Yesterday was essentially a repeat of the prior session: a plunge early on which quickly morphed into a ramp job that fell apart at the close, only to resume overnight. It wasn’t pretty; but, it was enough to stave off a completed H&S Pattern.

At the moment, futures are playing cat and mouse with the SMA10… …waiting to see whether VIX can hold its very slight bounce off its own SMA10.It’s not fun waiting for the inevitable.  But, that doesn’t make it any less inevitable.

continued for members…

The equity picture has scarcely changed at all.  SPX will face a test of its SMA10 and SMA5 200 on the open.  I mused yesterday about the downturn coming quickly and violently.  I notice that Trump speaks to the UN at 10:15 this morning and (only half joking) wonder whether that could be the start…

USDJPY rallied up and out of its channel top overnight, but is back below at this time with plenty of downside potential if allowed to drop.

The other dicey situation, of course, is oil and gas.  The negative inflation signal sent by the recent spike has reverted to a positive means by which to drive the algos higher. Although RB and CL are both off over 1% this morning, the decline has been engineered in such a way as to represent a backtest — suggesting that the next move could be higher.  But, that’s not what the daily charts suggest.

The big picture for VIX…

…and for the 10Y.UPDATE:  10:05 AM

Consumer confidence just missed and the gap between current and future expectations widened – often a leading indicator of a worsening consumer picture.  USDJPY and RB broke trend lines on the news and VIX just pushed above its SMA5 200. UPDATE:  11:00 AM

Finally getting a little slippage…  The first key test will be ES’ H&S neckline at 2995.25.  SPX’s is at 2989.46ish.

UPDATE:  11:36 AM

SPX just fell through its neckline and VIX popped through the purple channel midline.  Next challenge: the barrage of VIX moving averages between 15.98 and 16.65.

Things will accelerate nicely if USDJPY breaks its neckline. Of course, this is also where the PPT could jump in to “save” the market from further decline.UPDATE:  3:05 PM

Quick update…

VIX backtested all of the SMAs and came out of it okay so far.

TNX is crashing — with more likely once the SMA20 breaks. Keep an eye on ZN…a breakout of the little red channel from Sep 13 would likely trigger a lot of stops. USDJPY is making new lows.  Remember…when it last tagged 104.59, SPX was at 2822.CL has broken and backtested the red TL. RB has done the same and is only 6 cents from its pre-attack levels. SPX’s SMA100 is almost exactly halfway between its recent highs and its SMA200/Fib extension target.  I appreciate the fact that two 100-pt losses back to back would be quite unlikely.  But, that’s what the chart suggests could happen. ES’ falling white channel indicates a potential bounce around 2948ish.  But, that wouldn’t reach the H&S target.  When these kinds of meltdowns occur, a channel that covers only part of the recent price action frequently breaks down.  The other thing to watch is that big meltdowns sometimes bounce around 3:34PM.  Things are going to get busy over the next hour.  I’ll post more after the close.

UPDATE:  19:50

Pretty nice bounce on the close, but SPX remained below the SMA20 and ES below the white midline.  In bouncing here, ES hints at a H&S Pattern targeting 2890 and SPX suggests one targeting 2893.  These targets would correspond with the bottom of its purple flag patterns for both ES and SPX (was previously gray) so there’s some logic to them.

If we subsequently got a bounce there that then failed, both ES and SPX would be working on larger H&S Patterns targeting ES 2755 and SPX 2762.  This makes a lot more sense for ES than SPX since ES’ .886 is at 2763.59 and its C=A target is 2772.  The suggestion is that it would put in this additional downside in the after-hours.

SPX’s C=A target is 2816.13 and its SMA200 is 2827.81. So a neckline at 2891ish would target 2760, which is pretty close to the purple .886 at 2762.23 and the white 1.272 at 2767.76. Lots of what-ifs involved in that analysis.  For all we know, Trump will announce a breakthrough with China and the Fed will cut rates 75 bps and institute $200BB monthly in QE tomorrow morning.  But, those are the levels to watch if the downside continues.

Speaking of downside, if NKD were to put in an Aug 5 type plunge tomorrow from its SMA10, it would land right at a backtest of the broken white channel as well as its SMA100 and SMA200.  Just saying.GLTA.