble can persist without so much as a sneeze. The S&P 500 is coming up on two full months above its 20-day moving average, an exceedingly rare event when you backtest to even some of the most aggressive rallies we have seen over the years. 

Finally, oil and natural gas are turning in strong sessions, with some energy stocks quietly firming up and sporting quality chart setups which we noted for Members.