ES tagged our downside target yesterday, taking the opportunity to bag the 50 DMA in addition to the 1.272 Fib extension.  We should get a bounce here as the algos are all swinging into action. USDJPY has broken out as expected, CL/RB are inching higher, and VIX is getting smacked down.

However, the bounce might now last.

continued for members…We’ve discussed many times that CL and RB should have limited upside from here. While USDJPY has run into its SMA100 with the SMA200 just above. VIX is the only driver with more than enough firepower, as it won’t run into potential support until reaching its SMA200 at 27.27.The 10Y appears to have a little more upside with yields not having tagged their channel bottom yet. GC and SI are yet again threatening to break out. ES is likely to get bogged down at a backtest of the dashed red TL at 3771ish, but could climb higher over the next few sessions to the SMA20 at 3782.71.

UPDATE:  3:50 PM

Coming up on the close, and VIX has managed to remain – even bounce – off its SMA200.  It’s a good sign for the bears, and adds to the likelihood of an actual 1.272 tag.

If ES can drop back through 3710ish, it will have completed a good-sized H&S Pattern that targets my favorite downside target – the red 1.272/gray 1.618 at 3522.87/3523.58.

A couple of other interesting developments today…  apparently SLV has been targeted by the Reddit crowd and is popping nicely – up over 7% at its daily highs. As it stands now, it has broken out of its falling white channel.

We’ve been here before, but under different circumstances. So for anyone playing the breakout, it would be wise to use stops.GC has not participated at all – actually falling on the day.

The Bigger Picture

I thought this might be a good time to take a look at the bigger picture.

SPX backtested the red TL without ever reaching its 1.272. It also held the thin purple TL from its March lows.

This leaves it in a position to still run up and tag its 3.618 Fib extension……which is at the top of the rising white channel. Note that the white channel was the vehicle that allowed SPX to break out of the larger white channel from 1929……and test the top of the large yellow channel.  I’ll continue to work on this throughout the day and will be back with additional charts in a couple of hours.