Note: We’ll be doing a little site maintenance this evening.  The site, or your access to the membership area, might be down intermittently.  Thanks for your patience!

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Yesterday’s runaway rally has been ascribed to a number of things.  But, the only factors that really mattered were USDJPY’s 18-hr 1.8% intraday spike and CL’s nominal new highs (bringing the total ludicrous rally since Feb 11 to 33.4%.)  This is the equivalent of 660 SPX points in about 3 weeks time.

As we’ve pointed out countless times before, it isn’t just that CL keeps moving higher.  It’s when.  It’s essentially gone sideways since Feb 18.  But, the daily spikes higher are occuring just prior to or during “market” hours, thus providing the maximum algo-ignition benefit to stocks.  If stocks start slipping, you can usually count on CL to start pushing higher for no particular reason other than to prop them up.

After hours, CL can decline back to where it was without doing any damage to the ongoing rally.  ES is much more easily propped up in the low volume overnight session.  It’s a ploy that was constantly employed during 2014 and early 2015 with USDJPY.  And, it’s pretty darned effective.

With fresh crude inventory data coming in at 10:30AM, we’ll find out whether CL is able to provide further gains, or USDJPY will take over from here.

continued for members...

USDJPY ran into a small scale .886 overnight and is reacting lower.  But, it might be able to cling to the rising purple channel midline and maintain its upward momentum.Note that it’s solidly back in the broken falling white channel. The upside targets from our Feb 23 current forecast remain in place, though I came up with a potential alternate time frame for the 1999 tag. This morning, I’m looking for SPX to pull back to channel support at 1970, and should that fail, to SMA/Fib support at 1963.29.UPDATE:  9:53 AM

USDJPY is backtesting the falling white channel midline, allowing SPX to settle a bit. The timing for 1962.96, if it happens, might be when the SMA5 100 crosses it in the next 15-20 minutes.

UPDATE:  10:15 AM

CL just forced SPX to new highs.  Back to cash here if it pushes through. It might not, as ES just backtested a broken channel bottom and the SMA5 200 at the same time.

UPDATE:  10:24 AM

A reminder, a larger inventory build than last week’s 3.5MM might not produce an immediate effect.  Quite often, it’s delayed until after equity “markets” close.

If its a big reduction in inventories, however, the rally should be sharp and immediate.  A sudden spike higher in CL is reason to cover shorts and go long right away.  The next higher target is the red 1.618 at 1982.17, followed by our 1999 channel midline target.

UPDATE: 10:31 AM

Wow, a 10.4MM barrel build!  Biggest since April 2015.  Incredibly, though CL did decline, the initial plunge was halted at above the overnight lows.

If SPX should drop through 1962, then the next support is 1959.42, followed by 1949-1951.UPDATE:  10:55 AM

Covering the short here on CL’s ludicrous spike higher.UPDATE:  11:00 AM

Important resistance for SPX.  If it pushes through, then our upside targets are triggered.  Not sure I can chase it, though, as CL’s rise is completely nonsensical.UPDATE:  11:24 AM

SPX broke out of little red channel, should at least backtest it to 1975.25ish.CL has rallied almost 5% on the day — in spite of the biggest inventory build in almost a year.

As I mentioned yesterday, some of you have been receiving emails stating that you’ve changed your email or password to this site.  Ignore these.  They are being erroneously issued by DAP, which manages membership stuff for the site.  I’ll update the DAP version when I have a few extra hours — probably tonight.  This should take care of the problem.

Also, I recently updated the WP version I use.  So, I needed to update the image settings.  You should find that they now expand as usual when you click on them.

UPDATE:  12:00 PM

SPX is backtesting the red channel here as CL backs off.  If it drops through, I’d get a bit more bearish.  But, CL could find support at a backtest of the broken purple channel at 34.27 — at least until after stocks close.  This would limit SPX’s downside to the rising SMA5 100 now around 1970.UPDATE:  12:52 PM

Should get a backtest to the SMA5 100 here.  Trying a short position with tight stops.UPDATE:  1:29 PM

This is as much rope as I dare give it.  Back to long here if ES breaks above a perfectly good TL as it just did its SMA5 200.  Note that CL, USDJPY and NKD have all signaled lower prices.  But, as we’ve noted before, once you turn the algos on it’s very difficult to turn them off. UPDATE:  1:41 PM

I think it’s just a matter of time before ES pops through.  Even if this push is a head fake, it’s likely to find support at the SMA5 20, now at 1976, where we’ll break even at best.  Back to cash here.I know, we have an upside target at 1982.17.  But, it’s 3 points away now and I don’t see CL or USDJPY rebounding significantly.  Probably just treading water until the close, at which time they’ll reset lower.

UPDATE:  1:56 PM

ES just dropped right back through the channel top, so I’d go back to short here. Moments later… Note that ES found support at the SMA5 100, and could get a bounce here.  It’s relatively close to a TL off this morning’s lows.Note that SPX’s SMA5 200 will cross the 1962.96 level shortly.  This is still a viable correction target if SPX is able to push below the SMA5 100 at 1974ish.

UPDATE:  2:11 PM

SPX reached the SMA5 100 as NKD reached a small scale .618.  I’ll assume we’re going to see a bounce here.  Back to long with very tight stop for a potential bounce up to 1978ish.

Keep an eye on NKD.  I still much prefer a correction to 1962. We’ll also keep an eye on ES, which is backtesting a broken white TL.UPDATE:  2:19 PM

ES is reversing off that TL and USDJPY is heading lower, so it’s back to short here.UPDATE: 2:23 PM

Never mind.  CL is spiking higher again.  Back to cash. We should have one last chance at some downside if/when SPX reaches the falling SMA5 10/02 around 1977-1978.  Otherwise, it’s likely to be postponed until tomorrow at least.

UPDATE:  2:53 PM

SPX shot through the SMA5 10 and 20 without a second thought, and just reached the red 1.618.  I suspect it’ll reverse here, but with our 1999 target just above, I’d be cautious with this short.  Keep your stops tight.If TPTB got out of the way and let it go, the obvious downside potential is to 1951.  It’s the .618 of the just-completed 1.618 Pattern and the .618 retracement of the rally from 1931.88 to 1982.38.  If CL tumbles after the close (it will) and if they can’t prop up ES before tomorrow’s opening, then  1951 is a great downside target — worth staying short for if you can hedge overnight.

If you can’t, then the risk of 1999 makes a short position overnight too dicey.