SPX rose only 1% in May, largely on the back of rebounding oil futures and a last-minute surge by USDJPY.  Given the recent completion of the Last Big Butterfly pattern, will the old admonition to “sell in May and go away” apply in 2015?

Crude light futures (largely disconnected from reality these days) continue to provide daily boosts — particularly when USDJPY is unable.   But, in May, it was CL’s turn to lose some altitude.  And, it hasn’t (yet) bothered to break out of its month-old falling channel.

CL and DX are strikingly inversely correlated these days. So, any sell-off by USDJPY — which would normally send stocks into a tailspin — is typically accompanied by a dip in the dollar, which of course, sends CL higher.  CL-driven algos kick in, and voila! Stocks are propped up with little effort.  It’s happening this morning.

Somewhat surprisingly, the effects of the ECB’s long-awaited QE program have fizzled — producing only a 3% gain in the last several months.  Unlike the yen, the euro’s plunge in value inflicted losses rather than gains and was massively front-run.  It seems it’s not ready to take over carry trade duty from the yen anytime soon.

With USDJPY needing to do some retrenching, and CL losing ground over the past month, what’s going to keep stocks from following the “Sell in May, Go Away” script?

In several hours of charting over the weekend, I see no reason to change my current downside bias.  The fact that USDJPY has shot up on no news indicates TPTB are willing to inflict at least a little more yen weakness on the unsuspecting public.

But, it’s the huge drops that have traditionally been responsible for getting SPX up and over the important humps such as 1823.  And, huge drops are produced by huge increases in QE — which typically don’t happen unless the stock “market” is plunging.

Stay tuned.