Futures pared their overnight gains after beats in initial claims, housing starts, and building permits.

So far, it has been enough to backtest the little H&S neckline that was topped overnight.

continued for members…The question remains as to whether SPX will be allowed to backtest its neckline. VIX came very close to its SMA200, but came up just a little short.EURUSD has now officially tested its SMA200, while USDJPY is stalling. This has left DXY right at its SMA200 – i.e. a moment of truth. CL and RB are likewise going sideways as, like yesterday, the data is nudging rates higher.

The 2Y, however, is getting a little bounce…

…which has allowed the 2s10s to back off slightly from its threat to break above its recent past highs. This alleviates some of the bearish pressure on stocks. Our back-on-track XLU model, however, still suggests additional downside by mid-Feb. 

UPDATE: 10:30 AM

FWIW, SPX has not constructed a H&S Pattern like ES. Its SMA50 should arrive at the .886 either tomorrow or Monday, offering an opportunity for some kind of backtest if TPTB don’t want to allow a neckline backtest at 4600.

We have plenty of important economic data coming out next week – the most closely watched being claims, home sales, GDP, spending and PCE.

GLTA.