ES and SPX nailed our downside targets yesterday, backtesting their necklines yet again.  This time, however, they also backtested the channels from which they broke out last week.They had help from CL and RB, which also nailed our downside target before bouncing nicely.With the FOMC meeting wrapping up tomorrow, we’ll take a look at the likely next steps.

continued for members…

First, a quick look at yesterday’s action.  USDJPY didn’t quite close at its SMA10 and is off a little more today.  This minor move signals further weakness.

This fits with my expectation that DXY will sell off sharply in the next couple of days, finally fleshing out the rising white channel as EURUSD pops up to backtest its SMA200. VIX, which made a lower high, is stair stepping lower with the SMA200 and yellow channel bottom within easy striking distance. The key level to watch here is the SMA10 at 18.77. CL and RB reversed when ES/SPX completed their backtests yesterday.  But, CL seems to have more downside with the falling purple channel guiding toward the SMA20/50 at 50.83-51.03.  We’ll want to watch the top of the falling purple channel at 53.50ish.RB, is also coming up on overhead resistance – the neckline of the little H&S pattern at about 1.364 and the to of the falling red channel at 1.373.  But, it will likely reverse if/when CL does.Our yield curve model is turning short-term neutral, with a slight bounce to the current 2s10s at .151.  It can bounce around in this area for days, but must eventually break out or break down — both of which are net bearish for stocks.And, last, take a look at AAPL which is taking another crack at its IH&S neckline (157.28ish.) I’ll take a fresh look at AAPL later as it reports after the bell today. Piece all of this together, and I get the feeling that the goal is to have SPX continue sideways in order to keep the rising purple channel alive while fleshing it out.  It’s obviously important for bulls to hold the neckline. So, that leaves us with a fairly desirable stance: if SPX/ES remain above their necklines, hold long; otherwise, short.UPDATE:  10:01 AM

Consumer confidence just came in below expectations.  ES is at potential resistance, so we could see a reversal here.Note that while CL has broken out slightly……RB has reached its own reversal point……and, VIX is sitting just above its SMA10 — essentially guiding prices lower.