Note:  RUT and COMP charts were updated last night.  Check them out.

*  *  *  *  *

Since reaching  our Mar 17 upside target and generating a sell signal last Friday, SPX had gone virtually nowhere  — until the last few minutes of yesterday’s session, when it suddenly gave up 8 points or so.It was a tug of war all day, with rising oil and EURUSD providing cover for a falling USDJPY.There are three troubling developments for bulls this morning.  As the chart above shows, USDJPY’s rising white channel has broken down — at least for the moment.  And, CL has reached the top of the falling white channel.

Last, DX is bouncing at our downside target.

The implications of all the above are bearish, and we should see some follow-through in SPX today.

There are several potential targets. continued for members…

It will depend on what USDJPY does, but my favorite is the SMA20 at 2089.29 at the end of today’s session.  It’s also the red .618, which is a common enough retracement for a Bat Pattern completion in this unending rally, and intersects a TL off last week’s lows.

It will also stretch the timing out a bit as we discussed yesterday.  But, again, it’s important to keep an eye on USDJPY.  It’s not unusual for it to briefly dip above or below recognized support/resistance in order to bludgeon ES in one direction or another to reach a selected target — only to bounce back into charting compliance a moment later.

If 2089 doesn’t hold, then the next major support is the rising SMA10 — currently around 2073.  By tomorrow, it should reach the red .500 at 2079 and the gray channel midline.

Last, keep an eye on CL.  Though it reached the white channel top this morning, the path it took to get there could fit the red or the purple channel.  The red fits the top well, and the purple the bottom.

In the end, it might end up tracing out a rising wedge.  But, odds are it’ll find its way to the red bottom.  And, breaking through the purple bottom would batter stocks.

And, some food for thought on the dollar and overall timing.  If CL trends lower over the next several days, the dollar should continue rising.   The rising purple channel crosses our next major upside target — the .618 at 102.098 — in early May.

The downside target would have to be the bottom of the purple channel — which intersects with an important channel line around Apr 6 — the Monday following the Good Friday holiday.

SPX has vacillated between a strong inverse and a strong positive correlation with DX lately.  In general, SPX slumps when USDJPY does on dollar weakness/yen strength — except when CL interferes as it has on many occasions in the past several months.

And, the dollar been strongly inversely correlated with CL for the past year — except when USDJPY interferes as it nearly always does.  Because SPX has seen CL strength as a positive lately, it leads me to wonder whether DX’s move to 102.098 might correspond with a correction rather than an advance — i.e. a move prompted by fear.

Such a move would normally be accompanied by a falling USDJPY, but what if it’s driven by a resumption of the euro’s plunge?  The pair’s rise since Mar 13 has given stocks a big boost.

But, the top of the falling red channel is approaching.  And, our next major downside target of .9898 intersects with the channel in early May.

Just for grins, we’ll watch for signs that this pattern might play out: sideways or a moderate decline for the next several days, followed by CL breaking out of the falling white channel over the coming holiday weekend which drives stocks through 2119.59 and on to its next highs by around Apr 20.

After the Fib is convincingly broken — 2163 or so? — a resumption of EURUSD’s and USDJPY’s and CL’s fall and concurrent spike of DX to 102.098 as SPX drops to backtest something.  My leading targets are 2093 around the end of April or 2073 around Jun 5.If it plays out, the path to 2163 could look something like this.

This is all speculative, of course, but it kinda, sorta fits.  If nothing else, it should prove a good source of amusement when it flops.

While I was charting the above, USDJPY did exactly what we talked about earlier and magically rejoined the broken white channel.  It will be interesting to see whether or not the falling red channel midline holds.

SPX is back to the purple channel top — possibly for a backtest before falling further?  That would require USDJPY to reverse here, so I’ll be watching.

I have to step out for a while and may not be back before the close.  Keep an eye on USDJPY’s midline and EURUSD’s trendline — which was just broached.

GLTA.