With CL and USDJPY both off this morning, and VIX showing the first signs of life in weeks, we’re finally seeing futures exhibit a little weakness.  

Can VIX hold its breakout this time?

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ES is off 11 points, but has run into support at the purple midline.  If it holds, we’ll get the snapback rally we’re used to.  Otherwise, we would make some headway towards the 1.618 at 2338.87. SPX has its own 1.618 in mind for a backtest at 2335.34.

VIX will have much to say about things.  It pushed above the channel line overnight, but it remains to be seen whether it can hold the gains this time.  More typically, it has been using its overnight gains as a platform for the plunge that supports stocks during trading hours.  We’ll see.

CL, which broke down from the small purple channel on Wednesday (but, broke right back in) did it again.  It’s now backtesting the channel bottom again.

USDJPY is approaching its SMA100 — often important support for the pair.  If it fails, then the SMA200 and falling purple midline are next up, and we could see some real weakness in equities.

UPDATE:  9:45 AM

SPX has found support here, and has the SMA5 200 just below for insurance.No surprise, but VIX is dropping pretty steadily.  The key will be what it does when it reaches the white channel top.  If it bounces around 12, then the bears have a chance at a nice drop on the day.  Otherwise, the 1.618 backtest will probably be dragged out until next week.

UPDATE:  10:01 AM

Here’s a potentially good shorting opportunity at 2358.62, as VIX gapped down below the channel top and is bouncing back higher after driving ES up to tag a topping TL.  The initial target is the SMA5 200 around 2348.50, followed by the SMA10 at 2342.94 and the 1.618 at 2335.34.  I should point out there’s also a gap to fill from Feb 17 at 2351.31.

CL has bounced sharply, and is back in the rising purple channel.  It faces resistance from a minor TL and its own SMA5 200.  At the very lease, it needs to drop back out of the channel for SPX to have a shot at 2335.

UPDATE:  11:30 AM

VIX dropped below the channel top into the euro close, which pushed SPX up above the SMA5 10.   Will it stay here, or was it simply trying to lessen the damage at 11:30?  Staying short, as CL still hasn’t broken out and USDJPY is about to start another leg lower.  It appears that SPX’s SMA5 200 will cross the gap close at 2351.31 and the falling purple TL in about 2 hours (1:30ish.)  I’m mildly surprised that SPX didn’t close this morning’s gap when it had the chance 10 minutes ago.

UPDATE:  12:22 PM

Slowed to a crawl, the lesser targets are looking good.  

UPDATE:  12:50 PM

Moment of truth for the bears, as VIX has nearly reached channel/TL support and CL is testing its breakout TL again.

UPDATE:  3:29 PM

It appears they’re going to ramp SPX up to positive on the day here into the close.  VIX is headed for its SMA10 and potentially below it, which would send SPX higher.  Only hold short if you can hedge or deal with the gap risk over the weekend.  Otherwise, this is the place to cover.

Here’s what I expect to happen… a tag of the SMA10 next Tuesday or Wednesday, with a decent chance of a drop through to the 1.618 at 2335.34.

ES’ version, as shown earlier this morning…

VIX, flirting with the SMA10.  Can it resist a last second plunge?

FWIW, CL is still below the purple channel bottom……and, USDJPY hasn’t exactly broken out.