SPX made its way to our channel top yesterday, thought about it for a nanosecond, then broke out forcefully.  While the housing data helped, most of the gains were already in the bag on the back of a massive 3.6% rally in oil, and an almost as impressive 1.11% ramp job in USDJPY.  The USDJPY rally would be more impressive had it not taken the pair to some pretty heavy resistance.

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CL, more of the same.  It should drop through the purple TL if SPX is going to backtest, which I believe it will after topping the purple neckline near the previous high at 2084.87 (yellow arrow.)

UPDATE:  9:33 AM

I think that should do it.  I’d open a short position here and see if it can’t get down to, ideally, the yellow neckline around 2073.37.This is the neckline of a new IH&S Pattern.  It won’t necessarily set up, as TPTB have often missed such opportunities in their usual haste to push prices higher in the here and now.  It would target 2146 on SPX (as in a new all-time high.)

USDJPY supports a reversal here, having reached its red .886. CL is on the fence, as usual.  But, a reversal here back below the purple TL to backtest the white channel top or even the gray channel midline would help a lot.Here’s a look on a 60-miin chart.Again, the algos aren’t usually smart enough to figure out that it makes for a better, more bullish scenario than a simple break out.  But, it’s just as well.  It’s challenging enough to stay ahead of them without them throwing more head fakes into the mix.

Needless to say, a dip to 2073 wouldn’t make for much of a right shoulder.  2040-2050 would be much more symmetrical.  But, I imagine a rate hike confirmation from Yellen would be necessary.

UPDATE:  10:07 AM

The proposed neckline isn’t holding.  I think it’s more likely it pops up and tags the red .786 at 2092.83 — also the bottom of the broken red channel.The only things that could prevent it, and which hold the power to effect a reversal at that point, are USDJPY and CL.  USDJPY did reverse at the red .886, but hasn’t acted very bearish since then.  And, CL is still threatening to make new highs.  The EIA report comes out in 20 minutes, so that will likely have an impact.  If it merely confirms yesterday’s API, then we’re looking at another breakout.UPDATE:  10:14 AM

SPX just tagged the .786.  The red channel bottom is slightly higher.  It seems that CL is intent on notching a new high. Note that NKD has also backtested an important TL. UPDATE:  10:43 AM

A bit of bouncing around, but overall CL is not thrilled with the EIA inventory report — which showed less of a drop in crude than the API, and a bigger build in gas. UPDATE:  10:55 AM

ES has returned to the top of the rising purple channel it broke out of this morning.  No telling, yet, whether it will reenter it.CL has backtested the falling white channel it broke out of yesterday.  Note that it could fall further before running into SMA support (48.12) and even further before reaching the red TL from Feb 11 (the white dot at about 47.6.) USDJPY is finally coming off its highs.  Support is pretty obvious…UPDATE:  3:14 PM

Another day much like yesterday.  Though, SPX has broken down below the short term SMAs, whereas this time yesterday it had broken above.  Based on CL’s actions, there’s a good chance of a ramp into the close.  I’d revert to cash here, and short again only if CL breaks down.  I’d hate to call this a corrective wave — but, that’s the picture TPTB are trying to portray.  If it pops up through the SMAs, then it’d make sense to go long into the close, with a target of 2100-2101. CL has fully recovered, and then some.  Though, USDJPY is trying to avoid breaking down.UPDATE:  3:47 PM

SPX popped through the SMAs, but without CL support.  I’d consider shorting here with the idea that it’ll try to tuck back into the rising purple channel before the close. As to tomorrow morning, I’d love to see it drop back and backfill a bit.  But, it could just as easily run up and tag 2097.71 or, at the end of the day, the .886 at 2101.34.

USDJPY looks spent here, and could easily drop back to 109.62 or 109.86.And, CL…who knows?  It’s the elephant in the room, not really doing anything but daring bears to short into the close — which tells me it’ll probably drop in the morning.  I’d short only if you can handle the risk of a 8-pt gap higher.