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In an impressive pump by both CL and USDJPY, ES rallied 14 points off its weekend lows and is now sitting at a slight gain.  This has, of course, become a trend over the past month.  In fact, it’s gotten to the point where TPTB don’t really seem to mind if it’s blatantly obvious. continued for members…SPX’s targets from last week remain unchanged.  Initial downside support is at the white channel midline at 2085ish, followed by the SMA20 at 2080.56.  But, we’ll continue to watch for signs of the small purple IH&S playing out.  It targets the previous high at 2116.

It had multiple chances to break out this past week, but didn’t.  From this, I can only assume that the flag pattern is meant to continue a little longer.UPDATE:  9:34 AM

SPX’s initial spurt above the neckline is fizzling fast, led by ES – which is backtesting its neckline.  Unless the backtest extends beyond the neckline, this could be a retrenching before another leg up.  If it does extend beyond, then there’s a good shorting opportunity on down to the lower targets.UPDATE:  9:44 AM

Going to take a short position if SPX pushes below the 5-min SMA200, as USDJPY and CL are both sliding.UPDATE:  9:48 AM

Putting on the short here at 2088.17 with a target of 2080.52 (though the purple .618 at 2079.39 is more likely.)  But, watch out for the white channel midline at 2084.40.  If the SMA20 doesn’t hold, the bottom of the flag pattern is way down at 2067ish — just above the SMA200 at 2065.26. Note that this reversal is being led entirely by CL and USDJPY, which means it could easily turn on a dime when they do.  Set your stops accordingly.

10:00 AM

Pending Home Sales and Chicago PMI just missed……and, CL and USDJPY are doing their best to paper it over.  If they’re able to, the pundits will suggest that it’s “bad news is good news” all over again.  We’ll know better. UPDATE:  12:18 PM

Quick update… SPX is likely to bounce up and tag the 5-min SMA20 at 2085.50ish.  Whether it will stop there is not clear.  Ideally (for our forecast) it’ll backtest the white midline and continue lower.  But, we’ve seen many instances lately of a backtest getting carried away.  Watch your stops, and close the short here if you want to play it safe.UPDATE:  12:22 PM

The backtest we discussed just above…I’d close the short here if it makes any kind of sustained move above the white channel midline.  At this moment, CL is trying to work it lower.Ditto for USDJPY…UPDATE:  1:25 PM

Here we go again – another backtest of a falling 5-min moving average (the SMA50 this time) and the white channel midline.  I would ditch the short at this point, as USDJPY and CL have done their best to bring it lower without any effect whatsoever. I’d consider reopening a short position if USDJPY declines below the red, dashed TL off this morning’s lows.

UPDATE:  1:40 PM

I think today is a pretty good indication of what to expect this week: prices that stay within a fairly tight range while we’re waiting to learn what goodies Draghi et al have in store.

SPX spurted higher out of the falling red channel and appears likely to test the 5-min SMA100 at 2088 or SMA200 at 2089.40.  It actually dragged USDJPY higher, past the white channel midline, to test a TL off this morning’s highs.  A reversal here would allow SPX to backtest its red channel down at the 2079-80 by the end of the day.  Otherwise, we’ll have to wait until tomorrow to see if it’s even a possibility. UPDATE:  1:59 PM

SPX just reached the 5-min SMA at 2089.59.  If it’s going to reverse and close lower, this is the place.  I’ll try a short position here, as USDJPY suggests it’ll support same.  Tight stops are advised, as it is the last day of the month and USDJPY/CL gave it a pretty good effort to no avail earlier.UPDATE:  3:29 PM

I’m probably leaving money on the table, but this day has been awfully hinky.  I’m going to go ahead and close the short here at 2081.76 and go to cash for the rest of the day.  We got within 59 cents of our downside target, which is close enough.  We’ve had a decent month, and I don’t see any value in risking it for an additional 0.59!

Will it get down to 2079.39?  I think so.  I’m just not sure it’ll happen today.  And, with half a dozen central bankers about to take the stage in the next few days, this is a week in which to exercise caution on short plays.