The New York Fed reported one of the clearest signs yet that not everything is hunky dory in econ land. In a move that matches the early stages of the 2008 plunge, the Empire Fed Economic Activity Index just plunged to -14.92 (expectations +4.50.)  It’s the biggest miss in over 5 years.

Look for USDJPY to sell off just enough to matter — but, not so much that it reflects badly on the Japanese economy, which had its own embarrassing print last night.  GDP declined at an annualized rate of -1.6%, another signal that Abenomics hasn’t worked, isn’t working, and never, ever can work.  To Abe worshipers, of course, this is yet another justification for the coming expansion of QQE.

ES is currently off around 9 points.  Perhaps SPX will get some follow-through to last week’s elusive target: the SMA200, currently at 2076.54.

UPDATE:  9:40 AM

Gotta hand it to the PPT.  What they lack in integrity, they make up in single-minded determination.  There’s another point or two of downside in ES if that little trend line is to hold.  It currently shows two higher highs and two higher lows.  That’s a trend they usually care about protecting.

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SPX, on the other hand, has only reached 2079.42 — a completely nonsensical screeching halt three points above the SMA200.   We’ll see…

It’s important to note that the reasons for Japan to expand QQE are stacking up.  It’s own economic malaise is worsening; and, now it has a growing Asian Currency Crisis to contend with.

CL has declined 30.6% since USDJPY popped above the critical .618 at 120.11 in mid-May.  Look for an update on it later this morning.

UPDATE: 10:12 AM

That TL in ES did hold, so our upside targets are on the front burner.  Initial target looks like 2087.50 on ES, the SMA10 on SPX (2090ish.)  Updated charts in a moment.

UPDATE:  10:40 AM

Quite a rebound, all in the name of maintaining ES’ uptrend.  SPX will test SMA10 and probably break through.  If it does, the next objective should be the SMA100 at 2097 — between the red .786 and .886.

My only hesitation is calling for a long position here is USDJPY, which is lingering below the red channel midline.  It would help the bulls a lot if it could pop above, even temporarily.UPDATE: 10:58 AM

Look for the algos to take their foot off the gas here at the SMA50 at 2094.50ish.  Again, it’s ES running the show.  If it breaks through, then we’ll get to SMA100 that much sooner.The red channel top just shy of 2100 is the ultimate line in the sand between a continuation of the downtrend since 2132 and a breakout.

UPDATE:  11:12 AM

SPX just reached the SMA100. I’d hazard a short position here at 2097.60.  But, as discussed above, this is a golden opportunity for SPX to break out.  So, tight stops are advised.

The ES picture shows a nice, neat tag on the TL from 2126.75.  Of course, TLs can also be channel tops, so in the absence of a breakout, this could be a significant turning point.  Has to be one or the other.  And, I don’t know which.  But, given the frequent reversals over the past few weeks, the odds favor a reversal — even a small one — rather than a breakout.

With CL possibly bottoming, USDJPY has an opportunity to take a dive to SMA100 or even SMA200 support without killing off stocks.

UPDATE:  3:39 PM

SPX was held back (as usual) from reaching the purple .618.  A backtest of the SMA100 is in order… …and USDJPY is dipping back below the red midline to accommodate it.The prognosis is either a continuation of the falling red channel, in which case SPX might complete that H&S we discussed last week, or a breakout.  If a breakout, then a backtest of the SMA100 makes perfect sense either here in the closing hour or early tomorrow.

The daily and the 60-min chart have enough wiggle room in them that it’s hard to say whether SPX will close in the red channel or not.

So, I don’t think I’d hold a position overnight.  I don’t see any very clear indication of tomorrow’s direction, and there’s plenty of economic data coming out in the morning.   Best to cash out here at 2101 and see how things shape up,

I’m a little under the weather, so I’m going to rest this afternoon and take another shot at putting up the oil charts either later this evening or tomorrow.

GLTA.