We should get the follow through to Friday’s downside target today.  Beyond that, it depends on how much CL and USDJPY are ramped as the “market” opens.

USDJPY hit our upside target on Sunday, then tested the waters on a reversal until the eminis began to sell off in earnest before rebounding to its SMA5 200.  Interpretation: more downside.

While CL continues to conveniently ramp just as the daily session opens, giving stocks a boost until, conveniently again, the “market” closes.The past few days illustrate how CL is being recycled to provide its timely daily boost, then reset overnight.

Anyone who has read any of our many articles on BoJ intervention, or yesterday’s Bloomberg article on how the BoJ has become a top-10 owner of 90% of the Nikkei 225, should have no trouble putting two and two together.  A good primer:

How to Engineer a Rally

Bottom line: these daily CL ramps are without doubt the handiwork of the BoJ, probably in concert with other central banks.  Of course, we’ll potentially get another dose of central bank reality with both the Fed and BoJ meeting this week.

continued for members...

The SMA10 at 2078.63 will be the first real test the rally has had since Feb 11.

The 60-min chart shows the (now broken) white TL from Feb 11 as well as the top-heavy red channel.   Every single drop through the midline has been reversed by a rally in USDJPY or CL.

If, by some miracle, this one isn’t, we can start thinking about the SMA20 and yellow .786 sown at 2065.25.  A reversal to the yellow .786 after completion of a Bat Pattern at the .886 would be a very minor concession to normalcy.

Relenting to normalcy altogether would mean a trip down to the SMA200 at 2014 (for starters.)  But, I’m not holding my breath.

UPDATE:  9:50 AM

Update and possibly the pathway to 2078 and 2065…UPDATE:  10:21 AM

SPX just tagged 2078.64, close enough.  I’d go long with very tight stops.  As noted above, there are many, better targets down below if TPTB decide the SMA10 isn’t worth holding.  Initial upside target is 2087.94.

Lately, these rebounds have taken a while to get going, sometimes with several false starts before they do.  It seems to usually be the predatory HFTs and market makers who are trying to shake out the weak longs.  As always, keep an eye on CL and USDJPY. UPDATE:  12:11 PM

Just got a very deep retracement in CL that had SPX almost back to its morning lows.  It’s going to have to hurry if it’s going to test the top of the falling white channel at 2087.94.  A slightly less ambitious alternative is the red .707 at 2084.61.

Bottom line, it seems they’re in maintenance mode, seeing how far they can dial CL back without damaging the trend. Perhaps targeting the SMA10 at 42.38?  I believe this strengthens the case for the SMA20, currently at 2066.53 — though the question remains as to how much of a bounce will occur in between. UPDATE:  2:48 PM

CL is certainly having a hard time making any headway after the latest inventory build figures.  It’s making it very tough for SPX to get any momentum going. It seems likely that, at some point, SPX will run up and tag the SMA5 200, now at 2087.60.  Note that USDJPY is keeping things on track.UPDATE:  3:50 PM

SPX just can’t get out of its own way today.  ES just tagged its SMA5 200 again, and was clearly rejected.  Back to cash here for the night.  We might get another spurt up to 2086.75, but it could just as easily fall apart here in the last few minutes.ES’ tag:UPDATE:  EOD

Pretty concerted effort in the last 30 seconds of the day where VIX was hammered, USDJPY and CL popped just enough, NKD broke above a falling TL and ES was coerced into breaking a TL and the SMA10.  It was enough to get SPX almost up to our original target: 2087.79 versus 2087.94.