Futures shot up 10 points after this morning’s disappointing jobs report, meaning the bounce off our 2157.47 target, yesterday, is for real.  So, is the “market” out of the woods?  Not necessarily.  CL plunged through channel support yesterday, and has further to go if the longer term channels mean anything.

The upshot is that while SPX will most certainly pop on algo response to the jobs report, it’ll just as surely drop if CL can’t break out.

continued for members…

First a quick roundup.  USDJPY never quite reached its upside target… …while, CL didn’t quite reach its downside target…

…and, DX is testing its support zone yet again.

ES is pushing through its falling red channel… …leaving SPX in a position where it might.  I think it’s more likely it tests, but doesn’t break the falling red channel — at least not yet.  I’m looking for a pop up to 2182ish that might, in fact, fizzle.

UPDATE:  9:33 AM

Here’s the falling red channel top.  For those not still short from yesterday, I’d short here with tight stops.  Note that this latest move leaves SPX below the rising white channel midline.  I think this move is designed to backtest it, but not necessarily exceed it just yet.  It’s also the midline of the rising red channel (I know, I need to switch some colors around), which should mean something if – as I suspect – the red channel should replace the purple as the legit one.

UPDATE:  9:46 AM

SPX is breaking out, but hasn’t pushed through the white channel midline just yet.  Watch your stops.

CL is getting quite a ramp, here.  Though, it’s also coming up on a backtest of the falling white channel top at 44.40ish.  If it’s going to go down and flesh out the rising white channel at 42, it should reverse very soon.Last, we’re watching VIX, which dropped dramatically this morning.  It dropped below its Aug 26 lows, which might be significant.  Aug 26 was the day SPX spiked 15 points in the opening hour, only to reverse 28 points into the close.

UPDATE:  1:00 PM

All that upside resistance kicked in as expected, and SPX ran out of steam after slightly exceeding the red channel top.  It’s still seeking a way, however.

CL reversed at the white channel top. While USDJPY reversed at the red channel top. ES is trying to hang on to its breakout.

VIX is stuck on the .886 fan line from two weeks ago. And, SPX is trying to cling to its SMA5 10.  It’s not much, but it often works — especially with help from easily manipulated VIX or CL.

UPDATE:  1:36 PM

In examining VIX a little closer, I think it’ll be the tool that gets SPX to break out if it does.  The 60-min chart below shows a point at 11.82 that serves as the white .786 and the purple .886.  And, it’s at the intersection of a TL connecting the Aug 9 and Aug 19 bottoms (in white) and another one connecting the Aug 30 and Sep 2 bottoms (in yellow.)

I think SPX will be allowed to decline to the rising white channel bottom (now, about 2172-2173) or maybe even close this morning’s gap (2170.67.)  It could also push slightly lower to tag the SMA5 200 now around 2170.   After that, I’ll be watching very closely to see if VIX starts tanking.  The crummy thing is it could happen at the close or on Tuesday morning — leaving traders with the common 3-day weekend quandary.

CL is now fully engaged in propping SPX up, poised at the top of the falling white channel it fell below yesterday.  It can sit there all day, even rise slightly above it.  Threatening to break out would keep SPX from getting too energetic on the downside.

Stay tuned.

UPDATE:  2:15 PM

It’s entirely possible this is a head fake, but it looks like we’ll get a breakout here. VIX is breaking down, and CL is breaking out.  It should be enough to get SPX back above the SMA10, and possibly break out of the falling gray channel. Back to cash.  I’d gladly revert to short if SPX drops back through the SMA10 and VIX rejoins its rising channel.

And, if it breaks out of the falling gray channel (2177.65), I’d gladly go long.  Well, maybe not gladly…  more like reluctantly.

UPDATE:  2:33 PM

I’d go long here on the breakout with very tight stops.  VIX has broken down, and looks very likely to tag our 11.82 downside target.  But, every time SPX starts to break out, CL and USDJPY dip a little lower.  This is not a gimme.

I’d also throw a few bucks of play (high risk) money into the VIX Sep 14 13 puts, currently at .30.  If VIX does drop to 11.82, they’re a 3-4X.

I’m going to take a break and post the RUT update.  Thanks to Tim M. for pointing out that it’s about to reach our upside target from last May.

UPDATE:  3:49 PM

SPX broke out, and seems intent on backtesting the gray channel top and/or the SMA10 — meaning it’ll likely decline below the breakout price.  I’d revert to cash on any drop through 2177.  In either case, I’d go to cash by the close.

I’d also close the VIX puts at around 11.86.  No point in pushing our luck, especially since USDJPY and CL both have further to drop.I’ll post the RUT update in a few minutes.