The wait continues, as we’re getting enough push from VIX, USDJPY and CL during the after-hours to keep SPX/ES aloft, but not quite enough to register a breakout.  With VIX dropping toward Fib support, push has come to shove.

continued for members…

ES is inching its way toward its .886 retrace of its drop from its larger scale .786.

SPX needs about 15 points to reach its .886 — also pretty close to where its IH&S neckline resides.

Much will depend on VIX and whether it can continue dropping through its .886.Helping today are AAPL, which reached our next upside target yesterday… …and (perhaps) BA, which is struggling to hold Monday’s lows. CL and RB continue to inch higher. And, USDJPY has pushed back above its SMA200 and broken out of the falling white channel — just what the algos ordered. UPDATE:  10:00 AM

SPX has reached its neckline and .886, while VIX isn’t quite to its .886.  Decision time for the algos… Thanks to Chris P. for the question re DB.  Back in September, I posted that DB had reached an important inflection point at 11 [see: DB: End of the Road?] From July through October, it bounced at around 11, which made sense as it had also reached the bottom of a huge falling channel.

Given the $11 floor under the stock and the increased threat of a merger, spinoff, or other value-enhancing restructuring, continuing to hold short is a riskier proposition. If it dips below 11, go for it. Or, consider going long here with stops at 11.

In late October, it dropped through 11 for the last time and subsequently dropped through the bottom of the falling white channel — which it is now backtesting.The wording of the post “end of the road” was exactly how I felt about the stock at the time.  A drop through 11 meant it would likely not recover without some outside instigator.  Considering that the ECB has supported DB and like banks for years, I consider it unlikely that it’ll be allowed to fail.  If it does, it probably means another financial crisis at least as serious as the GFC.

A breakdown from a falling channel is incredibly bearish, but a move back above the bottom of the falling channel (around 9.50) would be net positive. To get there, it will need to break above the red TL and will then face its SMA200, now at 10.32.A long position with very tight stops would make sense for those willing to roll the dice.  However, if it can’t retake the channel bottom, then it remains a dead bank walking and a good short.

Obviously, shorting it in the hopes that the ECB lets it fail would entail some risk.  No doubt the ECB is trying to figure out a way to restructure it in such a way that it’ll survive and, ideally, not take the rest of the world down with it.  Until then, I think it’ll remain on life support.

UPDATE:  3:40 PM

I could be convinced that SPX is heading up to make new highs.  But, I can’t take my eyes off the Dow.  Remember, it never quite backtested its SMA200.  Today, it couldn’t make it up past its SMA10.  I’m thinking we get another leg down that takes back all the gains of the past 4 days and allows DJI to tag 25139 and SPX to tag 2703.  It’s definitely a hunch at this point.  But, I think this bounce got out of hand and will be unwound.