The big story in the markets overnight is crude’s near collapse below the trend line from 1998 to test its Feb lows.

The long-term chart:

But, USDJPY came to the rescue yet again, popping up to test (5th time) the falling red TL upper bound with a threatened breakout…

…and sending ES scurrying higher overnight.  It’s currently showing a 12.75 gain and backtesting the .382.

The stage is set for SPX to pop and drop. But, the ramp job should get it up over the SMA50 at 2059.27 in the opening minutes.  So, it’ll be interesting to see whether it takes the bait.

Note that USDJPY has backed off the channel top, and is signalling a retest of the white channel midline or lower — but, not until it’s done providing cover for oil

It now appears more likely that the backtest of the yellow .618 at 120.11 might wait until Wednesday — perhaps as the initial kneejerk reaction to the Fed announcement.

continued for members…

UPDATE 09:35 AM

SPX made it over the SMA50, and will likely top last Thursday’s high in order to establish a bullish trend.  If so, the H&S Pattern we discussed last week gets less and less likely — which I suppose was the point of Friday’s panic ramp job at the close.

Why? VIX is testing the bottom of the rising red channel again — a great signal of TPTB’s intentions.

UPDATE:  9:45 AM

SPX topped out at 2066.72 – a few pennies higher than last Thursday’s 2066.41.  Technically, this busts the tiny white Fib pattern that suggested either 2032 or 2023.

But, I’m not sure it’s off the table just yet.  We’ll wait and see what VIX does.

Quick aside on EURUSD — which is bouncing just for the heck of it.  No support here — just a long overdue backtest/short covering.  As we mentioned in euro update Friday, it is oversold on the daily charts — but, not on the weekly or monthly.

The 60-min chart:

I think just about everybody is expecting CL to bounce at the white .886 Fib at 42.51.  But, it’s hard not to wonder about this potential falling red channel.This morning’s ramp job, the threatened USDJPY break-out, the VIX channel breakdown — all cover for crude’s current leg down.  If it bounces big off 42.51 — things should turn bullish without all the manipulation.

If it doesn’t, that’s a whole different matter — with the next real support way down at the former low of 33.20.  Though, oil has received plenty of support through extreme spoofing.

UPDATE:  3:00 PM

CL got a terrific bounce off of…well, nothing really.  TPTB just decided it had fallen low enough, and starting pumping it back up.

USDJPY has again popped up through the red channel top.  No way of knowing whether this one will “stick.”Between those two and VIX…

…it was enough for SPX to pop through the SMA10.

The upside target from last Friday is still in place, but we could call this a potential (probably interim) top as well — especially if CL is permitted one last leg down.  If so, the downside target moves to 2067ish.

Though, ES ultimately suggests another 11 points to 2084ish (the red TL at the purple .236.)

It continues to suggest 2155 (2138 for SPX) later this month, unless the trend goes negative and the .618 at 1929 is finally tagged in, say, mid/late April.  FWIW, there is a decent-looking falling channel shown in white below.