It has taken a strong bounce in CL/RBOB and a 6% smackdown in VIX just to produce a 6 point gain in futures this morning.  But, for now at least, ES’ rising red channel remains intact.

Only if SPX/ES pushed back above their .886 Fibs would I have much faith in a bigger bounce.

Though the Turkish lira has strengthened a bit, the problem has clearly not gone away.  It would need to return to below 6.5 to the euro and 5 to the USD to get back to merely rapid depreciation.continued for members…

Also on the currency front, EURUSD and USDJPY both continue to look vulnerable… …which helps explain DXY’s schizophrenia. RB got a very aggressive bounce (off nothing in particular, just trying to save stocks)……while CL’s backtest of the Flag Pattern is working overtime.  Remember, API inventory data comes out after the close, and EIA’s will be released tomorrow morning.VIX backed off the SMA100, but remains above the SMA200 and the white midline.  It would obviously need to remain above current levels for equities’ downside case to play out.ES was propped up, but I get the sense it might not last.  The SMA20 is at 2829.28.  If/when it breaks down, the channel bottom is around 2826. This is a gut feeling more than anything else, based largely on the fact that it would have been easy to push SPX those extra 8-9 points to establish a new high last week.

SPX’s best targets remain the .786 and white midline around 2800, the SMA50 and yellow neckline* at 2786, the 618 and white channel bottom at 2742.92 and of course the 2.24 extension at 2703.62.*this isn’t technically a neckline, as the left “shoulder” didn’t fully form.  But, that has seldom stopped the bulls from treating it as though it did.

On the bond front, the 10Y2Y continues flattening – back down to .26.We can see both declining in keeping with the flight to safety generated by a day like yesterday. More later…