SPX backtested the former highs yesterday, coming within 0.46 of our downside target before being magically levitated by the threat of a drop in VIX and intraday pushes in both DXY and CL.  Unfortunately, for the bulls, those pushes have fizzled as real, live geopolitical concerns have once again bubbled to the surface.continued for members…

We’ll make some slight adjustments to SPX’s downside targets.  Otherwise, things are pretty much unchanged from yesterday…

…unless VIX decides to break down. USDJPY is making another play — pretty nuts considering North Korea sailed another ballistic missile overhead (the better to prop stocks up.)CL is doing the same, spending all day long just above the SMA200 yesterday, only to dip back down to it right at midnight.  It’s making noises about a breakout again, today.  I still don’t believe it will.Likewise for RBOB.I assume this charade is all about delaying the SPX backtest until later today, when it can backtest both the purple TL and red channel bottom at the SMA10 — a three-fer.Of course, this being a Friday, I wouldn’t be the least bit surprised if they held off until Monday morning.  And, I’d be even less surprised if VIX suddenly broke trend again, sending SPX up to the 1.272 at 2510.87.

But, out highest probability trade remains shorting RB and, secondarily, CL.

UPDATE:  7:53 AM

I know this will come as a shock (not), but VIX is breaking down and SPX is reacting by melting up.  This really gets old… The low on Sep 1 was 10.02.  VIX just dipped down to 10.00 — a lower low.  It was enough to send SPX and ES to positive for the day, with ES up 10 points from its overnight lows.

If you missed shorting RB two weeks ago at 1.77, here’s another chance at 1.66.  I’m looking for at least 1.45.It’s the midline of a large rising channel and the SMA200.