Not even the threat of selling off half the Strategic Petroleum Reserve has been able to dent CL’s algo-inspiring price action. With help from VIX, it has been able to squeeze another few points out of the futures, which are currently up 4 points.  Our next upside target is just overhead.  Will we get the reversal we should?

continued for members…Still looking for the .886 and IH&S target of 2400 from SPX. Note, however, that ES has already reached its .886.  So, either it will need to overshoot or SPX will come up short.  Lately, it’s been no contest when it comes to a bullish versus bearish decision.VIX has dropped through the little red TL that held it yesterday and seems firmly ensconced back below the yellow channel bottom — 19 of the last 22 sessions, now.And, USDJPY continues to be held aloft.  A backtest is now possible of both the SMA200 and the falling red channel.  UPDATE:  9:44 AM

The mismatch is being whittled down a bit.  SPX can reach 2399.72 with only a .25 overshoot of ES’ .886.  It seems as though SPX will probably backtest the SMA5 10 at 2395.10 and possibly the .786 at 2394.42 as well.  This would allow ES to backtest its SMA5 200 at 2392.57.  Usually, these things are sorted out after hours… The larger question, of course, is “what happens after the .886 tag?”  I’ll be working on that today.

UPDATE:  10:55 AM

The idealized time for SPX 2399.72 looks like 11:15. UPDATE:  11:31 AM

ES just pushed to a new high for the day, while SPX came within 0.18 of its .886.  I’d ditch the long position here, and only go long again on a sustained push through 2400.  If it reverses here and picks up any momentum at all, the purple channel bottom is the initial resistance at 2395ish.  If that fails, I’d be looking at the SMA5 100 at 2394ish and then the yellow channel top at 2391 or the SMA5 200 as it intersects the SMA20 at 2389 or SMA10 at 2388.34.  In other words — lots of support not far below.  UPDATE:  11:41 AM

This solves one algo mystery: how they were going to keep the momentum going after reaching the .886.  It’ll probably run its course at the .500 at 111.60.Not much action out of VIX yet; but, if TPTB intend to push through the .886 right here and now, that would be the logical lever.UPDATE:  12:30 PM

There’s no actual support here for SPX, but there is for ES.  So, this is probably it for the initial reaction.  Once ES’ SMA5 100 lets go, then we could see it tag its SMA5 200, currently around 2393.  This would equate to SPX 2395ish. UPDATE:  12:41 PM

Updated SPX chart with the downside targets marked…VIX looks like it would like to backtest the intersection of the SMA20 and SMA5 200.  It’ll be important to watch what it does if it reaches 11.00-11.02. I’m going to take a 30 minute break and do some big picture charting.  More later…

UPDATE:  1:47 PM

A very gentle touchdown if it’s actually finished.  Note that VIX has tagged its SMA5 200.  A reversal here means no more downside for SPX at this time. UPDATE:  2:51 PM

Things were looking hinky with SPX loitering below its SMA10/20 when VIX suddenly took a dive.  Hard to know whether this is just a backtest of the broken purple channel or it will rejoin the channel.  But, the SMA5 200 has reached the yellow channel top, making it a solid downside target if things go that direction. No surprise, but CL and USDJPY suddenly decided they need to rally again.  These have been effective in the past, so I’d say there’s a good chance they facilitate a rejoining of the rising purple channel. But, it’s also quite possible they’re just trying to keep SPX within striking distance of new highs so they can use the Fed minutes to either: (1) ramp it to new all-time highs, or (2) minimize the ground lost.

I’d stay short as long as SPX remains below the purple channel bottom, and revert to cash on any move back into it — currently around 2400.  Just know that any downside might be limited to the .786, perhaps when the SMA5 200 crosses it later today or tomorrow.

UPDATE:  3:53 PM

Not much to go on, here.  I think cash is a perfectly good place to be for now and for overnight. It was a pretty good job of circling the wagons — with CL and USDJPY ramping when needed and, towards the end, VIX tumbling when needed.