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So much attention has been focused on CL, lately, that USDJPY’s oscillations have gone largely unnoticed, until last night.  It reached levels last night not seen since Oct 31, 2014 — the day that Kuroda surprised the markets with a massive expansion of QQE (days after promising it wouldn’t happen.)

USDJPY spiked 3.26 higher that day, and 12.64 over the next 5 weeks.  Thanks to the wonders of the yen carry trade [what’s this?], SPX rallied to new highs, tacking on 220 points from its October lows.In other words, from 110 to 125 and back again.  SPX had reached the same level as of February when CL’s 63% spike fed a different set of algos.  But, CL topped out a couple of weeks ago.

[see: How to Engineer a Rally.]

Is it time for some new leadership?  Or, at least, some new old leadership?

continued for members…

Assuming the red channel bottom holds [see: Rumors of More Easing in April] the drop should force SPX down to the white TL and red .618 at 2043.57 which was yesterday’s next downside target. But, if CL or USDJPY starts spiking in the next few minutes, they might be successful in holding it to the white channel top at 2051ish.  Stay tuned.

UPDATE:  9:35 AM

Here’s the white channel backtest.  Watching for a reaction from CL or USDJPY, and don’t see one yet.UPDATE:  9:50 AM

Getting a little bounce here.  Nimble traders might wish to ride the bump, perhaps as high as 2050.  But, I expect it to be back to 2043.57 by 11:00.  I probably don’t need to remind any of you what happened Friday when we were looking for a “little bump.”  Keep an eye on USDJPY and CL for algo ignition – particularly when SPX reaches the falling SMA5 10. UPDATE:  10:05 AM

There’s the SMA5 10 tag at the daily SMA10.  If it’s going to reverse, it should be here.  I’ll revert to short with very tight stops.UPDATE:  10:07 AM

It took all of 90 seconds for CL to start spiking higher.  Back to long. UPDATE:  10:15 AM

And, it’s right back to the SMA10.  If it doesn’t hold it, back to short. UPDATE:  10:18 AM

Back to short here as neither CL nor USDJPY are providing much of a boost.  Though, what I expect is SPX will drop only to the SMA5 10 at 2050ish, then pop up and tag the falling SMA5 20 around 2055-56.  Both CL and USDJPY have ample opportunity to rise above key resistance, but haven’t.  I can only assume they’re going to allow the 2043.57 tag when the white TL crosses it — about 11:00 or so.

BTW, Hostgator, which hosts our site, just burped for 4-5 minutes a little while ago.  If you noticed the pages not loading, that’s why.  We had a spate of this about a month ago, and the problem was supposedly remedied.  But, apparently not.  I’d encourage everyone to follow @pebbletrades on Twitter.  It’s a good, quick way of communicating — the only way when the site goes down unexpectedly.  It’s a private twitter account, so I’ll need to approve your follow.  If your identity isn’t apparent from your handle, please contact me so I’ll know who is requesting approval.

UPDATE:  10:28 AM

Back above the SMA10 with the SMA5 20 bearing down on us.  The key will be whether SPX reverses just south of or north of it when it arrives.  Back to long here, though I suspect I’ll be reversing it within minutes.Note that CL has already reversed off its SMA100, and USDJPY has passed up several opportunities to tag its falling SMA5 200.  So, for whatever reason, it’s not yet taking on the same style bounce as last Friday.  More fuel for the 2043 argument, but we’ll find out shortly. UPDATE:  10:39 AM

SMA5 20 is almost here and CL and USDJPY are heading south.  I’ll revert to short here.UPDATE:  11:13 AM

Decision time for SPX…  FWIW, the white TL seems to cross 2043.57 around 11:40.Just need USDJPY to reverse off this TL…UPDATE:  11:33 AM

USDJPY is doing its part… …but, SPX is hesitating because……apparently, CL didn’t get the memo.Where are those pneumatic tubes when you need them?

NKD is trying to reinforce USDJPY’s move without damaging its recovery uptrend.This is turning into a real battle between algos responsive to USDJPY and those responsive to CL — which refuses to permit SPX to break trend.  USDJPY looks like it’s all in — 2043.57 or bust.  Will it shoot its wad and go for 109.80 or even 109.60?

UPDATE:  11:48 AM

DX on the brink, again… …as USDJPY goes all in....but, just barely puts a dent in SPX.

UPDATE:  12:00 PM

Wait, what!?  Come on algos, get your story straight!  2043.57 is getting a little dicier as the white TL starts to move beyond it.  It should top out and reverse by 12:09 if it’s going to. UPDATE: 2:26 PM

I gave it as much rope as I dared.  Going to cut the short loose here, will perhaps pick it back up on the way down.  Ideally, it’s just backtesting the broken white channel top and will dip back to 2043.57 or even 2033.19 in the morning. Thirty seconds later, CL is spiking higher.Anyone who knows anything about charts will tell you this is complete and utter BS.  It was so important to TPTB that this morning’s lows didn’t exceed Friday’s that they were willing to do whatever it took.

In the end, we have a higher low — 2044.89 versus Friday’s 2043.98.  And, that’s supposed to make investors feel more bullish.  Sigh…

And, here’s the fun (sarc) part.  USDJPY is sitting right at overhead resistance.  So, there’s a very good chance that it’ll reverse after the close (an agonizing 90 minutes away, still) and drive futures down enough overnight to get SPX down to 2043.57 or even 2033 in the morning.UPDATE:  2:35 PM

CL and ES have reached overhead resistance.  For swing traders who don’t mind rolling the dice overnight, this is a decent short setup per the scenario described above. UPDATE:  2:43 PM

I’ll give a short a try here, even though it’s probably a total waste of time.   Note that tomorrow, the SMA20 should be closer to 2035.50 — the red .382.   Please feel free to ignore this update!  I won’t hurt my feelings, and you’ll probably be the better for it.Odds are TPTB will close SPX just above the daily SMA10, maybe even above the SMA5 100 as it closes there — leaving traders up in the air for the after hours.

I expect DX to tag 94.249 tonight or tomorrow, which would give SPX all the ammunition it needs to dip again.Of course, our usual caveat applies – don’t even think about holding short overnight unless you can hedge your position effectively or at least watch it like a hawk.

UPDATE:  3:37 PM

Quick update on SPX.  This would be the ideal spot for it to spike up to the SMA10 (2052.87) at the close if it’s going to.  Of course, maybe now they’ll let it plunge into the close just to fake more folks out…UPDATE:  3:59 PM

That’s close enough for me.  Yes, there’s a good chance it’ll gap down further.  But, I’d like to sleep well tonight — don’t want that hanging over me.I’m going to take an actual lunch break, might recover enough to write a little more afterwards.

UPDATE:  EOD

The charts to watch tonight…