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Yesterday’s 8-point decline in ES was elevated to a 4-point gain overnight as ECB’s Ewald Nowotny talked up the need for more QE. 
ES had clearly broken trend.
It was also enough to prompt a rebound in USDJPY, which had also broken trend. 
When all else fails, overnight ramp jobs are a very effective way of forcing “markets” higher. But, it doesn’t change the fact that an important event occurred last week.
continued for members…
USDJPY failed at the red channel midline. And, every previous fail (white arrows below) produced a decline in stocks.
Until it breaks out, the USDJPY should be a net drag on stocks. EURUSD is bouncing, but it’s a backtest.
DX itself is back within the falling channel top.
SPX still needs to backtest its moving averages, so our downside targets remain in place: chiefly the SMA100 at 2036.82.
ISM and construction spending are coming up at 10AM. So, SPX is unlikely to do much until then.
UPDATE: 9:40 AM
My lights just flickered a moment ago, so if I suddenly go dark for a few minutes it just means I’m switching over to reserves. We’re having our first decent (and, much needed) rain of the season.
USDJPY is backing off its ECB gains. But, stocks are caught up in the EURUSD rebound — a move which is obviously at odds with the Nowotny comments.
I would suggest waiting on an opening trade until the ISM data comes out. It could easily be used to push SPX through resistance at 2088. But, if SPX reacts negatively, it would present a good shorting opportunity.
Note, also, that CL is very actively involved in this morning’s ramp job. A push back to the red TL would definitely help prop things up. 
UPDATE: 9:50 AM
ES is backtesting the broken purple channel as USDJPY is backtesting its purple TL. However, CL just popped through local resistance, which is keeping SPX elevated.
UPDATE: 10:04 AM
The data was pretty much in line with expectations. USDJPY popped up over the TL for a moment, but has settled back down. 
However, CL continues to push higher.
SPX initially flashed a little higher, but is pretty much sitting still. Futures, however, suggest the CL algos might be capable of extending current gains. Watch your stops. 
UPDATE: 10:11 AM
Everything looking shaky except CL, which continues to spike higher.
It just tagged the red .618 Fib a third time since last week’s lows. As can be seen from the chart below, the red TL I referenced above is a potential neckline for an IH&S. Remember, if USDJPY doesn’t perform its levitation tricks, TPTB are only too happy to prop up CL.
UPDATE: 10:22 AM
USDJPY has been nudged back to just above the purple TL, meaning a move higher is likely in the works. 
UPDATE: 11:50 AM
It appears SPX will probably take a breather around 12:09 and test the 5-min SMA100 (2089ish) or SMA200 (2088ish.) Nimble traders might wish to play a break below the 5-min SMA20 (white.) Unfortunately, if the 100/200 SMAs catches it, that doesn’t translate into much point-wise. 
Note that USDJPY is well above the purple TL now, but is starting to slump a bit just above the pennant top. 
While, CL has given up much of its earlier ramp. 
ES tagged its .786 on the nose, but hasn’t broken below the 5-min SMAs yet.
UPDATE: 12:07 PM
It’s barely enough to be worth it, but the purple midline remains untagged — so there’s the potential for it to turn into something more. Tight stops advised. I’d focus on ES and the .786 at 2088.22. It should top it again unless it’s going to break out and tag the .886.
UPDATE: 12:45 PM
It’s really hard to turn off the algos once they get started. Even with USDJPY and CL falling away, now, SPX keeps inching higher.
UPDATE: 1:00 PM
Taking another stab at a short here at the white TL.
UPDATE: 2:08 PM
…as ES tests its .886… 
But, USDJPY is pushing past a little TL off this morning’s highs — a breakout.
And, CL is also breaking out again. 
The .886 is up at 2104.21. Typically, TPTB will hold short of a key Fib like that, only to gap up over it the following morning. We’ll see.
UPDATE: 3:01 PM
Note that, in addition to completing a Bat Pattern, this marks the midline of the purple channel that has guided SPX higher since 1343 on Nov 16, 2012.
ES still has 1.21 to go in order to reach its .886 at 2099.46. So, don’t be surprised to see prices propped up until after the close.
We’ve been talking about (and witnessing) propping up and ramp jobs all day. But, for those able to hedge overnight, this is a price level at which it might make sense to hold short after the close.
UPDATE: 3:28 PM
ES just tagged its .886, too.