Time for a quick update on the big picture.  When USDJPY and CL bottomed on Feb 11, we called for and got a sharp rally.  CL responded with a 31% spike, while USDJPY rebounded 3.5%.  SPX tagged on 120 points for 6.6%.

We’re at the point now where the bounce can do one of three things: (1) backtest support, (2) push through the next line of resistance, or (3) fail and produce new lows.  The ES 60-min chart illustrates:

continued for members…Note that SPX is back above the purple channel/neckline and the red channel midline — which it could fall below on the open.  I expect a backtest of the purple neckline at 1887 either today or, more likely, Monday.

This will coincide with the broken SMA20, which has yet to be backtested.  This support at 1887 is critical.  If it is broken again, then we are likely looking at a drop to at least the red .886 at 1783.  Of course, if the H&S plays out completely, the target is 1573.  But, it’s hard to imagine central bankers sitting on their hands that long.

Note the importance of holding the red channel midline and the 1.272 Fib at 1823.  A lot of effort has gone into it thus far.  But, that was while the USDJPY was constantly on the rise.

Note that USDJPY is back below the falling white channel bottom, presumably in order to support a decline in stocks.CL is definitely backtesting.  It could get support at the gap close at 31.49, but the better target is the purple TL and rising purple channel bottom at 31.

This morning’s initial target is the red midline at 1900.  But, watch for support from the same sort of TL support ES is getting, probably around 1907.USDJPY has given permission for a decline.  It’ll largely be up to CL as to how big a decline will be allowed today.

UPDATE:  9:41 AM

Looks pretty close to the red TL from here.  I’d cover the short and go to cash while we see if it has more potential.  I’m seeing a mild bounce in NKD and CL.  Perhaps a bounce up to the broken red TL and then another leg down to finish it?UPDATE:  10:00 AM

Looks like all the bounce we’re going to get.  Back to short here at 1905.49.USDJPY and CL are supporting a move lower. UPDATE: 10:15 AM

Looks like it’s going to push through the red TL again.  Back to cash.UPDATE:  10:21 AM

Will take another shot at it here at the SMA5 20.  CL is backing off its bounce.  Very tight stops, though, as the SMA5 200 at 1917 might attract SPX.Watch it if/when it dips to the red SMA5 10 now at about 1907.37.  The SMA will often scoop SPX higher.  CL’s drop to the red TL hasn’t pushed past it, and there’s the .618 at 31.47 — right near the gap close at 31.49 — for support.

UPDATE:  10:30 AM

Not thrilled with the way ES is bouncing around.  I suspect lots of direct HFT activity.  Back to cash here.I suspect they’ll go for CL 31.47 –  31.49 (gap close) and then a nice bounce.  I’d be happy to go long once that tag is in, with a traget of the SMA5 200 at 1917ish, followed by the purple TL up at 1922.    Max Pain is supposedly 1935 today.

UPDATE:  11:01 AM

USDJPY testing the red TL, while CL closed the gap and SPX backtested the SMA5 20.  Back to long, with tight stops. UPDATE:  11:05 AM

Just as CL and SPX were set to bounce, USDJPY started plunging below the red TL.  Back to cash here, though it could be a head fake.Next support for USDJPY looks like 112.46.And, now it’s dragging down CL.  Just tagged the gray midline and possibly heading for our 31 target — a pretty important line in the sand for bulls.UPDATE:  11:16 AM

Trying again, with CL pushing back above red TL.  Long here at 1910.84.  But, if it goes nowhere, I might hang it up for a while.  This is a lot of whipsawing, and bulls are having a lot of trouble making progress considering it’s euro close ramp time on OPEX.UPDATE:  11:33 AM

That should do it for the initial salvo.  I’ll  revert to cash here and see if we get another leg up after the SMAs catch up.UPDATE:  12:20 PM

SPX just backtested the falling purple channel top, the rising red channel bottom and the SMA5 20.  Going long here at 1914.  Tight stops are advised, as the 1887 target hasn’t gone away.  The question is whether OPEX and max pain will make it wait. USDJPY just dipped below the bottom of the channel dating back to 2011.  Needless to say, this is a very important line in the sand.UPDATE:  1:09 PM

This certainly isn’t taking off the way I imagined.  Part of the problem is CL, which has done the bare minimum to keep things on track. I’ll revert to cash here and wait for something to get going.  SPX is very much in danger of losing it’s momentum. USDJPY and NKD are also acting quite disinterested in pushing stocks higher.  That could change if USDJPY pushes back above the white TL and trends toward the red.  ES might have found channel support here.UPDATE:  2:35 PM

We have the makings of a melt-up, but no melt up yet.  USDJPY is back above the white TL, but CL is currently melting down — with the possibility of reaching our lower target at 31. SPX has officially lost the rising red channel, so I’d short here with tight stops.

UPDATE:  3:01 PM

Back to the purple midline.  I’d switch to long here with tight stops, as USDJPY is also pushing higher.  Target remains the SMA5 200, now at 1920ish.USDJPY pushing higher.NKD going in the right direction, but not a lot of enthusiasm.UPDATE:  3:44 PM

There’s the white channel top.  I’ll take profits here and see if it can push through after a pause.  I intended to wait for the SMA5 200, now at 1919.54 — but, everything is moving so lethargically, this might be all we get.Pretty baffling day all around.  Keep waiting for some excitement, and it’s nowhere to be found.  If it pops up through the channel top I’d go long again with stops right where I got in.  Otherwise, I plan on staying on the sidelines into the close.

Can’t see any reason to hazard a long or short position over the weekend.