The BoJ’s latest pronouncement is probably the closest we’re ever going to get to “we have no idea what we’re doing.”  Bottom line, it’s more of the same — but, without the language indicating they could go even more negative on rates.

The USDJPY sold off (but, only to the closest and easiest TL to defend.)Futures are therefore taking it on the chin, and look likely to tag yesterday’s downside targets.

continued for members…

On the 5-min chart, we can see USDJPY has formed a little falling wedge that might provide an escape valve should things get too ugly.Therefore, SPX’s drop could be confined to 2009 for now — an expanding triangle as the FOMC announcement approaches.  If it drops beyond that, I’d be looking for a backtest of the SMA100, currently at 1998.08.

As always, it’s important to watch CL, which has broken below and is backtesting its SMA100 after its rising white channel broke down.UPDATE:  9:37 AM

Getting our first bounce here, as USDJPY has potentially reached SMA support.  Holding short, as CL is still dropping and ES has another few points to go. UPDATE:  9:41 AM

HFT volume picking up in ES, determined to bounce here.  Back to cash until it finishes.  It appears to be a delaying tactic that will probably see SPX backtest the red TL at 2009ish.UPDATE:  9:48 AM

Backtest is complete, and ES has tagged its falling SMA5 100.  Reverting to short here, though I’d keep a tight reins on it as USDJPY is in no-man’s land now.CL is also in position to help at any time, with a spurt up to or through the SMA100 and SMA5 200 at 36.79. A little unclear re USDJPY — is it backtesting after breaking ot of the falling white wedge, or obeying the red TL connecting the minor tops ov the past 8 hours?  Could be either, or both, depending on when they want the SMA100 tag to occur.For now, I’d kwatch for ES’ potential SMA100 tag.  It should provide the bounce — even though the rising white channel midline is several points lower.UPDATE:  10:05 AM

Definitely in delay mode, here.  Possibly even heading back up to the red TL to meet the falling SMA5 10 at 2009.  But, it’s approaching pretty quickly.  Watch your stops. UPDATE:  10:28 AM

Back to cash on USDJPY breakout.  Probably going for a SMA5 20 tag around 2012-2013.UPDATE:  10:42 AM

There’s the SMA5 20 tag and SMA5 200 backtest.  Back to short.  Relatively loose stops, as ES didn’t quite reach its SMA5 200.  Now it has to push below both the TL and the SMA5 10 at 2009.13ish.  This support might drive it back up to 2013 to complete a little corrective A-B-C.UPDATE:  1:18 PM

Talk about delaying things…  SPX hasn’t broken down yet, so it’s probably heading up to the SMA5 100/200 around 2015 — which means the SMA100 at 1998.08 could be delayed until tomorrow morning.  I’ll step aside here and go to cash, but look for a reentry if ES reverses at its SMA5 200 at 2001.75.  That’s the key. UPDATE:  1:40 PM

Well, that was a perfectly good waste of 2 hours.  CL and NKD spiked just a little, and it pushed ES right through the SMA5 200.  At this point, SPX will probably backtest the SMA10 and make its way up to its own SMA5 200 at 2015.37 — so, just a few points, and not worth chasing.

From there, it could reverse or — the way things are going so far — go on up and backtest the SMA200 and close the gap at at 2019.64.  If I felt confident about it, I’d play the long side.  But, at this point it’s a 50:50 shot where it goes from 2015.  So, I’ll sit on the sidelines and wait for some clarity.

If the purple channel I’ve sketched in holds, then 2019 looks pretty likely.  So, there might be a chance to go long at 2011ish for a possible meltup.

UPDATE:  3:01 PM

Just bottomed out at the red channel bottom and purple midline.  Another fish or cut bait moment for SPX.  CL and USDJPY not indicating either direction just yet.  If it moves through the bottom, I’d short. The SMA5 50 is around 2011.  Otherwise, a long position with very tight stops make sense.UPDATE:  3:40 PM

Getting a little bounce here at the intersection of the SMA5 20 and 100.  Watching CL, NKD and VIX to see if they’ll assist in a spike into the close.UPDATE:  3:57 PM

I’ll close the long position at the close and revert to cash for the night.UPDATE:  4:00 PM

Got a little help from VIX at the close. Back later.

UPDATE:  6:00 PM

ES got almost all the way down to its SMA10 before TPTB hit the panic button.  SPX didn’t get close.  Tomorrow is a decent possibility, as the purple .618 matches up pretty nicely with the gap at 1992.63 and is slightly lower than the daily SMA100 at 1997.91.We’ll see what the Japanese do overnight. And, note that CL spiked up to backtest its SMA100 after the close.  If it reverses, good times for bears.