There’s an old expression that says “close only counts in horseshoes and hand grenades.”  So, we spent most of the day yesterday wondering whether the day’s 2336.45 lows were close enough to our long-held downside target of 2335.34.The tag was marred by premature reversals in oil and VIX.  Did the guys working the algos not get the message?  Or, were they just a little over-eager?  Admittedly, it’s tough to nail a precise value in an index as unwieldy as the S&P 500.  But, they went to all the trouble of engineering a backtest of a key Fib level.  You’d think they’d care…

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Judging from the fact that SPX failed to complete its IH&S, and VIX has completed its, I’d say we have a decent chance of reaching the actual 2335 target — if not lower.  Much of it will depend on CL, whose bounce made it up to overhead resistance at the SMA200.

The futures are flat at the moment.  The H&S finally played out, but resulted in a small scale 1.618 tag.  Could the SMA50 come into play on an overshoot?The other wild card is USDJPY, which continues to melt down even though DX hasn’t yet capitulated.

UPDATE:  10:03 AM

VIX’s lovely little IH&S is under fire.  Could be TPTB don’t want the 2335 tag to happen — five waves, looks more like an impulsive move?  Or it could be we’re just looking at another delay.  If the neckline is busted, the SMA5 200 is just above at 2354ish.  Watch your stops.

On a positive note, CL is slipping a bit — but hasn’t yet reentered the falling white channel.

UPDATE:  10:33 AM

This is getting a little silly — even the machines can’t decide what to do.  It looks like SPX is running out of room, and will probably pop up to tag the SMA5 200 around 2353.  But, it’s anyone’s guess.  I don’t want to sit and watch it all morning, so I’ll pull the plug on our short but re-short if it reverses at the SMA5 200 or drops through the SMA5 10/20.

I’m going to set some alarms and sign off for a while to work on several other charts I’ve been wanting to get to for the past week.

UPDATE: 10:52 AM

There’s the SMA5 200 tag, courtesy of VIX backtesting its ST SMAs.  If it’s going to reverse, we should see VIX rebound from 12.73.  If they want it to break out, VIX will break down some more.  I’ll take a stab at shorting here with very tight stops.

UPDATE:  10:54 AM

VIX dipping below 10.73, so it looks like they’re going to break it out.  Back to long.VIX broke down below the short-term SMAs, the SMA 100 and the neckline itself.Remember, the C=A of this little A-B-C wave (at least, so far) is 2355.27.  So, we’ll need a good push through 2355 to ensure it doesn’t slide right back below the SMA5 200.  From a practical standpoint, short any sustained move back below the SMA5 200.

Taking a quick break, will be back around 11:15.

UPDATE:  11:19 AM

If we treat 2336 as the bottom, then this is the midline of the falling red channel.  Back to short for at least a backtest. Given where ES is, it could be the end of a wave 4 as we’re back to the Mar 9 lows.  And, it’s that theory that kind of resonates for me.  I’m still looking for CL to dip down to 45.36.  But, it would do some damage to stocks.

From 2359, SPX has more room to fall before there’s a real problem.  Whereas from 2345, there wasn’t as much.  I see that USDJPY is ramping — just pushed up past its SMA5 200.  And, DX is threatening to break out of a small triangle it’s been in this morning.

Could this all be cover for CL to complete its drop?  It’s arguably the most important objective at this point, as the BLS is running out of time to create a favorable YoY CPI comparison for March.If this all seems a little tin-foil-hattish, consider what RBOB is doing this morning.

Note that little H&S Pattern pointing to 1.53ish — the white channel bottom.  RB bounced back above the red neckline, meaning it wasn’t meant to be — at least, yet.

If you want to be real conspiratorial about it, consider the fact that to reach 2335, now, SPX would be backtesting the falling white channel at the end of the day.  TPTB could even blame it on the AHCA falling apart or some such rubbish.

And, if they want to be clever at all, they’ll let the CL/RBOB drop happen after-hours, when stocks won’t really be affected.  It’s much more important that gas prices come down than that SPX tags 2335.

UPDATE:  11:46 AM

Redrawn rising channel for ES…note that it’s backtesting the falling white channel that broke down on Tuesday.

SPX’s SMA5 10 has caught up to it.  So, we should find out pretty soon whether this rally has legs.

 

UPDATE:  1:11 PM

SPX has tagged the SMA5 200 at a level that could serve as a 4th wave bottom.  At the same time, CL has retreated to its daily rising TL, VIX is back above the neckline and the SMA100, and USDJPY has backtested the falling red midline.  

This is a good line in the sand, as a drop to 2335 needs to plow through the SMA5 200 right here, while a new high obviously wouldn’t.  My brain is screaming to take profits and move to cash, but my gut is telling me to hold short.  Stay tuned and watch your stops.

UPDATE:  1:33 PM

SPX is back down to the red neckline, while VIX is working to get back below its.  I suspect they’ll try to ramp SPX back up from here.  While it might eventually fail, and we’d have a chance to take advantage, I’d cover the short here and protect the 8-pt gain we just made.  If it drops through 2349, I’d be right back to short.

UPDATE:  1:55 PM

If 2335 is going to happen today, SPX should reverse here at the SMA5 20 and white midline.  FWIW, Spicey is on the boob tube, and doesn’t seem to have anything good to say about the AHCA negotiations thus far.  Various Representatives have confirmed there is no deal.  Back to short with tight stops.

UPDATE:  3:14 PM

Moment of truth for SPX.  If it can drop through here 2335 is a gimme.  If not, then we’ll face another night of waiting to find out.

UPDATE:  3:20 PM

Note that SPX is ready to go, but ES might be a problem with the white TL and the white channel bottom as support.

UPDATE:  3:30 PM

ES is at support and VIX is at resistance.  It’s now or never…

UPDATE:  3:41 PM

We’ve certainly been here before.  A few points to go, but VIX dumping and futures pumping.  Take profits here or be prepared to go down to the wire.  I suspect this is all about how the drop from 2400 is labeled: corrective or impulsive.  Hanging short, still looking for 2335.

UPDATE:  3:57 PM

Looks like the corrective wave guys are winning out.  I’d cover here and see what happens in the morning.  Can’t be sure it’s worth holding short for the last few points.

Note that VIX, with its SMA now just .38 away, it still getting slammed into the close.  Sorry state of affairs…

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