The two charts on everyone’s minds this week are the meeting schedules of the FOMC and BOJ.  The Fed gets started tomorrow and announces Wednesday, and the BoJ bats clean-up on Friday.The FOMC has been fostering sentiment that they’ll do something.  And, the BoJ has been downplaying their interest in doing anything.  From a market standpoint, it doesn’t matter all that much, as they already got what they wanted without lifting a quantitative finger.

continued for members…SPX is back above its SMA200 and has broken out of the falling channel which had roughly guided prices since the May highs.

The lift came courtesy of the USDJPY, and involved no QQE expansion — but, rather, ordinary yen bashing at which the BoJ is quite expert.If we see any weakness in SPX today, it’s likely to be focused on backtesting the SMA100 or 200 at 2037.39 and 2060.11 respectively — with the SMA10 at the broken red channel top at 2028.34 an alternative.

The white .618 is at 2032.48 and SPX did just tag its .786.  A drop to the .618 would be the least one would expect in an unrigged market.The upside targets are pretty clear as well: the white .886 at 2104.21 and, ultimately, the 1.618 extension at 2138.04.

The initial move should be downward, as USDJPY has broken trend and is back below its SMA200.  So, for traders, the initial position should be short. And, this is the key chart to watch, as TPTB will want to keep USDJPY within striking distance of its SMA200 in case stocks start looking too wonky.  A quick ramp back to the SMA200 should fix things in a hurry.

One scenario that’s bounced around in my head for a while is that the FOMC does go ahead and raise rates a 1/4% or so for face-saving purposes.  The BoJ MPM coming up two days later would serve as a safety net.

Something to think about…

UPDATE:  9:45 AM

Close-ups on SPX and USDJPY. UPDATE:  9:51 AM

First potential support for SPX here at the red TL and 5-min SMA100.  A drop through this level means 2060 is coming up shortly — though they might wish to delay it until the SMA200 arrives.In addition to ES and USDJPY, I’m keeping an eye on CL — which is testing its Oct 2 lows (43.94.)

UPDATE:  10:03 AM

CL is, in fact, respecting 43.94.  But, USDJPY is cutting loose. It has dropped not only to the .236 red channel line, but the top of the expanded purple triangle.  It has never properly backtested it.  Of course, a sustained drop below it would make the carry trade algos nervous. So, SPX is a bit confused as to which algo it’s supposed to respond to…If USDJPY firms up at the .236 channel line, look for SPX to bounce back up to at least the 5-min SMA10.

UPDATE:  10:30 AM

Obviously, last week’s melt-up through what would traditionally be thought of as strong resistance has bears hunkering down for a long winter.  Volume is non-existent.

So, the algos can do pretty much whatever they like. Here’s my best guess for where this is going.  2060 looks like a safe bet, with the purple midline at 2050ish an interesting closing price.The 5-min SMA20 (white) should serve as a good guide to the squiggles, while the SMA50 (purple) could come into play if they want a head fake to shake things up.

UPDATE:  12:05 PM

Things are still looking okay for 2060 — ideally around 12:30. UPDATE:  12:20 PM

USDJPY just put the brakes on the decline to 2060 by pushing above the top of its falling white TL for the first time.  It’s strongly suggesting a tag of the 5-min SMA200.  So, instead of a quick 9-pt slide, SPX is likely to go sideways for a while. The safe play is to take profits here, though I think we’ll probably retrace this pop after a tag of the SMA50 — currently at 2071.56.

UPDATE: 12:42 PM

USDJPY still easing higher with that SMA200 at 121.01 in mind.  It’s the 5-min and daily SMA200.  What it does after reaching that level will determine whether SPX has any potential downside left today. SPX is likely to poke up through the SMA50/100 intersection.  Whether or not it reverses at the red TL is debatable.  Anyone holding short…there’s the risk that we get a repeat of Friday.  12:20 was the time at which SPX broke its TL then, too.CL hinting at a backtest of the purple TL.

This is an important inflection point for SPX.  If VIX breaks down, then the idea of a SMA200 tag today is pretty much out the window.  Conversely, as long as it holds above that white TL, the downside case remains intact.UPDATE:  1:30 PM

USDJPY just poked through the SMA200 and is testing the red channel midline……while, VIX just dipped below the white TL.  SPX shows no signs of reversing yet — though, the current 5-min candle could be construed as a red TL backtest.  I see no reason to get short again — at least not yet. I stand ready to switch sides, but I’d want to see a catalyst first.

UPDATE:  1:43 PM

Speaking of catalysts, CL tosses its hat into the ring.  Will USDJPY play along?  VIX might.  SPX thinking about it……but, probably won’t make a move without USDJPY.UPDATE:  1:52 PM

USDJPY dipping below the SMA200 ever so slightly.  And VIX bouncing, though not back through the TL just yet.  Probably a head fake, but it could be a good set up to continue to SPX 2060.I’ll short here if SPX dips below the SMA50.  But, this ones on a tight leash.  Any reversal in USDJPY and it’s back to long.

UPDATE:  3:30 PM

USDJPY is squatting on its SMA200… …and CL is squatting on horizontal support… …meaning SPX has no clue where to go.  I’d go to cash here rather than take a guess which way this triangle is going to break.  If it begins to break lower, I’d climb on board.

But, it appears that won’t be allowed to happen during “market” hours.  Unless it gets started right away, look for a gap down in the morning. UPDATE:  3:50 PM

Looks like it’ll close in the triangle.  Again, if it starts to dip below support, I’d short into the close.