Following the 5th sell off in a row, the S&P 500 futures reached the SMA200 again yesterday.  It started with a sell off in USDJPY (yen strength, dollar weakness.)

So, it’s only natural that when the panic button was pushed, it activated an overnight ramp job in USDJPY……and, thus, ES.  Look carefully, though, and you’ll see that ES merely backtested the broken white TL off the 2009 lows and is drifting lower. It correlates with USDJPY’s backtest of the red channel midline.

In other words, this rescue will likely be something less than an actual reversal.  Pop and drop, anyone?continued for members…

We should see a partial or full backtest of the purple midline or yellow neckline, followed by a continuation of yesterday’s slide.

UPDATE:  9:32 AM

I did my best last night to clean up the SPX some, but I’m afraid it’s still pretty busy.  Note that some of the harmonic grid colors were changed.  Here’s the bigger picture:

Note that the entire move since last October’s lows have been contained within the yellow 1.272 at 1823 and the yellow 1.618 at 2138 (the 1.272 and 1.618 extensions of the crash from 1576 to 666 between 2007 and 2009.)

I’ve drawn the lowest target way down at 1940.  As bearish as it seems, it’s merely a .618 retracement of the move from last October (the one inspired by Bullard’s QE4 comments.)

I’ll mention it again later, but I want to let members know that I’ll be traveling on Thursday and Friday.  I should have a chance to post early in the morning on both days, but there will likely be no intra-day posts.

I have some other charts to update, so we’ll let our short simmer for a while and check back in if anything dramatic happens.

More later…

UPDATE:  11:00 AM

CL to the rescue.  It broke out of the falling wedge — but is obviously coming up on the falling red channel top.  A spectacular 3.8% move in less than 8 hours.

Assuming it reverses there, we should see SPX’s spurt run out of gas between the yellow and white dashed lines (2078-2082.)

If CL doesn’t reverse, then SPX will likely retrace more of the past week’s losses, with the next resistance being the white .500 at 2088.42 and the red channel midline at 2090ish.

Personally, I think CL — though it tagged its .786 of the rise from March, will continue down to the .886.  In other words, its levitating powers may be completely expended today.

The chart I’m really focused on at present is NKD. While the BOJ clearly cares about the other “markets” they’re propping up (they have invested here, too) it’s the home turf they’re most interested in protecting.

Note the NKD’s daily chart shows a violation of the white channel midline earlier in the month.

It can be seen better on the 60-min chart below, which also more clearly shows the megaphone pattern that was setting up.

1.  drop through the midline
2.  rescue at red, dashed TL off recent lows – no lower lows allowed!
3.  break out of the pattern after rescue

It’s no surprise that the rescue was engineered by the USDJPY.  The numbers are synced up to make the operation easier to spot.

1.  drop through falling purple channel midline
2.  reversal before reaching the single most important Fib line in the last 20 years
3.  break out of the falling purple channel

Back to that NKD chart…note that last night’s ramp job enabled it to backtest the white channel midline — but no more.  It’s basically back to where it was when it was broken out of the megaphone pattern that targeted 18,802 — or worse.

The biggest disaster for the BOJ — which now has a significant percentage of their balance sheet (and the country’s pension plan) directly in stocks — would be to fall below 18,365 (the 2007 high.)

So, any move that even looks like it’s going to allow that to happen has to be nipped in the bud.  The yellow target down at the .382 of 18,532 is probably not realistic (given their manipulation.) But, we should be on the lookout for some capitulation that generates enough fear to prompt further QQE — perhaps another tag on that red TL (currently around 19,200.)

UPDATE:  1:15 PM

UPDATE:  2:07 PM

SPX coming up on the SMA100 at 2095.  I rode it through the stop at 2092 just because the SMA100 was so close.  But, a move through 2095 would be reason enough to retire for the day.  BTW, the SMA100 for ES is at 2089.87 — a little higher.At this point, CL and USDJPY have both exhausted their mojo.  The last bit above SPX 2090 was all about VIX, which should find Fib fan support here.

CL and USDJPY will reset after the cash market closes — no harm, no foul.  Feeling squeamish about shorting after all this?  That’s the idea!

more later…