So far, so good.  VIX popped just high enough to get SPX to its SMA200, then subsequently dropped through a TL of support that spurred the futures into action overnight.continued for members…

Although SPX stopped at the rising white channel midline on Friday, the futures action should help it pop above that line and seek out our Feb 14 target.  Note that I’ve put a few different targets on the chart.

The algo calls for VIX to bottom on Feb 14, so we’ll look for SPX to reverse at that point, whether its the .500, .618 or the SMA10/20.  Combining all those, 2720 looks like a reasonable target — though the Fibs themselves are just as legit.

The key this morning will be getting past 2650 — the bottom of the rising white channel from Feb 2016 which broke down last week.

At this point, I’m still looking for SPX and ES to reach 3000 by Apr 3 — with a possible overshoot to SPX 3076-3094.  But, I can’t emphasize enough how important it is for VIX to support the move.  If it’s unable to get back down to at least the low teens, all bets are off.

Likewise, if USDJPY does a big belly flop between here and there, the rally could easily fizzle.  The charts call for DXY to reverse any day now, which would allow EURUSD to go up and tag the channel line and/or .618 (1.2597-1.2670) as the USD weakened.  If USDJPY were to rally at the same time, it would offset some of the negative impact — at least as far as stocks are concerned.