S&P futures came to within 20 points of the neckline of the H&S which nicely forecast December’s 300-pt plunge before finally taking a rest last night.

Yet, as the charts indicate, the latest drop has (so far) merely tested the bottom of a rising wedge. Should ES bounce from these levels, the upside case remains intact. Even a drop to the SMA10 would merely establish a less aggressive rising channel.It’s only when ES drops through its SMA10 that real trouble arises.

With CL and RB rolling over as expected and VIX backtesting the TL it just broke below, stocks are once again in a precarious position.

continued for members…

The channel alternatives for ES…  Even a breakdown of the rising wedge could be salvaged by the rising white channel.

Much will depend on whether VIX can push past the purple TL shown below.  Currently, it’s merely backtesting it.CL and RB both have more downside potential – though it wouldn’t be unusual to see them hold off on additional downside until after today’s close. USDJPY continues to cling to the purple TL which, technically, sends supportive signals even as the pair continues to look susceptible.EURUSD is still nibbling at a breakout, but the upside has now declined substantially as the SMA200 has continued to fall. A reminder…this is OPEX week.  As most of you know, OPEX is typically a week of ramp jobs followed by at least a mild sell off as the propping up is discontinued.  When the market doesn’t ramp during OPEX week, it typically plunges instead.

The past several weeks have seen stocks heavily managed, primarily via VIX suppression, so I have no reason to suspect the rally will fall apart now. But, the market feels quite delicate and headline risk remains high.  As such, pay close attention to these support levels such as the SMA10 and SMA20, channel midlines and bottoms, etc.

When things break down, they are likely to break hard and fast. I’ll be taking the rest of the day to focus on a post touching on the current big picture, including an outlook for 2019 to be posted tomorrow morning. I’ll jump back in if anything unexpected occurs.

GLTA.