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Is there a way TPTB can erase the damage done over the past few months and have SPX resume its bullish ways?  Consider that SPX is back above the neckline of a large H&S Pattern, back above the midline of a rising channel dating back to the 2009 lows, and back above the midline of the channels that have guided the decline since last May.

The cost of getting here, however, was substantial.  USDJPY required a strong rebound (sorry, Japanese consumers and manufacturers.) Interest rates also had to rebound strongly (sorry, borrowers.)  And, most importantly, CL had to bounce an insane 31% off its Feb 23 lows.  Think about that next time you’re filling up the Family Truckster.continuing…

The big picture for SPX:Note the bounce back above the red midline, the white midline and the H&S neckline.  Like it or not, this is bullish.  No guarantee it’ll stay up here, but it’s bullish.  The hard work is over.  Now, it’s a matter of properly managing the overnight ramp jobs until the falling gray and (especially) white channels are broken — with the critical price level being the purple .618 at 1999.44.The key will be whether USDJPY can regain some upward momentum.  Today, it’s again testing the bottom of the purple channel from 2011. The failure to retake it (just yet) should provide cover for SPX’s decline.  This morning, look for SPX to backtest the purple TL and white channel midline this morning at around 1927-1928.  At that point, it should continue higher to test the SMA50 at 1951.69.UPDATE:  9:43 AM

Getting a bounce here at the SMA 5 100, but I believe it’ll continue lower.  Ideally, it’ll overshoot and tag the SMA5 200 at around 1927.14.  But, I show the channel midlines crossing around 1929.50, so it’s a fairly large target range.

UPDATE:  10:25 AM

It hit 1929.49, which might be all we get.  Still, a dip to 1927.14 would be more complete. UPDATE:  10:55 AM

Just hit our 1927.14 target and isn’t yet bouncing.  Could be ES wants to tag 1920.  Watch for the turn…UPDATE:  10:58 AM

Going long here at 1925.95  Tight stops are advised, as USDJPY is bouncing like crazy but CL is still dipping.  1920-1921 is the ideal downside target for ES — about 1923-1924 for SPX. UPDATE:  11:09 AM

ES just reached 1920 and is trying to bounce.  But, so far, weakness is winning out.  Could be aiming for the .618 at 1915.75. I’d move to the sidelines here in case there’s more to come. If ES races back above the white TL, I’d want to be long again.UPDATE:  11:15 AM

ES pushing back above the TL, and CL tagged the .886 at 31.63.  Should get a rebound here.  Back to long — though now we have overhead resistance at 1927.48 and in all the other indices we watch, too.UPDATE:  11:27 AM

ES isn’t holding above the TL.  Back to short here at 1924.04 for ES 1915.75 — about SPX 1919.  Very tight stops, however, as the algos could kick in at any minute.UPDATE:  11:36 AM

I think they’re going to try and push past the SMA5 10s. Back to long here at 1923.99.  As before, we still have overhead resistance at the SMA5 200 at 1927.65.The bulls really need USDJPY or CL to make a move here. Note that NKD is back above the red TL from this morning, but bumping into red TL from 2013.  Needs to push above if SPX is to keep rebounding.UPDATE:  11:46 AM

SPX backtesting the broken channel lines here at 1929.40. I’d revert to cash for now.I feel fairly good about it continuing higher, but USDJPY and CL aren’t demonstrating much juice just yet.  NKD is also not pushing through that red TL.

I think the rising red channel is probably kaput and they’re making plans to embrace the rising gray channel.  This could be done by tagging the daily SMA20 (and, red .382 Fib) down around 1894.68 either late today or tomorrow.This would be problematic for bulls, as it would take SPX back below the midline of the rising red channel from 2009.

So, it’s possible they’ll just ride the red channel bottom into the close, and allow backtests of its midline until the bottom is up above 1905ish — tomorrow or later in the week.

UPDATE:  12:45 PM

USDJPY is pushing up through the SMA5 200 again, and NKD past the red TL.  I’d try a long position here, but it would fizzle at the SMA5 200 unless we see a sizable push from CL or USDJPY.  So far, that’s not happening.  In fact, I think CL might be channel tilting with a goal of 30.37 — a backtest of the red channel top.  In the absence of a strong rebound to 32.80+ today, the white channel is looking like the more legit guide.Note that NKD is backing off the red TL yet again. UPDATE:  1:11 PM

It seems pretty clear they’re trying to keep SPX and ES inching higher for the tag with the SMA5 50 — probably around SPX 1929 in the next 20 minutes or so.

At that point, they could push it up through all that resistance and aim for the SMA50 up at 1951.69.  Or, if they’re trying to let CL down easy, we could get that gray channel test down 1895.77 — which would conveniently close the gap from Feb 16.If that’s the plan, then 1928-1929 would be a great short entry.  Watch NKD.Stay tuned.

UPDATE:  1:37 PM

SPX losing trend here.  I’d gladly revert to short if ES can push below the white TL and CL, USDJPY and NKD can break down. Note that the SMA50/200 cross already happened, so it loses its cache as an upside target.  At this point, a backtest of the SMA10/20 at the white TL around 1926 is more likely.  But, ES keeps hinting at a plunge below the TL… UPDATE:  1:45 PM

ES is breaking down, just need CL and USDJPY to follow suit… UPDATE:  1:49 PM

CL just dipped below its TL, USDJPY below its SMA5 100 and NKD below its TL — so, I’m shorting here at 1923.54.  Could take it a few minutes to get going with 2PM a few minutes away.  A ES backtest at 1924ish still a threat to bears…. UPDATE:  2:04 PM

I should have waited just a little longer, as CL and ES just popped back above their TLs and NKD and USDJPY also found support.  Back to cash.UPDATE:  3:01 PM

SPX, CL and USDJPY are losing TL support.  I’d try a short position here at 1923.42 with tight stops.  Note that there’s a .618 just below at 1919.18 (ES 1915.75) that might provide support.  If we get a bounce there, then I’d be inclined to leave the stops a little loose. 

Stocks have been agitating for lower prices all day, and there’s a decent possibility that they’ll sell off into the close. The .707 at 1915.22 is the next lowest Fib.  But, I like the .886 at 1907.25 much more.  It all depends on the red channel remaining intact. UPDATE:  3:32 PM

Getting a big USDJPY and NKD bounce to rescue SPX/ES.  Back to cash here if it breaks out of the red channel/SMA5 20 at 1923.80ish. UPDATE:  3:36 PM

Breaking out of red channel.  Back to cash here, though I suspect we’ll get some follow through in the morning.It seems pretty likely that SPX has more downside in mind, as discussed above, but TPTB don’t want the headlines of another 10-25 point decline today.  Hold short if you can watch and/or hedge overnight — and there’s a pretty good chance of a gap down to 1915 in the morning.  If that fails, then 1907 is the next support, with 1897ish the even better target.