Stocks remain in a year-end holding pattern, meaning they’re getting plenty of support from algos.  SPX had a shot at its SMA10 yesterday, but seems undecided between its 2.24 extension at 2703.62 and a backtest of its SMA10, currently at 2675.41.  It’s a whopping (sarc) 1% spread which simply won’t make a difference.Things could get interesting if SPX drops through its SMA10.  But, after all the pushing and shoving it took to get here, is that likely?

continued for members…After three January downturns, 2017 was the first to keep the rally going strong. Taking a look at our algo drivers, VIX has the ability to dive deeper.GC suggests the dollar has more downside ahead. Though, USDJPY is still threatening to break out – dollar strength.

EURUSD remains reluctant to flesh out the falling channel — more dollar weakness. And, CL and RB still look overbought to me. Put it all together, combine it with an overbought RSI and negative divergence in ES and SPX, and you end up with a fairly downbeat forecast for the initial 2018 move — perhaps testing 2600. UPDATE:  1:00 PM

SPX just slipped through its SMA5 200 as ES dropped through a TL of support.  Look for ES’ SMA10 to get tagged here.  If it drops through, SPX’s SMA10 at 2675.41 comes into view, followed by both SMA20s (2662.41 and 2657.19.)If those should fail, I have a target of 2545 on ES for mid-March.