SPX came within 4 points of its all-time highs yesterday, a few days ahead of schedule but close enough to be considered a major victory for the bulls.  Oddly enough, the futures didn’t seal the deal after-hours.

Is it just possible that the downside case isn’t completely dead?

continued for members…

For those who remember the worst case scenario (best head-fake scenario) we’re just about where it would need to be in order to play out. While ES and SPX have both pushed above the falling white channel (The Slope of Nope seen in 2007, 2011 and 2015) the falling purple channel remains a possibility – if not a likelihood.  If it were to play out, we’d want to see USDJPY break down as EURUSD is.  Note that DXY came within .10 of important overhead resistance.  We’d want to see it reverse here.We’d also want to see the 10Y resume its slide, as it seems to be doing. And, we’d want to see VIX remain above its channel bottom — as it has done for 8 sessions in a row.Last, we’d want to see CL and RB come back to earth.  They’re worth shorting again, with RB’s top most obvious……and CL’s potential for a reversal is less clear (yesterday’s high of 66.6 has a certain biblical appeal.)

UPDATE:  3:50 PM

So far, so good.  Though, it’s hardly enough of a move to get excited about…yet.  Still in favor of a drop from here: VIX and CL.

VIX has bounced off the channel bottom again.  Though, it would be nicer if it could close above some overhead resistance such as the SMA20 and fan line off the December highs.

CL is an interesting case.  Note the slope of the falling channels within which every major drop occurred. The latest drop is at about the same slope — not to mention the fact that the latest inventory reports are bearish and CL is way overdue for a backtest of its SMA200.Potentially arguing against a drop in equities: USDJPY (depending on whether or not it breaks out.)The large triangle top is just above.

This is a very big pennant pattern that seems destined to test its top again.  Where it goes from there, of course, is another question.  Note that it can break out of its triangle without making new highs by testing the horizontal resistance at 114.50ish that has held the line since May 2017.

But, DXY itself finally tagged the resistance at its .618 and even broke through a bit.  If TNX continues to fall as I expect it to, then DXY should reverse here. SPX and ES did poorly most of the day, closing on a negative note.