It looks like we’re going to get that yellow neckline backtest after all.  That poor white dot has been hanging out down there at 2086 for a week, looking less and less likely to ever get tagged.  Now, not so much.continued for members...

As usual, the timing will depend on CL and, to some extent, USDJPY.  A tag on the SMA10 is a given, as is the white neckline at 2102.96.  I’d like to see it get down to the white channel bottom (2100ish) in the initial thrust, but we’ll have to play it by ear.

CL has plunged back below the white channel top, tagged yesterday’s target at 49.68, and is still going.USDJPY is in a position to help by rebounding sharply off the white TL.UPDATE:  9:40 AM

SPX has 14 points to go to reach its yellow neckline at 2083, while ES has only about 6 (2080, also the SMA20.) UPDATE:  9:43 AM

Hard to see it on such a busy chart, but SPX just backtested the purple channel top above which it broke out last week.  I’d cover the short here.It’s easier to see on the daily chart.  Note the yellow arrow…

I doubt this is the low for the day.   But, stranger things have happened.  If it pops back above the white channel bottom, it’s probably worth taking a long position.  But, for now, I’d be happy on the sidelines.  Of course, if it drops through the purple channel top, the yellow neckline beckons.

UPDATE:  9:52 AM

CL is still signalling lower, or maybe just taking advantage of SPX’s bounce to reach some support of its own.  While the white channel midline would work, the stronger support is around the end of the day at the SMA29 and purple channel line: 49.14.

Note that SPX is in a position to form another, larger H&S Pattern.  The white channel would, of course, need to remain broken.  The white neckline is at 2085, the Jun 1 and Jun 3 lows and, FWIW, would intersect with the yellow neckline backtest Monday morning. USDJPY is hanging on to TL support, but not doing much to enable to bounce here.  Makes me think we have further to go after the top of the hour.UPDATE:  10:11 AM

SPX is clinging to the purple channel line, but doesn’t look terribly secure.  Again, a dip below it and I’d be short again right away. I’ve adjusted CL’s rising purple channel slightly, and the best near term target appears to be the purple channel .786 line at the white midline or the white .618 at 49.27 – 49.40.  Note that the purple channel line still represents only the top 1/4 of the rising channel from Feb 11.UPDATE:  10:24 AM

It appears to be bouncing on USDJPY and CL hints of a breakout.  Back to long here with a target of the white TL at 2103, the SMA10 at 2104.60 or wherever it is when it intersects with the white falling SMA5 20.BTW, I worked till about 2am last night.  If things stay stuck like this for very long, I’ll leave you all with some important price points and head back to bed.

UPDATE:  10:35 AM

USDJPY is breaking out, trying to get SPX up to 2104.60.  The problem is the approaching SMA5 20 and the midline of a (now) expanded falling red channel.  I’m inclined to take profits here and move to the sidelines.

I’m about 50:50 on the 2085 tag on Monday — one of those V-shaped rebounds would work.  But, as can be seen from the highlighted blue rectangle, they worked very hard to get SPX up through the purple channel top, and they might wish to preserve it.If SPX drops through the purple channel line again, it’ll probably mean that DX has broken through it’s backtest of the rising white channel that broke down on Monday. Here’s a close-up of what’s going on with this rebound.  Seen on a 1-min chart, it’s pretty well contained at this point.  The SMA5 10 is down to 2102.08, so we’ll know pretty soon whether or not the bounce can extend.If it does, it’ll likely be a result of USDJPY backtesting its white TL and spiking higher.CL is just wandering at this point, but is usually game for a little algo goosing in order to get SPX up over its SMA5 10 and 20.UPDATE:  11:20 AM

CL, USDJPY and NKD are all agitating for lower prices here.  But, SPX is ignoring them…so far.  We’ll know they’re serious when USDJPY drops back through the rising white TL, CL does the same with the .618 at 49.27 and NKD plunges below 16337.  But, I’ll be surprised if any leg lower came earlier than today’s close or Monday. UPDATE:  11:37 AM

This is probably a head fake, but it seems to me SPX is losing its momentum, and the weak USDJPY push above trend isn’t enough to contain it — especially since CL is slipping lower and the euro markets are now closed.  I’d try a short position here with tight stops.UPDATE: 12:00 PM

Moment of truth, here…UPDATE:  1:12 PM

Quick update…SPX keeps working lower, and USDJPY makes sure it doesn’t get going too fast.  Note that CL is now backtesting its white channel midline and purple channel .786 line.  As long as SPX can remain below the white SMA5 20, we’re on track. Otherwise, this will be extended or avoided all together.UPDATE:  1:23 PM

I’m going to pull the plug on the short here.  Back to cash until SPX can push below the SMA5 10 again.  It’s entirely possible we’ll see a reversal at the falling SMA5 50 (purple) around 2100.  But, this last push increases the odds of a meltup.  I’d be happy to revert to short on any drop through the SMA5 10/20 at 2098.80ish.

USDJPY is working lower.UPDATE:  1:32 PM

I have a lunch meeting coming up, and will have to duck out early today.  So, I’ll leave you with suggestion of shorting here on the dip through the moving averages and holding until at least 2090 — ideally around 1:35 ET.  Use trailing stops at the SMA5 20 (the SMA5 10 as a warning) and you should stay out of trouble.  If it reaches 2089.37, I’d consider a long position as long as USDJPY and/or CL are rebounding strongly.  With the neckline just below at 2085 (which most traders won’t see) it could easily leak lower and close below 2089.