SPX lost key ground yesterday as it dropped back below the top of the channel dating back to May 2015.  CL and USDJPY did their best to stem the losses, but SPX dropped straight to our downside target, then tagged on a little more for good measure.continued for members…ES has reached the next level of support we discussed, so the 4.50 current losses should reverse after SPX tags the SMA50 at 2076.50 at the open. The key will be CL climbing back above the white channel bottom and continuing higher.UPDATE:  9:32 AM

SPX has tagged the SMA50 and should head higher.  I’d be comfortable taking a long position, here.  Initial target is the white channel bottom around 2082, followed by the SMA20 at 2084.48.  The cleaner target is ES’s SMA20 and channel backtest at 2081.74.CL has broken back into the white channel and is spiking higher.

It would help if USDJPY would also break out.UPDATE:  9:47 AM

USDJPY did break out, and is trying to defend the breakout with a backtest. SPX is having trouble with the purple channel bottom (a subset of the white channel.)  Either a failure of the bounce, or a deep retrace coming up.UPDATE:  9:54 AM

The retrace gets deeper, testing the SMA50, as CL and USDJPY are backing off their initial pops. The SMA50 makes a nice line in the sand…UPDATE:  10:12 AM

SPX has dropped back below the SMA50, and CL and USDJPY aren’t doing much to save it.  I’d move to the sidelines here.CL has dropped back through the purple TL, a real show of weakness.  While it might halt at the SMA5 200, it’s not providing its usual support.USDJPY is also taking a very lackluster interest in propping up SPX.And, NKD is losing support. I suspect ES is aiming for the red 1.618/purple .618 down at 2059.34-2059.88.  It came close earlier, but didn’t quite nab it.  This would be the equivalent of 2068.50ish in SPX — the white .500 Fib.I might take another stab at a long position there, or perhaps just stay on the sidelines for now.  With the Fed meeting and Brexit coming up, I’d like to work on the big picture charts.  I’ll give it another 15 minutes or so.

UPDATE:  10:55 AM

ES’s .618/1.618 combo came and went — still slipping.  CL has broken down twice, now — and, has one TL of potential support left. USDJPY has also broken down.At this point, it appears SPX is heading for 2062.06-2063.61.  If that doesn’t hold, the next support isn’t until 2046.16.UPDATE:  12:39 PM

SPX got pretty close, but not all the way to the 1.618 or .618.  Traders might try a short position with tight stops, as USDJPY, CL and especially NKD support additional downside.  The only hitches are that (1) SPX is now above the SMA5 10/20, and (2)  any drop might wait until tomorrow morning.  Hence, the tight stops.

I’m working on some big picture charts, so won’t be able to watch this position.  The SMA50 at 2076.50 should serve as a good level at which to consider covering if it moves higher.

UPDATE:  3:33 PM

There’s a good chance that SPX will break out and make its way back to 2084 — the white channel top.  Back to long here with very tight stops.  A drop back through the white TL is cause to short into the close (but, not overnight unless you can hedge or watch it quite carefully.)UPDATE: 3:52 PM

SPX is back below the white TL, CL is slumping, and USDJPY seems lost.  So, I’ll assume this isn’t going anywhere.  Keep a close eye on your stops.  FWIW, if it closes below 2076.50, it’s fairly bearish and strongly suggests SPX will gap down to 2062-2063 in the morning.NKD is working it… …but, CL isn’t (yet?) on board with the last minute ramp. The close is coming up.