Futures are off modestly on an important election day which will hopefully resolve plenty of unknowns.On the bullish side of the aisle: both ES and SPX are safely above and have backtested their 2.24 Fib extensions; oil and gas have fallen sharply to decent support levels; VIX is at a modest level with a clear path lower if necessary; USDJPY has a clear path higher – at least temporarily.

On the bearish side of the aisle: inflation should be much lower in Oct as a result of oil and gas declines; interest rates are still pushing against important resistance; VIX experienced a golden cross on Friday; FAANGs are providing bearish leadership; and, many fundamental analysts have pronounced a democratic surge as bearish.

Both sides have played to their bases in this midterm.  In several cases, this has resulted in excellent results for our forecasts.  Consider, for instance, how much gas prices have dropped — mitigating the damage done by Trump’s Iran sanctions and helping our oil/gas forecasts working out quite nicely.The assistance provided by currency moves has played nicely into our USDJPY forecast.As we learned after the 2016 election, the market moves the way the algos dictate.  The only question is whether the algos will receive enough “guidance” to keep stocks on the rise. It should be an interesting next couple of days.

continued for members…

So far, the algos have things well in hand.  VIX has resisted any serious bounces and has constructed a weak rising channel from which to break down.

A small surge in interest rates……continues to support the USD and USDJPY. Oil and gas have reached decent support (though I still like 59.47 for CL.)This leaves stocks comfortably above their Fibs with plenty of cushion above their lows in case the election results are judged to be bearish.

COMP, AMZN and AAPL still make a good argument for additional downside.

UPDATE:  EOD

Not a whole lot to say about the day.  SPX and ES leaked higher with both nearing their SMA200s… …thanks to USDJPY ramping higher……and, VIX going nowhere. COMP continues to suggest a selloff.

TNX tested its channel top again, which helped DXY hold its ground despite a rise in EURUSD. CL and RB had a rough day, with CL covering about half the ground to our 59.47 target before ramping higher into a bearish API report that saw it sell off again.  RB pushed slightly lower, hinting at a drop to 1.622 or 1.5915…depending on tomorrow’s EIA inventory report and the general post-election mood. Bottom line, the “market” is no less susceptible to the algos which are still susceptible to whatever the factors tell them to do.  For anyone who wants a quick primer on what this could look like, go back and review the 2016 post-election results – detailed in Why The Trump Rally is a Fraud.

All it took to erase a 4.5% overnight plunge in ES was a severe hammering of VIX and ramp jobs in USDJPY and CL.  I don’t see why tonight would be any different.  Though, there’s the possibility that fundamental investors who have bought into the Trump Rally concept would freak if Dems were successful enough.  If so, SPX could drop 52 points to its 2.24 or even 158 points (5.7%) to its .886 before doing any serious damage.

If it dropped further, then I guess we could get excited about the latest H&S patterns playing out and the possibility of SPX 2450, 2421, 2280 or 2138.  Personally, I would love to see it play out, as it would somewhat restore my faith in the credibility of the markets.  If I had to place a bet, that’s the one I’d want to place.  But, doing so would go against everything the “markets” have demonstrated over the past few years.The above, adjusted for the timing the falling white channel suggests: