The Beat (Down) Goes On

With VIX finally unshackled from its falling channel, the question of the day is “how bad can this get?”

It all depends on whether ES or SPX will be in the driver’s seat. ES closed at our purple TL target, but as we discussed last week, its 2.24 Fib extension is a little lower at 2728.79 — the equivalent of SPX 2730.Now, 2730 isn’t terribly significant on SPX’s chart — a .707 Fib and well above SPX’s 2.24 way down at 2703.62. So, we have an important conflict.The way this sort of conflict is usually resolved is a bounce at the higher target, followed by a leg lower or…. a nonsensical V-shaped recovery. Which outcome do the charts suggest?