So Draghi and the ECB didn’t discuss tapering or extending QE.  Hmmm… a little hard to imagine.  What’d they talk about, the weather?

Futures, which know where their bread is buttered, ignored Draghi and followed oil’s lead instead.  CL nailed our 52.21 target yesterday, and has been reversing ever since.  It’s now closing in on the red channel bottom again — which will determine whether stocks can maintain the latest bounce.  The key level to watch is right around 50.63 — the SMA10 and red channel bottom.continued for members…

Keep an eye on USDJPY, which has been doing its best to compensate.ES is pinning its hopes on this rising channel — which it should be able to hold if CL doesn’t break down.SPX should continue yesterday’s sell off on the open.  The question is where it’ll hold.  If ES’ channel breaks, we should at least get a backtest of the broken white channel at 2130ish.

UPDATE:  9:38 AM

I’d short here at 2141.93 as ES is pushing below its channel bottom.  Tight stops are advised.VIX still needs to break out… …and USDJPY is getting a bounce at the white TL shown above.  But, CL has further to go before it reaches support.  It should be good for 2130-2131 on SPX.UPDATE:  9:55 AM

USDJPY is pumping, and VIX is dumping. So far, SPX is being propped up at a 1-2 point loss. UPDATE:  10:02 AM

SPX just closed the gap, and USDJPY is still rising.  I’d close the short here at 2144.25 and revert to long.  There is more upside potential if USDJPY breaks out of the white channel.  If it stops at 103.96, then we’ll just get a bounce up to 2147-48. UPDATE:  10:09 AM

Things are moving too fast for me to chart & type…  USDJPY just broke out of the white channel, but faces OH resistance at the falling white channel top.  If it can break above 103.96, then SPX should continue up to at least backtest its broken white channel – currently at 2149-50.

If USDJPY reverses, and CL continues to drop — then we’ll probably get a backtest at 2142ish.  I’m tempted to go short.  But, if CL bounces at 50.63 — prompting a backtest of SPX at the SMA10 at 2143, then we’d be right back to long.

Bottom line, I went long too late and too early.  But, if CL holds at 50.63, it should turn out okay with SPX holding at 2142-2143.  If CL drops through 50.63, watch out below.

To further confuse things, check out DB – which has been all over the map this morning.  The flag pattern breakout should at least test 14.61.  But, watch out after that, as the red channel could still take over, opening up a backtest of the twin red midlines at 13.50ish.UPDATE:  10:25 AM

Back to short at 2142.15 as SPX just dropped through the SMA100.  USDJPY seems stymied here at the white channel top, and CL is still slipping lower.  Keep an eye on USDJPY, though.  If it breaks out, this position could be very short-lived.Note that DX finally backtested (sort of) its SMA10.  So, it seems to have a head of steam.UPDATE:  10:32 AM

SPX testing 2138.04 as CL tests 50.63.  Decision time.  It’s not enough for CL to stop at 50.63.  It must bounce if it’s going to save SPX from further downside.  USDJPY seems played out.

Note that the gray TL isi at 2132.66 and the white channel top at 2130.11.  Of course, the elephant in the chart is the 2015 high at 2134.72.  But, an overshoot wouldn’t be that unusual.CL should tell us when SPX is done by bouncing strongly back above 50.63.UPDATE:  10:48 AM

Back to cash here at 2135.82 as CL is bouncing.  I wouldn’t go long yet, as CL is probably just delaying rather than stopping SPX’s slide to the backtest.UPDATE:  10:54 AM

SPX is slipping lower as CL’s bounce is fading.  Back to short at 2135.05, but a reminder that this could be a minor drop to 2132.84 or so. And, the BoJ just panicked.UPDATE:  11:00 AM

Back to long here at 2135.36 as SPX has tagged the TL and VIX has hit resistance.  Just waiting on CL now.  And, USDJPY just keeps going.  My gray TL was a little off earlier.  I had drawn it with the 60-min chart, leaving it a little low.  On this, the 5-min chart, we just had a very precise tag. 

Note, however, that the white channel backtest never did occur.  If TPTB care about such things, it’s now down around 2130. UPDATE:  11:18 AM

The SMA5 10 has finally arrived on the scene.  If we’re going to get another leg down, it should begin here.  VIX poked above the megaphone top by a little bit, but hasn’t committed.  It could easily retreat.

CL is back above 50.63, but hasn’t taken off.  I’m very uncomfortable being long here, especially with the euro close coming up.  But, I’ll stick it out and see what happens. I usually get this feeling right before VIX takes over and ramps stocks higher. UPDATE:  11:45 AM

Next hurdle for SPX here at the SMA5 20.  They should be able to push it through.  But, I’m concerned that ES has merely backtested its broken channel, and USDJPY is dropping back into its rising white channel.

I’d be cautious here, and be prepared to short if SPX and CL drop back through their SMA5 10s.  Once ES retakes 2133.13, longs can let their guard down a bit.

Remember, the broken white channel was, itself, a backtest of the TL connecting the Feb 11 and Brexit lows.  We’re still in backtest mode until ES is able to push through it (currently at 2147.50ish.) UPDATE:  12:03 PM

Taking profits here at 2143.07.  Though, if VIX can push below its SMA20 or CL above the white TL, there’s more to be had. UPDATE:  2:50 PM

CL is tanking, but SPX is being driven higher by VIX, which just plunged .18 in about 90 seconds for no particular reason.  Holding short, but getting very nervous about the games being played…UPDATE:  3:10 PM

It seems they’re not going to let it dump today.  Back to cash here, though I’d gladly short on any drop through the purple TL.  I guess Draghi got tired of having the “market” tank every time he holds a press conference.  I’m not easily impressed, but this has been a stunning display of intraday intervention. UPDATE:  3:18 PM

VIX has reached its channel bottom, so there’s an outside chance of SPX dumping here.  I’ll try a short position here on the drop through the SMA10 @ 2143, just in case.  Tight stops, of course.

It’s not pretty, but it’s a channel bottom with what looks like an opportunity to complete a Bat Pattern up at 19.51 if it can put in any kind of bounce.  Can’t get too excited about it, of course, as we’ve seen countless such patterns break down.

Anyone see the NKD futures, today?  Up 1.73%, all to prop up SPX.  Unbelievable.

There’s a very good chance that TPTB will ramp oil and USDJPY overnight.  Or, they might let them fall to support and save the ramp for when the “markets” open in the morning.  They could also knock VIX down another point or two.

Point is, they have plenty of ways of supporting stocks here.  If they can get SPX back above 2144, there’s a well-formed IH&S targeting 2158ish.  If they can’t, then our downside targets are still waiting.  Only hold short if you can stomach the idea of a sizeable gap higher in the morning or hedge your position.

Things are hanging by a threat here.  Unless they perform a little magic, SPX is going lower.