SPX came within a couple of points of our next downside target yesterday, continuing to sell off in advance of the election and in response to oil’s and USDJPY’s swoons.  Futures are marginally higher this morning as the latest polls show a slight Clinton rebound.

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Note that ES’ SMA200 is approaching the white 1.272 extension at 2080.53 — the yellow target.

SPX came up just a little short of our swing target at the white .500 at 2092.77 and red 1.618 at 2089.96.  I would continue to hold short and fade any initial bump.  Though I haven’t charted it, there’s also a potential target at the purple 1.618 at 2081.5.

I mention it now because SPX could tag both it and the SMA200 in one fell swoop today.  It would represent a break down of the falling white channel.  But, if it were swift enough, the channel could be deemed still intact.  Of course, a close below 2089 would bode well for our 2068.92 target. I still favor those targets which align with the white retracements — the .500 at 2092.77 and, especially, the .618 at 2068.92.  These are the same targets I posted on Oct 12 [see: Next Steps] in the wake of our Oct 10 assessment that oil had topped [Welcome to Peak Oil.]

USDJPY continues to sell off after falling back below the white channel midline, but found support at the SMA100.

And, CL is nearing our 44.10 downside target, likely to reach it about the same time as the SMA200.

It’s worth keeping an eye on DB, which broke down below the SMA50 and a key TL off the Jun 23 and Sep 9 highs.It appears to be headed toward a backtest of the red channel midline, probably around 12.85 – 13.  But, if current levels hold, it has upside potential to at least 15.04, followed by the SMA200 at 15.77.

And, of course, VIX continues to be an important price driver.  Note that it tagged the large white channel’s midline again yesterday.  The last tag was on Sep 12 and marked an interim bottom for SPX at 2119.

There are a lot of moving pieces on this chart.  But, the one I think is worth watching right now is the fan line off the Aug 25 2015 high.  It terminated the Jun 27 Brexit spike. Breaking it would be a potentially strong signal, though the falling white channel top is just above at 22.12.  IMO, it would align nicely with either of our 2089-2092 or 2068.92 targets.

UPDATE:  12:52 PM

There’s the .500 Fib.  No telling whether it’ll drop down and tag the other lower targets, so the safe bet is to take profits and reopen a short if it drops through 2097.77 again.  My gut tells me we’ll see lower, so I wouldn’t hesitate to re-short.

CL hasn’t quite reached our downside target……VIX has a ways to go still……and, USDJPY is wandering aimlessly.

UPDATE:  3:58 PM

Could we have gotten all the way down here without tagging the SMA200?  Probably not.  We should see more downside ahead.

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