I was a bit chagrined when, after posting BoJ Underwhelms last Friday, a 47-pt meltup followed the initial ho-hum reaction.  My point then was that the BoJ had:

1.  managed to ramp USDJPY directly to overhead resistance; and,
2.  it wouldn’t matter unless yen carry trade investors believed it would continue higher.

I’m chagrined no more.  Not only did the pair reverse at that resistance (a major channel midline and the SMA 200), but the subsequent reversal plunged right through the biggest, most important line of support in the most important instrument that affects the “market” — the USDJPY’s 61.8% Fib at 120.11.  It erased over 80% of USDJPY’s post-Kuroda gains, and 88.6% of SPX’s gains.

continued for members…Sure, oil has rallied nicely from yesterday’s lows.  But, at this moment, it’s only backtesting the white channel that broke down yesterday.ES has done the same — though we’ve seen countless instances of important channels being rejoined after TPTB realized the damage that was done by losing their support.If they want to keep the rally going, it would be quite simple to maintain the push into the white channel bottom while doing the same for CL.  If they do, then SPX should test the SMA20 again — now at 1914.16 — where it crosses the SMA5 100 (1915.10.) If they don’t, we should get a nice pop and drop down to the next line of support, the red channel midline around 1892.UPDATE:  9:36 AM

SPX got all the way up to 1913.98, the the support from USDJPY and CL has so far evaporated.  I’d revert to short here and see whether it picks up support at the red channel top where the SMA5 10 crosses around 1905-6.  If I wanted to keep the ramp going, that’s where I’d make my stand.Watch ES for signs of it bottoming at the rising red TL.UPDATE:  9:46 AM

USDJPY just tagged its .886 as ES tagged the red TL and SMA5 200.  If SPX is going to bounce, it should be here.  Back to long at 1903.81 with tight stops. CL is even getting into the spirit, with a nice bounce of its own.  Note that ES and CL are still constrained by those channel backtests.  Unless they can turn them into something more than a backtest, then this will be nothing more than a bounce.

UPDATE:  9:53 AM

It’s not holding.  Back to short here at 1903.58, targeting the SMA10 at 1897 or the red channel midline at 1892, followed by the red .618 at 1889.50.USDJPY not holding the .886 Fib, and in danger of dipping below last Friday’s Kuroda-bounce inception at 118.513.  If it does, the next support isn’t until the .618 at 118.14.CL is doing its best to prop things up.UPDATE:  10:10 AM

USDJPY is still falling, so SPX is too.  If it drops through 118.149, could be real trouble.UPDATE:  10:15 AM

USDJPY is getting a bounce here, so SPX should do the same.  Back to cash — not long — as the .886 at 1881.19 or white channel bottom at 1875ish would be a better terminus. UPDATE:  10:20 AM

I’d go back to short if USDJPY loses the .618 or CL slips below the first red TL to backtest the purple channel — possibly where the red SMA5 200 crosses around 20.03. UPDATE:  10:25 AM

Back to short on more USDJPY weakness.  Next targets 1875.94, then some stop running at 1872.UPDATE:  10:38 AM

I’ll go ahead and take profits here at 1872.38. If it drops any lower, it’s likely targeting the .618 at 1863.91.  I’d jump back in on the short side.I’m going to take a quick break, and will be back in 5.

UPDATE:  10:49 AM

Wow.  Panic much, Powers That Be?UPDATE: 11:02 AM

Back to short here at 1887.04, as CL just tagged the top of the falling red channel from last October.  Should get down to at least the SMA5 10 at 1882.20 — more if TPTB don’t panic again. Keeping an eye on NKD, which is approaching a .618 at 16630 after dropping over 4% today.

UPDATE: 11:19 AM

CL bouncing again.  Back to cash at 1888.49.  Euro close coming up, and ES VWAP currently at 1887.45.  Might get another chance to short there as UPDATE:  11:30 AM

Back to short at 1893.78 on ES VWAP tag and USDJPY SMA5 20 tag.  Very tight stops, as there’s now SMA5 support, and who knows what crazy stuff CL will pull next…UPDATE:  11:38 AM

Yep, algos taking control — CL pushing to new highs. Back to cash here at 1889.98.

UPDATE:  11:44 AM

USDJPY is indicating more downside, but the guy at the CL ramp desk is apparently sloshed, because he just keeps pushing that big green button. ES indicates the SMA10/SMA200 combo at 1894.43, so SPX should push through its daily SMA10 at 1897.49 — even if only temporarily.

UPDATE:  11:54 AM

SPX has backtested the rising SMA5 100, and USDJPY is testing the little TL off this morning’s lows.  Should get a bounce here back to ES 1894.  Back to long with tight stops. UPDATE: 12:06 PM

Back to short at 1894.39, as USDJPY and NKD are breaking down.  Watch out for the SMA5 20 support at the falling red channel bottom around 1888.64. UPDATE:  12:16 PM

SPX just got a bounce without even tagging the SMA5 20.    Please watch your stops, as a quick pop up to the SMA5 100 at 1901.93 is still very much in the cards.UPDATE:  12:22 PM

Got a bad feeling.  Bailing on the short and back to cash here at 1892.79.ES looks ready to pop.IF ES and SPX break below their SMA5 20s or reverse off the upside targets, I’d feel more confident.

All the same, NKD looks ready to plunge down to 16630 any minute.  Maybe one last pop up to the red midline?UPDATE:  12:32 PM

ES and SPX breaking below SMA5 20s and USDJPY and NKD continue to slump.  I’ll give a short another shot here.  If NKD is headed for 16630, then the gray .618 at 1863.91 is a possibility (ES 1856.11.)UPDATE:  12:55 PM

SPX getting another boost from CL.  Back to cash, maybe just until after the top of the hour.  NKD hinting at a rendezvous with the falling SMA5 50 at the red midline, say 16925.  A sudden pop would get SPX up to the yellow SMA5 100, probably at 1898ish. UPDATE:  1:08 PM

USDJPY and NKD are breaking down.  Back to short here at 1893.So far, CL has been able to offset USDJPY’s declines.  We’ll see if it continues… UPDATE:  1:20 PM

We’ve got a lot of noise in here, but note that USDJPY is very close to being back to the red channel bottom. It sits at the white .886 at 116.612.  Drop below it is a drop below trend form Nov 2014 — very bearish.  So far, it seems pretty determined to reach it today or tomorrow.UPDATE:  2:11 PM

Closing the short on another push to new highs by CL.  Sure, it’s BS.  But, it’s the way it works these days.  Note that this is the midline of the falling channel from Jul 23.  Is a push through it justified on a dip in inventory.  You be the judge.UPDATE:  2:18 PM

Is it over?  Maybe.  I’ll try one last short on expectations of NKD 16330 and USDJPY 116.61. UPDATE:  2:20 PM

Stupid move.  Back to long for move to 1895 or ES 1893.68.  If that’s broken, then SPXs SMA5 200 at 1910.97 might work.UPDATE:  2:30 PM

Might be leaving money on the table, but NKD just hit its falling red channel midline.  So, I’ll take profits here at 1906.57 and step aside for now.UPDATE:  2:59 PM

Remember that SMA20 backtest we just missed this morning?  Looks like we finally got it — just 84 points (round-trip) later.  I’d short here at 1912.99 (on general principles) with tight stops.  Watch out for the fast-rising SMA5 10.ES has retraced 88.6% of its losses, should back off some into the close as many of these oil rumors don’t pan out.Nikkei’s bounce, in particular, really bugs me.  What does a 9.1% increase in CL do for any aspect of Japan’s economy?  Nada.  It should reverse to the midline at the very least — though it would probably come after stocks close.UPDATE:  3:09 PM

Never mind.  They got it back to green and that’s where it’s likely to stay for the next hour.  Back to cash — time to go find the aspirin.UPDATE;  3:12 PM

This is going to sound kinda nutty, but ES just backtested the rising white channel again.  If the CL rumors prove to be BS (good chance) then this is an ideal place to short again — but, only if you can stand to watch or hedge overnight.  I’ll try a short here with these provisos — it’ll possibly only get back down to 1909 today. CL shouldn’t hold its gains, and USDJPY has been dragged kicking and screaming to these levels.  It has unfinished biz at 116.61.  And, as mentioned earlier, it makes absolutely no sense for NKD to have bounced.

This is a very speculative trade, so feel free to ignore…

UPDATE:  3:26 PM

Here’s the safe exit spot for the above trade.  Hold on only if you’re a real daredevil with cash to spare and/or the ability to hedge well. UPDATE:  3:30 PM

That should about do it for today’s downside.  ES just backtested the SMA20 again (from above, this time.)  Back to cash for the night.