SPX 2703 was the last line of defense for the seemingly endless rally from the 2009 lows – the yellow channel below.
The futures were all set for SPX to open there in the morning…until Trump’s address, the NBA’s cancellation and Tom Hanks announced that he and his wife have the coronavirus — all moments which suddenly made the virus very real to many people who were willing to pass it off as just like the flu.
Unless stocks climb back to flat by the close, the yellow channel is no more…
…and things are likely to get very ugly.
continued for members…The big picture for SPX…
Support is now at a smattering of Fibs, channel lines and the weekly 200-DMA (the red line, marked with white arrows.)
On the ES side, We have potential support at the .786 Fib at 2548, the .886 at 2439, horizontal support at 2317, and finally the 1.618 at 2156.
We can probably safely remove the yellow channel now, leaving just the white and purple ones. At this point, ES has dropped through the white channel midline which leaves the purple channel bottom as potential support around the purple .886 at 2439.96.
Next comes the 2018 lows and white channel .236 line at 2316.75, follows by the white .786 and white channel bottom at 2143.83. This is the target that appeals most to me at this time as it also aligns with the gray 1.618 of the 2007-2010 drop at 2155.93 (equiv to SPX 2138.) This was a major Fib which was never even remotely backtested after ES/SPX blew through them on BS algo action after the 2016 election.
VIX suggests it won’t be the .786, and probably not the .886 either.
One caveat: almost all of my charts are constructed on a log scale. Accordingly, patterns tend to break down “sooner” than they do on an arithmetic scale. As the TNX chart below shows, SPX is just now testing a TL from 2009 on an arithmetic scale.
Neither way is right, and neither is wrong. I personally have had more success using log scale, especially when dealing with large swings in price such as we’ve seen in stocks. But, I want to put it out there as another reminder to be very cautious in trading these volatile markets.
This is what the arithmetic chart looks like. A good fit for the 2009, 2016 and current lows (at 2500ish) but a lousy fit for the 2018 lows and essentially all of the highs.
The ES arithmetic channel is a much better fit all around since the Dec 2018 lows were lower. Translation, watch out it the decline stalls around 2500-2520.
Oil is off, but holding in the range it established earlier this week…
…while RB is testing a critically important TL. If it fails, all that’s left is the 2016 lows and the 2008 lows. More on this shortly.
The currency picture isn’t too crazy, with DXY rallying…
…as the euro screams back toward its SMA200.
USDJPY is holding its own… 
…but the NKD has reached our target at the white channel bottom, a critical level of support hailing from the 2009 lows. 
On the bond front, ZN is pushing back above the 1.272 and white channel .786 line – an important signal to stocks.
The 2Y dipped as low as 0.31 – below the next horizontal support – but has rebounded to 0.43.
The 10Y held fairly steady…
…meaning the 2s10s temporarily broke out, reaching as high as .38 before being brought back under control. 
Yield curve management, of course.
More later…
UPDATE: 1:00 PM
Unbelievable drop in RB sent it down below the 2016 lows and not far from its 2008 lows. Note the additional targets added.
SPX is bouncing back nicely, up 134 points off the 2500 lows following the Fed’s $1.5 trillion repo (QEnot) announcement.
ES’ and SPX’s weekly SMA200 is around 2639.
UPDATE: 3:45 PM
Well…I guess we’ve settled the question as to whether the Fed uses log or arithmetic scale charts. they announced the $1.5 trillion in new QE at 2500, and have defended it the rest of the day.
VIX has reached our .786 target, suggesting this support might hold.
The 2s10s has officially left the station, though — a very bearish sign if it holds, which it should given the Fed’s action.
At the bell, that red line SPX just tagged is the red channel top that connects the 2018 and 2016 tops.
Not sure what else TPTB will throw at the market after hours, but this is clearly an important line in the sand for them. GLTA.