pebblewriter

Just When You Thought it was Safe…

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The downside scenario triggered when S&P futures reached our upside target on Jan 22…

…is playing out very nicely indeed.

Credit VIX, which uncharacteristically didn’t collapse last night……and CL which, having come close to our 51.62 target on Sunday, is taking another gander.Needless to say, our downside targets remain unchanged.

BTW, Boston folks, I’ll be downtown today and Friday. Drop me a line if you’d like to meet up.

continued for members…The bigger picture for ES shows the SMA50 has risen slightly from the optimal channel intersection. But, the logic of the channel backtest remains intact.

SPX’s perspective is almost identical.

Of course, if 3200ish doesn’t hold, there’s plenty more downside.VIX sort of suggests this will be the case, as there aren’t any compelling targets now that it’s broken out……until it reaches 23.28. A rise above 24.81 unleashes lots of potentially messy scenarios, with 33.33 and 45.73 being the most interesting.As always, be on the lookout for a sudden, unexplained collapse in VIX. We’ve seen it happen many times before, ruining many a downside scenario.

USDJPY toyed with the idea of breaking down.  If it drops through the SMA100 at 108.722, it has .618 support at 108.65 and the more important SMA200 at 108.426.

DXY is only backtesting its SMA100……as EURUSD is getting a backtest bounce.ZN is chomping at the bit……and TNX nears our next downside target……the 2Y briefly violates 1.4% support……and the 2s10s (still broken down) threatens to be much more broken down.I’ll be out of the office until early afternoon, will post more then.

UPDATE:  2:22 PM

SPX is testing a TL off yesterday’s highs as VIX threatens to break down. In the meantime, USDJPY is still pushing toward the SMA200… …and CL has essentially reached our downside target.Not so much for RB.Stay tuned.

UPDATE: 3:15 PM

ES has pushed back into the flag pattern and is rising……on the back of CL’s bounce……USDJPY’s bounce… Just waiting on VIX’s “breakdown” – a drop through 16.24 would likely send it into the green. Below 15.63 definitely would.Note that TNX tagged our next downside target.  We could still see a drop to the .886 or former lows, but the going gets tougher unless it waits a few days.

UPDATE:  3:45 PM

VIX dropped through 16.66. This should send SPX above its SMA20 and test the channel top.

The 2Y is back to 1.40.SPX is testing its SMA5 200 – the final resistance before testing the SMA20 and channel top. Going green now…UPDATE: EOD

Does this mean the downside case is kaput? No. VIX is still above its SMA200, and the whole thing has the distinct smell of a potential headfake.

But, CL and RB might well be done, though a big bounce isn’t likely.

 

 

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