Thanks to last night’s 1.9% ramp job in CL and a breakout in USDJPY, S&P futures have been pushed up to the brink of another breakout.  This will be the 9th since mid-April.  So, if you’re a swing trader and feeling a little frazzled, you’re not alone.  For those in US time zones, it’s like placing a bet on a high stakes blackjack game, then having to wait until you wake up in the morning to discover whether or not you’ve busted.

So, while I can tell you where SPX is probably going in the next few minutes, no one except the CL and USDJPY button pushers can tell you what happens after that.

continued for members…CL seems destined to tag the top of its own falling channel.  But, it’s currently backing off this morning’s highs.Note that ES shows a completed IH&S Pattern targeting 2080 — if it can break out of its falling channel.  The white channel top here looks to be about the white .786 at 2059.34.

The ramp should be enough to take SPX to the white channel top at 2059-2062.  The range, rather than a discreet value, is due to the sloppy formation of this channel, relative to the better formed ES one.  Note that the SMA50 and SMA20 are at 2061.06 and 2062.59 respectively.  And, the red .618 is at 2062.35. Since the futures action could take SPX all the way to the white channel top in the first few minutes, I’d hesitate to chase it.  There’s a distinct possibility of a pop and drop.  And, with the ES target only a few points above current prices, it’s hard to see much upside unless we actually get the breakout that has eluded us since Apr 20.

If SPX does break out, the red .786 at 2072.25, where it backtests the yellow H&S neckline, looks like a good candidate.

UPDATE:  9:35 AM

ES just reached 2059.34, and SPX the SMA50.  Do or die time.UPDATE:  9:51 AM

ES has reached its white .886 and yellow neckline.  So, we could see a reversal here for SPX.  I’d try a short position with tight stops here at 2067.63.  Obviously, SPX hasn’t reached its neckline, yet.  But, perhaps it’s ready for an interim pullback.  If I’m wrong, the neckline looks to be at about 2071.80.It will require a reversal by CL in order to amount to much.  And, there is justification for one — the top of the rising purple channel.  But, of course, CL loves to ignore bearish patterns.FWIW, USDJPY also just tagged a potential turning point: the SMA50.  Note that it’s also quite close to backtesting the rising white channel (109.943) it broke down from yesterday.UPDATE:  10:24 AM

Hanging in there, as SPX is less than one point from the necklilne.USDJPY should reverse here at the white channel bottom, with the bottom of the purple channel from 2011 just above at 110.09……and, CL is pushing up against the purple channel line and the white .618 — if not quite the white channel top. ES is testing the May 17 highs and the purple channel top.UPDATE:  12:09 PM

Obviously, SPX has overshot the neckline.  And, it’s protecting its position quite carefully — even as CL backs off this morning’s 2.7% rally.  ES nearly tagged its .886, and should back off here — perhaps a backtest of its neckline at 2066.  But, that would mean SPX dropping back through its — and, it’s not too clear that will be permitted — at least, not today.

UPDATE:  1:03 PM

Apparently they’re not going to allow a backtest of any kind until the SAM5 50 reaches the neckline.  Whether that’s before or after SPX reaches 2078.15 is anyone’s guess — though, at this point it’s not looking good for “before.”Last Monday was a similar melt-up, and SPX closed on the neckline after dropping a few points at the close.

It was a strong close, considering SPX had rallied 28 points.  But, the next morning, it plunged 10 points, bounced, then plunged another 20 points to lower lows.  With CL being the prime instigator of today’s rally, and with API data coming out later this afternoon, I’d be very careful about holding long at the close.

If we get a chance to close at or near the neckline, it might be the prudent thing to do.  I was surprised last Monday when they gave up the neckline.  I can’t imagine them letting it happen again.

UPDATE:  2:10 PM

A backtest by SPX at the red .786 would be 2072.25 — and count as a neckline backtest too.  A backtest by ES at the white .786 would be 2067.39 — the equivalent of SPX 2070.10.  Either makes sense here — just depends on where CL goes.  It’s backed off the falling purple TL, and might head down to the rising purple TL at some point – depending on how deep they’re willing to allow this dip to go. UPDATE:  3:03 PM

An hour to go.  Likely we’ll get a spike up to SPX 2078.15 or down to 2072.25.  Either is entirely possible, as USDJPY is breaking down but CL is still threatening to break out.  With API inventories coming out after the close and EIA in the morning, will we see profit taking into the close, or will TPTB keep things on the rise?  My gut tells me we’ll close at or near the neckline, but my confidence level is low. ES will almost certainly back off to at least the white .786 at 2067.39, but it could easily wait until after TPX closes.  This could mean waiting until the morning for any sort of backtest (if it’s going to happen.) So, hold overnight — long or short — at your own peril.

UPDATE:  3:23 PM

SPX just tagged the .886, and shows no signs of backing off.  The purple channel top is just above at 2079.10.  If it’s going to give up any of today’s gains today, that would be the place.Again, we might have to wait until tomorrow morning for the pullback.  If you do short overnight, just make sure you hedge or, at least, watch it closely.  Today’s meltup could repeat tomorrow, and that wouldn’t be very fun to wake up to.

If on the other hand, it plunges to the yellow neckline in the final few minutes, I’d consider that a good exit point, regardless of your expectations for tomorrow.

UPDATE: 4:05 PM

Not much of a sell-off at the close.  SPX broke out of the falling red channel due to CL’s break out of the falling purple TL, NKD”s breakout of the falling purple channel, and USDJPY’s breakout of the falling red channel.

Whether those breakouts make sense after the API data coming out shortly, or tomorrow morning’s EIA data, we’ll find out.