The old saying “the bigger they are, the harder they fall” is often true in charting.  CL, which has been on a non-stop tear since Feb 11, is finally showing a little weakness these past few days.

Earlier this morning, it finally closed the gap at 38.63.  It was a day later than expected, and has broken a few trend lines and channel bottoms in so doing.  It’s a significant drop, as it definitely puts a dent in the trend.But, it’s more significant for what it portends for stocks.

continued for members…If it can reverse here, or at the white midline or even SMA20 at 37.61, it can shoot back above the purple channel top (40.64) and carry on with its ramping duties.  If it can’t make it back above the purple channel top, it’ll mean stocks have likely topped out.

For now, its job is to allow SPX to decline to backtest support.  We’ll look for SPX to finally backtest its SMA200, if not today, then when the rising red channel midline reaches 2017 in a couple of days.  If it happens this morning, the ideal timing would be 11:30 – 11:45.

Note that ES is only 5 points above its own SMA200, so there is additional downside potential from what futures are now indicating.  But, SPX’s SMA200 is further away than ES’, which is why the actual tag might be delayed.

If CL continues to show weakness, it’ll be on USDJPY to provide the support.  And, right now, it appears to be ready to allow the decline to SPX 2017 before ramping back as high as 114ish.  It has cloud support at 112.316 and channel bottom support at 112.237.Note that NKD also supports the idea of SPX 2017, given the triangle bottom (16590-16600) below current prices.

UPDATE:  2:19 PM

Pretty much a repeat of yesterday, with USDJPY and CL both being used to prop up stocks.  Multiple tests of SPX’s SMA10, but no breakout.  I assume SMA200 is still happening, but it would be in the final hour or Monday.

A reminder, markets are closed tomorrow for Good Friday.  The CME is open till 9:15 am ET and forex and interest rate futures are open until 11:15 am.  So, earning the last 13 points might involve staying short over a holiday weekend — always a sketchy proposition.

I have a hard time believing TPTB brought SPX all the way to the doorstep of the SMA200 without intending to let it happen.  For this reason, I’d be inclined to stay short — especially if you can hedge and/or watch your position carefully.

UPDATE:  6:52 PM

Much stronger rebound than I expected, and an interesting finish at the midline of one falling channel and the top of another:It’s not hard to imagine a tag of the SMA5 200 at 2039.20, but the daily SMA10 backtest should carry more weight.