As we discussed yesterday, the key to new highs was CL breaking out of the rising channel it’s been in since May 18.  Yesterday, it did.  And, SPX had no difficulty in reaching our next upside target.

As expected, however, USDJPY’s rising channel broke down (a much more legitimate occurrence, I might add.)Can stocks maintain their upward momentum with the pair on the decline?

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Note that CL has reached the red TL that has marked previous downturns.I believe it will pause here as well, giving SPX a chance to backtest some broken TLs as well as the purple channel bottom.  The yellow TL at 2106.50ish looks like a likely candidate, though the actual tag might have to wait until tomorrow.The 60-min ES chart shows a potential yellow neckline backtest around 2086 on the 15th.  Given that it’s the day before the Yellen press conference, and stocks frequently rally into important Fed events, we’ll take this with a grain of salt.

UPDATE:  9:41 AM

I’d short SPX here at the top of the falling red channel.UPDATE:  9:54 AM

CL has repeatedly threatened to break above the TL, leading SPX to leak past our original short and establish a slightly higher high than yesterday.  I’d hold short unless CL actually breaks out.UPDATE:  11:40 AM

The latest thrust lower didn’t finish the job.  To reach the SMA5 200 would have meant a drop through the red .886 Fib — and, they don’t have any interests in retracements that are that deep (at least during “market” hours.)

This looks like a breakout, but it’s probably a head fake.  Odds are that SPX will tumble back down to 2112.52 at the same time the SMA5 200 reaches that price level — ideally around 12:15-12:35 ET. They’ll use CL, of course, as it still hasn’t reached its own SMA5 200, let alone the red TL connecting bottoms since Jun 3.   If CL’s SMA5 200 can’t get SPX where it’s going, they can use a drop to the red TL or even a backtest of the white channel top.UPDATE:  2:30 PM

CL is all over the map today.   That momentary drop was either a foreshadowing of what’s to come, or a pretty nasty head fake.  But, SPX just retraced to .886 of this morning’s highs.  So, we’ll look for a reversal here if it’s going to happen.  Traditionally, this next 30 minutes is hardly the best time to expect a short.  I’d keep tight reins on it here.USDJPY looks due for a drop, though it might wish to take the SMA5 200 and/or white channel top first.  It’s common for its drops to occur after the US close. UPDATE:  2:37 PM

It seems they’re going for a new high.  I’d dump the short here and move to the sidelines.UPDATE:  2:50 PM

With CL already tagging its red TL and the .886 retracement of the subsequent drop, and USDJPY sitting at the top of its falling white channel (and, nearly its SMA5 200), there’s a possibility that SPX’s move through 2120 was nothing more than a stop-running exercise.  Be cautious in here, whichever way you play it. UPDATE:  3:17 PM

USDJPY and CL are all maxed out for the day.  I’d try a short position here, but with very tight stops. UPDATE:  3:46 PM

CL is ramping again.  I’d dump the short and go to cash overnight unless you’re able to hedge or keep a close eye on it in the after hours.UPDATE:  9:50 PM

For those looking for an interesting currency trade tonight, USDJPY is looking tasty.