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We’re still waiting on CL to break out – or not – of the falling channel it’s been in since early October. As we noted yesterday [see: Drumroll Please]:
Now, for the 4th time in almost 3 months, it is again threatening to break out of the well-formed channel it’s been in ever since. Whether or not it breaks out will tell us a lot about what to expect from the overall markets.
It almost did yesterday. CL popped up above the channel top an hour into the session, then spent most of the afternoon above it before dropping back through right after the cash session closed.
Classic head fake in a broken and heavily manipulated market. What else is new? 
continued for members…The “strong selloff”, as it’s being billed by the MSM, was only to the rising red TL off the December lows. Actually, it hasn’t even reached it yet.
And, of course, USDJPY is available for propping duty — though it’s still clearly in a slump. The bounce off the near-miss of the .618 at 120.11 has been quite anemic.
By pushing up over the white .236 channel line, it’s at least hinting at a recovery. Note that this morning’s highs, however, didn’t even break Monday’s.
With ES off 6 points on CL’s failure to break out, SPX will need it. Look for SPX to backtest the white .618 at 2069.41 or the SMA200 at 2061.37.
UPDATE: 10:00 AM
My apologies for the late start this morning. I’m still battling a bad cold, and couldn’t pop out of bed at 4 this morning as I like.
I believe the SMA50 at 2064.65 is the primary target, probably when the 5-min SMA200 crosses it sometime later this morning.
That will depend, of course, on SPX continuing lower when the 5-min SMA10 catches down with it in a few minutes. And, of course, it will also require that the purple TL (bottom of a small wedge) be violated by at least a few points — perhaps to flesh out a channel instead.
It will also require USDJPY to cease and desist. It just broke Monday’s highs — though briefly. 
CL is likely going to provide the impetus for any lower prices by tagging one of the TL’s off recent lows.
ES provides some suggestions. Its rising channel is a little cleaner, and it offers a nice, big IH&S Pattern if it can make it back to 2100 over the next week or so.
UPDATE: 10:21 AM
So far, so good. Remember, the white .618 at 2069.41 could be all we get out of this move. A backtest of the SMA200 would normally be expected.
But, if USDJPY stays on top of the channel line and CL rebounds off the first red TL, then there isn’t a lot more downside available. We’ll just have to watch both of those and hope that they provide solid clues when the time comes.
Note that CL just borke Monday’s lows and tagged the first TL. 
UPDATE: 10:32 AM
SPX just reached the .618. We could see the bounce or merely a bounce here. So, watch your stops.
FWIW, ES also tagged its SMA50.
UPDATE: 10:41 AM
Again, I don’t expect it to amount to much, so you’re probably safe staying short if you aren’t into micro-managing. This is likely just a delaying tactic to get the 5-min SMA200 up to the daily SMA50 at 2064.65. I’ll probably be back to short within 15 minutes.
UPDATE: 10:57 AM
If it doesn’t reverse here, then they’ll call the lows a purple wedge tag and go to work on erasing the red ink. But, I see that the SMA200 is coming up on 2064.45, so I still like our downside scenario.
UPDATE: 11:06 AM
Dumping the short position here on the push through the SMA20. USDJPY and CL aren’t supporting it, so it could be a head fake. Still I’m still ready to switch back to short.
UPDATE: 11:09 AM
USDJPY and CL are backing off, so I’ll assume the push above the SMA20 was a head fake and revert to a short position. Tight stops, please.
UPDATE: 11:57 AM
USDJPY is providing some mystery here. Will it break out or break down? Every time SPX starts down, USDJPY extends the triangle a little further. Hopefully just waiting on the top of the hour…
CL definitely looks like it’s waiting for a signal.
UPDATE: 1:31 PM
A good alternative to the moving average nonsense would be the ES 5-min chart, which so far has done a decent job of guiding things lower. Looks like the purple SMA50 is acting as a good guide today.
UPDATE: 2:47 PM
The trick will be getting down through the 5-min SMA200 (red) when it arrives at the .618 at 2069.41. An awful lot of work went into keeping SPX above 2069. So, it shouldn’t surprise anyone if it holds into the close.
And, I won’t be watching this one. I’m taking my wife out to lunch on our 20th anniversary, and she wouldn’t take it very well if I keep checking the “market.” Good luck to all!
UPDATE: 3:36 PM
Glad I didn’t leave right away. Here’s your exit, folks. Back to cash for the night.
