Things went very much according to plan, yesterday, with SPX plunging to our third support level before beginning the predictable meltup.  And, there’s no mystery as to what was driving it.With equities just short of a breakout (again), is the drama already over?

continued for members…

If the rising white channel holds, we should see SPX top the SMA5 200 today — with the white dot a logical target.  If it doesn’t, the yellow channel top at 2426ish is good support, with the 2408 target still lingering as a good fallback position late today or Monday morning.

We’d need to see USDJPY hold the SMAs at 110.68 and ideally break out of the falling white channel.  And, we’d need to see CL continue to bounce.Most importantly, VIX would need to at least not break out. There remains a good possibility that the goal today is simply to reach support for NDX — which came within 3 points of its SMA50 yesterday.  If so, SPX should drop to near yesterday’s lows (if the SMA50 is the target) or even lower (if the white channel top.)UPDATE:  9:40 AM

The white channel is breaking down.  Nothing wrong with shorting here…just use tight stops in case we get the usual 10:00 spike.VIX is approaching its SMA5 200, which should help put a floor under SPX.UPDATE:  9:46 AM

Yellow channel top.  I’d want to be long here with reasonably tight stops.Note that VIX popped up above the SMA5 200 and white midline, testing the yellow channel bottom, but dropped back fairly quickly.  As long as it keeps dropping, SPX should rebound nicely.  If it continues higher than 11.27ish, then one should be short as our downside targets are in play.UPDATE:  10:00 AM

I’d revert to short here as I think the NDX strategy is exactly what’s happening.  The SMA5 10 and SMA5 100 should serve as reasonable stops.  If this assumption proves correct, SPX’s turn will depend on when NDX turns.  Therefore, our initial downside target is a little fuzzy.As yesterday, NDX’s SMA50 is inching higher throughout the day.  So, pay attention to the blue label on the Y-axis, not the horizontal line I’ve drawn at 5637.04 (it’s there as a place holder when I switch to 60- or 5-minute candles.  We could see a turn when the SMA50 is tagged, but a backtest of the white channel top at 5589 would be smart.

After such a heroic move yesterday, USDJPY is making no effort to prop up SPX.  We’ll know how serious it is by whether it remains above the SMA200.As I mentioned yesterday, I have some other matters I must attend to this afternoon.  So, I’m ducking out early.  I have lots more updates coming this weekend — hopefully including an updated big picture post.

UPDATE:  1:35 PM

Quick update…I can’t remember the last time I saw a floor on VIX.