The long-awaited BOJ pivot looks to finally be coming and that is one thing that markets weren't quite prepared for, at least not in the final stretch of the year. Positioning data will tell you that everyone expected the Japanese central bank to play it straight today but Kuroda just had to get one final shot in before he departs in April next year.
That has sent the yen surging and bonds reeling, in turn also weighing heavily on risk sentiment and equities. S&P 500 futures are down another 40 points on the day, or 1.0%, currently.
This continues from the retreat since last week, after the cash market broke below the 100-day moving average (red line) following a more hawkish Fed and ECB. I've been warning for a while now about the poor technical look for equities especially if it fails to break above the key trendline resistance (white line) and 4,100 mark and alas, here we are.
As mentioned before, the double-top pattern near 4,100 sets out a target near 3,760 and it looks like we may heading towards that next. The 50.0 Fib retracement level of the rebound since October, seen at 3,796, will offer up some minor support before we get to that at least. But a break below those levels will see the November low at 3,698 come into focus before eyes turn towards the October low at 3,491 potentially.
