If the rally over the past two months was the Trump Rally, will they call this the Trump Slump?  It’s been over three months since we had a bearish cross in the moving averages, though the follow-through hasn’t been very impressive…yet.

We remain short with our downside targets essentially unchanged from last week.

continued for members…

SPX closed its gap from last week and landed right where it started for no gain.  Yet, the SMA10 remains below the SMA20, and should act as a magnet for the index.  The value has changed slightly to 2261.93.

USDJPY bounced where expected, and I still look for it to go sideways or slightly lower for the next week……as CL continues to sell off…

…and VIX remains non-committal.

The focus today seems to be on the Tillerson and Trump appearances, though the EIA inventory report at 10:30 ET could also be a catalyst.

Had SPX tagged its SMA10/20 yesterday, it would also have tagged the white (backtesting) channel bottom.  It didn’t, so now a SMA10 tag would require the white channel to break down somewhat.  This would lend a bearish tint to any such dip.

On the other hand, the failure of SPX to drop back through the red channel top, to maintain its “breakout” status, has to be interpreted as bullish — but, only so long as the breakout continues.  Once SPX drops back through 2268, the implication would be bearish.

UPDATE:  10:33 AM

Big build on inventories. CL is testing its recent lows.

UPDATE:  11:31 AM

The rising white channel has officially been broken.  The next test is here at the falling red channel bottom, to be followed by the SMA10/20.If we expand the falling red channel a bit, we can see a reasonably clear path to our 2212 target.

UPDATE:  11:38 AM

SPX just dipped below the SMA10 and tagged the purple channel line.  We should see a bounce here — a playable bounce for those so inclined — though the downside case remains intact.

Note that SPX has now completed a small H&S Pattern that targets 2249.25, which is near the expanded red channel midline later today.  Once SPX finishes bouncing, probably to backtest the yellow neckline, white channel bottom and/or SMA5 10 around 2266-2268, that will become our next interim target.UPDATE:  11:49 AM

SPX just backtested the white channel and yellow neckline.  The SMA5 10 should be along in a few minutes, which means SPX could inch a little higher, but this is probably enough of a bounce.  I’d revert to short here.

UPDATE:  1:32 PM

Another H&S setting up (targets the 886 at 2239.15), so we should get a bounce here.  Ideally, it’ll be limited to the falling purple channel top at 2267.CL to the rescue.  It just bounced up and out of the falling white channel and just backtested the SMA20.  I guess someone got a little nervous about stocks.  This is a strong move that could at least delay the plunge we’re expecting.

UPDATE:  2:41 PM

Courtesy of VIX, just tagged the SMA5 200, where I suspect we’ll reverse lower.  Back to short here at 2271.83.

Note that NKD has fully backtested here.