We’ve seen several attempts to put in a reasonable backtest fail, lately, as USDJPY and/or CL suddenly spikes higher midstream and stocks spend the rest of the day rallying.  Today could be different. Yellen is speaking today, and Mr Market loves nothing more than to put a good scare into the old gal lest she think hawkish thoughts.

Then again, it’s entirely possible that TPTB are merely delaying the inevitable in order to preserve SPX’s positive results for March.

continued for members…

We’re starting the day on a down note, with ES currently off 5 and clinging to minor channel midline support. USDJPY has reached cloud support, but could be aiming for the red TL.  If it fails, then the .618 at 113.05 is the stronger support.And, CL is threatening to break down below the SMA20 – which would be very significant.UPDATE:  9:32 AM

SPX is coming up on channel support.  If it holds, it’s another failed attempt to backtest the SMA200.  If it can drop through, then we might finally see 2017.  UPDATE:  11:26 AM

SPX dropped through the channel bottom, only to bounce back on CL’s temporary bounce back above its SMA20.  When CL fell back, USDJPY took over.  As of right now, it appears SPX is headed for the SMA10 at 2036.41.  It would also be the top of the falling purple channel — so, a reversal or a breakout. UPDATE:  12:20 PM

Getting a strong reaction to the text of Yellen’s speech.  Time to bail on the short and see if the spike lasts.  With any luck, it could reach the top of the white channel (2046.60ish.)

If there was any question before regarding the relative strength of CL vs USDJPY in moving “markets,” this latest reaction pretty much settles it.

Note USDJPY’s plunge as CL spikes.  SPX follows CL, and appears headed for 2043.57, despite USDJPY’s drop.  USDJPY appears headed for the SMA20 at 112.94.

UPDATE:  12:46 PM

That should about do it for now.  SPX has slightly overshot the channel top and will likely drop back to meet the rising SMA5 10 around 2043.57 – a backtest of the red .618.  Might try to pick up another long position there if it stabilizes with a goal of 2049 at the close.CL will likely retrace some of its bounce — possibly to the SMA20 at 38.2 or, at least, the yellow SMA5 100 at 38.45.  And, USDJPY is just glad for the chance to reset.  If it drops through 112.86, the next support isn’t until 112.72.UPDATE:  1:09 PM

I would try a long position here, but CL and USDJPY are both dropping.  Watch it carefully.  Maybe things will firm up once the SMA5 20 (white line) arrives.UPDATE:  2:20 PM

This is the top of the falling white channel from 2134.  While it probably fail eventually, we ought to see some pushback here.  I’d close the long position from 2043 and go to cash.USDJPY is testing our lower target —  the white channel bottom.  It this breaks down, we’re probably looking at the SMA10 and red TL at 112.44ish.UPDATE:  3:50 PM

Coming up on the close, and SPX has reversed back down near the .886 — partly due to USDJPY’s continued meltdown.  As mentioned above, the next support — now that the white channel bottom has broken down — is 112.44.It should be good support, but there’s no guarantee.  The more dovish tone coming from Yellen has sapped support for the USD, which is obviously not helpful for USDJPY.

If it can tag the support and close back inside the rising white channel, then the bullish case remains good.  It has a clear path to 114.  If not, then there are many more downside targets.

Likewise, CL has reached reasonably strong support at the falling white channel midline and SMA20.While it could certainly dip lower to, say, the purple channel midline at 35.55 (also the .white .382), it is in a position to reverse higher and support stocks if they get too wobbly.If I were in charge of manipulating the market higher, I’d ramp both CL and USDJPY higher overnight, run ES up another 10-15 points, and be done with it.  On to 2065.88.

But, as a trader, I’d not be comfortable placing that bet right now.  Better to sit in cash and see how it shakes out once the CL and USDJPY interface settles out overnight.

SPX still has two days to reach the SMA200 without breaking the red channel midline.  But, it’s definitely looking less likely than it did this morning.