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This post is a continuation of the intraday comments and trade alerts originally appended to this morning’s Update on CL.

Be sure and peruse that post, as it contains critical components of the outlook for the next week or two.  Also, note that I have updated gold, USDJPY, the Nikkei, and financials in the past week.

I am in the process of updating the current forecast in the wake of our Feb 11 bottom call [see: USDJPY Finally Relents] and should have it posted later this afternoon.

As you know if you read that post, this morning is all about oil — which gapped higher last night in anticipation of today’s inventory report due out at 11:30.continued for members…

I’m looking for that backtest that SPX never could quite manage yesterday.  Perhaps SPX 1914-1917.  Much of it depends on ES, as discussed earlier, and USDJPY — which is again threatening to break out. UPDATE:  9:31 AM

I’d short here at 1928.94 for the drop referenced above.  The SMA5 100, currently at 1917.32, is rising to meet it, and this drop could be limited to 1920 or so.If I’m right, USDJPY should drop through the purple TL.One slightly bearish chart to watch today: NKD, which is backtesting the broken purple channel.UPDATE:  9:53 AM

Quick progress report… I believe they’ll use a CL drop to or through the SMA5 100 and 200 intersection at 33.56-33.60 to effect whatever drop they have in store.  Might be holding out for SPX’s SMA5 100 to reach the .146 Fib at 1920.17 around 10:30.

But, a quick drop to the white channel midline at 1914.80ish would also be nice.  The rising red channel is a little wonky, so it’s hard to say for sure.

I hope ES is off a little, as it suggests 1915 around 11:30.  90 minutes is a long time to wait for a 6-pt additional drop.  Having said that, the red TL is somewhat arbitrary.  No reason to think it’s THE ONE.  But, the rising white channel is pretty well formed, meaning a tag on its bottom should provide strong support — whenever it occurs.  For its part, NKD suggests the timing is more like 10:45.

UPDATE:  10:26 AM

The SMA5 100 has reached the Fib at 1920.17.  Should see the rest of the move very soon.  The red channel bottom crosses 1920.17 around 10:40.BTW, I am having some serious delays with Hostgator this morning.  I had to wait several minutes before being able to post this update.  If I’m unable to post at any time, I’ll continue on Twitter: @pebbletrades.

Only a handful of you have signed up to follow it, so please take the opportunity to do so asap.  If you don’t have a twitter account, it’s free and easy to sign up.  Then search for and follow @pebbletrades and I’ll approve your follow.  If your real identity isn’t readily apparent from your twitter handle, also send me an email so I’ll know who is requesting approval.

UPDATE:  10:50 AM

SPX just reached the SMA5 100.  It should go lower, but in this “market” you never know.  My channel could be off a little.  The safe play is to take profits on the short here at 1922.12 and go to cash in case it pushes lower. 

We can always join in again if there appears to be more downside — which I’m about 75% sure there will be.  Just not sure about when or how much.UPDATE:  10:58 AM

Might not be much to it, but NKD and USDJPY are dropping.  I’d revert to short and see if it leads anywhere.  Tight stops are recommended. UPDATE:  11:01 AM

Didn’t take long.  ES says it’s over, but NKD, CL and USDJPY are still falling.  SPX 1914? UPDATE:  11:12 AM

That’s probably enough for now.   USDJPY and NKD are bouncing, which always makes me nervous with a short on.  Back to cash.  I’m guessing we get a bounce back up to tag the red SMA5 10 around 1920, then another leg down to 1914.  But, anything could happen. ES could easily bounce big right here.I should point out that there are two options with the white channel midline.  One place it just below at 1914, while the other places it near today’s high.UPDATE:  11:30 AM

Euro close with SPX tagging the falling SMA5 10.  Might be worth trying a short position here to see if there’s another leg down to come.  But, I’d want to see CL, NKD and USDJPY relent first.  Right now, they’re in an excellent position to help drive SPX higher — if that’s the plan. Zerohedge has some nice charts on the crude inventory build that sent CL plunging.  Apparently, the Saudi Oil Minister also threw some cold water on the production cut rumors.  Bottom line, CL has no business up where it is.

At the very least, it should close the gap at 31.49.  Right now, however, the algo kings are trying to prop it up at the purple neckline at 32.63 to prevent any further losses in advance of OPEX.  It’s a battle, and I’m not sure which way it’ll shake out.

Either way, CL shorts should be safe if they are willing to hold out, possibly over the weekend and through whatever news might hit next.  The backtest to 31.49 in the CL Update is much more likely.  And, in the absence of additional (even mildly plausible) rumors, even lower prices are possible.

UPDATE:  12:50 PM

I’d short on any drop through the SMA5 20 currently at 1921.80.  NKD and USDJPY are testing support. CL has been reigned back in, and is backtesting the SMA50.Conditions are ripe for a drop to tag the rising red SMA5 200, now at 1908.46.  It should reach the falling white channel at around 1910 in an hour or so — which would make for a good target.

UPDATE:  12:57 PM

Will short here at 1922.06 with tight stops.  Target is the SMA5 200, probably around 1910.UPDATE:  2:22 PM

Well, they avoided the SMA5 200 tag pretty easily.  SPX just tested the top of the falling white channel and NKD and ES continue pushing higher.  CL is being supported.  I’d cut the short position loose here and wait to see if it drops back down.UPDATE:  2:30 PM

Nice reversal for CL, but NKD still threatening to break out.  Maybe we’ll get a reversal off the SMA5 100 at 1923.60ish. UPDATE:  2:45 PM

Another chance for a decline.  Shorting here at 1923.61, though the SMA5 10 could support it at 1921.65.  Tight stops advised.  Because, while SPX’s SMA5 200 down below was completely ignored, ES’ SMA5 200 up at 1923 (+4 pts) is likely to draw the algos higher. 

A good middle ground close could be at the SMA5 200 around 1916-1917, perhaps on a down note, followed by a USDJPY inspired gap higher in the morning.   About the only positives I see for shorts are the USDJPY — which has so far dropped below the SMA5 10 and is respecting the 113.60 overhead resistance — and, CL, which is respecting the dropping SMA5 20 and could sell off into the close.

UPDATE:  3:39 PM

Quick update… I plan on closing the short when SPX tags the SMA5 200 — unless there’s time left and algo drivers are still diving.  USDJPY, CL, NKD working hard to convince folks to sell in the face of pretty obvious ramping potential.  Ideal close around 1914 – 1914.50 or lower. Coincident targets: USDJPY at 13.05, ES at 1910.50, NKD at 15915.

UPDATE:  3:52 PM

I think that’s probably good enough.  Covering here at 1915.26 — though there could be more.I’m going to take a lunch break and then come back and work on the forecast.  GLTA.