Happy Friday the 13th.  The stage is set for our next downside target to be reached.

CL is off substantially again this morning, with the white channel bottom within striking distance and the .786 or .886 good alternatives. USDJPY has settled lower, but maintaining the upward trend in the rising purple channel. continued for members…

SPX is all set to reach the .618 target in the opening thrust lower or, if a head fake is on tap, Monday.

Remember, there are two targets in close proximity — the SMA200 at 2035.16 and the .618 at 2032.48.  The .618 has the added benefit of intersecting the yellow TL I’ve drawn – a potential H&S neckline which is parallel to the two completed ones above.

Bottom line, it might be a little tricky judging when/where to jump in.  As always, we’ll keep an eye on USDJPY, CL and VIX.  When they start spiking, it’s usually a pretty good sign — but, not always.

UPDATE:  9:45 AM

Making good progress.  If USDJPY can settle back down, and CL dips below that purple TL, then 2032 should be easy to reach. UPDATE:  10:11 AM

We’ll watch USDJPY and CL closely, as neither has started back up just yet.  And, VIX has broken out of the rising red channel (but, should see resistance at the .786 at 19.96.)The next support isn’t until the .500 at 2000.90, so it’ll be important for the bulls to hold this level.  And, I’m fairly confident that they will.  Just in case, however, here’s a look at the timing for that, and the next lower level at 1969.32 — probably around the 17-18th.UPDATE:  11:05 AM

Remember, if they want this… …all they have to do is run up and tag the purple target instead of the more obvious white one.  Pretty much as simple as that.UPDATE:  1:25 PM

Plenty of selling pressure today with CL on the skids and retail sales tanking…  From a technical standpoint, the bounce is having a hard time getting underway.  I can only take this to mean that the MM’s are purposefully creating confusion for the purpose of shaking loose weaker players before whatever comes next — which still appears to be a big bounce.USDJPY broke out, alright, but has since fallen back below the TL from this morning’s lows.  Keep an eye on it as it approaches a backtest of the broken purple channel. One other possible issue is that ES hasn’t had a chance to tag its .618.  It got within about 3 points this morning, but reaching it would have meant SPX had to dip to below 2024 — an unacceptable distance from its own .618. 

Maybe they’re planning it for after hours today or on Sunday, in which case it could easily keep SPX from really breaking out today.   It would have the added benefit of allowing a close at the day’s lows so that traders who want to participate in the bounce have to hold over the weekend.

It’s not entirely clear whether or not VIX will be content to reverse here at the .786.

UPDATE:  2:53 PM

ES just tagged its .618 at 2018.25.  I’ve been unusually lax with stops today, only because my gut tells me there a nice bounce ahead.  But, it seems pretty clear that it’s going to wait until after today’s cash close.

Think of all the great short bets over this past week that only paid off if someone was willing to hold overnight.  I believe this is the flip side — a well-designed bear trap.  But, I’d hate to have anyone hold long over the weekend if the prospect of sharp 20-pt drop is too alarming.  Only hold long if you can hedge or handle the potential loss.