SPX nailed our first target yesterday, and came within inches of our second.  After the close, the futures collapsed and finished the job, only to soar after the debate results suggested that FOMC members didn’t necessarily need to start polishing their resumes.

However, the news cycle came roaring back overnight.  Deutsche Bank apparently didn’t go away.  Oil producers have no interest in capping production.  And, Japan is still a mess.

SPX is likely to tag our next downside target without any difficulty.  The question is whether or not it will stop there.

continued for members…

USDJPY is clinging to support. As is CL.

This leaves SPX in a precarious position.  It should reach 2142 easily enough.  But, if it doesn’t stop there, 2134.72 is back in the picture.

Which ES confirms.

UPDATE:  9:33 AM

There we go.  CL just bounced off its SMA10/50, which is supporting SPX at our initial target.  Back to long, here at 42.51.  The initial target is the SMA10 at 2147ish, with a secondary target a backtest of the rising white TL at 2155-2156.  The top of the falling white channel is 2158-2159.

Don’t forget stops, as ES really looks like it could drop on down to 2127 without any problems.

UPDATE:  9:54 AM

SPX had some trouble with the little red TL, but just pushed above with help from CL and VIX.  USDJPY is stirring, but not much yet.  Coming up on 10AM, where these initial pushes often lose steam.  Consumer confidence will be released — the last mark being 101.1, the market is expecting 98, w/ Briefing.com at 99.4.

UPDATE:  10:00 AM

Consumer confidence was a blowout at 104.1, while the Richmond Fed was disappointing.

UPDATE:  10:05 AM

Taking profits on our long position here at the backtest target. Back to cash at 2155.62 — our secondary target from above.

CL and USDJPY have both hit resistance and seem to be settling lower, which will give SPX a chance to at least consolidate and wait for the SMA5 10 to catch up, probably at the white channel midline around 2151-2152.  Note that VIX has backtested the falling white channel, which could provide support.  Though the SMA50 at 13.13 might act as a magnet.

It remains to be seen whether they’ll try to turn this into a big rally, or be content with a stick save.  I just read that Deutsche Bank just turned positive in Frankfurt on comments from the Justice Department that they might be able to pay less than $14 billion to settle charges. So, there you go…apparently the world has been saved.

UPDATE:  10:32 AM

Back to long here at 2152.38, with reasonable stops.  

UPDATE:  10:35 AM

Jumped the gun.  Back to cash at 2151.19.  Probably going to, at least, test the SMA5 20 at 2149.61.

CL had started to bounce, but it didn’t last more than 30 seconds.

ES might be about to backtest its SMA10 at 2140.70.  I’ll look for support there if it doesn’t come in at the SMA5 20.

UPDATE:  10:48 AM

Back to long at 2149.98, as SPX is catching support at its SMA5 20 and white midline, and I think VIX is about to drop to 13.13.  If I’m early again, then there should be channel and SMA5 50 support at 2148.70.

UPDATE:  10:58 AM

Ok, so scrap that idea.  Back to cash at 2151.19.

UPDATE:  11:03 AM

I’d be tempted to go long here on the SMA10 backtest, but look at CL — new lows and likely to test 43.80 or 43.45, if not 43 itself.  This is not a good development for the bulls.  Worth shorting?  Probably.  But, the SMA10 and the upcoming euro close might be enough to support it.  

Instead of reversing at the red TL, VIX just broke out a bit.

And, I get the feeling the BoJ is shoveling yen into the furnace to keep USDJPY from plunging.

Just a quick FYI…I have a conference call coming up at 11:30 ET.  Shouldn’t take more than 30-45 minutes or so.

UPDATE:  11:25 AM

Looks like they’re going to try to get it there by VIX, alone.   Play along if you like; but, unless USDJPY and CL stop slumping, 2160 is going to be tough going.  Tight trailing stops are advised.  The upside target is the SMA20 at 2159.41, probably when the SMA5 200 intersects in the next hour or so.  The fast the better, tho, as the white channel top is falling away from the SMA20.

USDJPY is finally making a contribution.  It could really help if it popped up above the SMA5 200 at 100.52.

UPDATE:  12:26 PM

SPX just topped the SMA20.  Back to cash here at 2160.03.  I don’t see it reversing very strongly, but rather holding these gains until the short term SMAs catch up.  In fact, if USDJPY and VIX can do a little more, we should see it continue its gains.  Note that VIX doesn’t have much real support here.

I’m going to take a 15 minute break.

UPDATE:  1:12 PM

Sitting here watching CL spike higher in order to maintain SPX’s breakout status.  Really, guys?  Geez, this gets old.

Assuming that VIX drops on down to 12.91, and then 12.65, and USDJPY rallies up to at least its SMA5 200 or, better yet, to the red TL around 100.7 (depending on when) and CL can maintain its breakout, then SPX would target 2171.44 next.  Play along if you like, but trailing stops are strongly recommended.

It’s the top of the falling white channel and the rising red channel’s .786 line.   It’s also the .786 of the drop from 2179.58 to 2141.55.

There, SPX would have another chance to break out.  Much of it will depend on DB — which should rebound from here.  See a special post on DB due out in a few.

UPDATE:  2:05 PM

SPX has been treading water for over 1 1/2 hours.  If it can hold the rising white channel, we should get another 12 points out of it up to 2171.44.   I’d advise a long position on any sustained break out above the SMA20.

If not, it has plenty of downside exposure – starting with a backtest of the falling white channel at 2155ish (depending on when.)  I’m going to take some time and work on other charts.

My gut tells me we’ll get further gains, if not this afternoon then on tomorrow’s open.  However, there’s an enormous amount of risk out there.  So, I’d remain long, but keep those stops nice on tight.

GLTA.

UPDATE:  3:45 PM

Back to cash for the night here at 2059.64, as VIX refuses to take the plunge and send SPX up past the SMA20.  CL and USDJPY are still sitting right at support.  So, yes they should be able to bounce here.  But, not, they haven’t yet.  There is a reason, and I think it’s simply too much selling pressure across the board.  I just don’t trust either side to win this particular battle, and would rather sit on the sidelines overnight.

 

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