Where it stops is anyone’s guess.  But, as with Brexit, the futures aren’t taking any chances. We’ve seen a broad advance in, well, practically everything over the weekend.  If a fall is coming, it’s going to be from higher.

With SPX having reached our next downside target last week, we’ll take a quick look at our post-election targets.

continued for members…

SPX, having reached our next downside target Friday, failed to reach the SMA200.So did ES — which is now bumping into its SMA10 and a TL connecting recent lows.And, so did CL.VIX, as discussed Friday, did reach overhead resistance at the white channel top — if not good Fib resistance.  It’s perhaps VIX that has the greatest potential to disrupt any further downside targets.

SPX looks likely to tag its SMA10 at 2120.30 before running into serious resistance.USDJPY has done what it does best – ignore Fibs and channel lines all together in pursuit of higher.UPDATE: 9:48 AM

SPX is having trouble making the last point or two, as ES has already been rejected at its SMA10.  For anyone riding this morning’s bump, I’d revert to short here at 2117.86.  Might be a little early, so I’d leave stops on the loose side.  If ES is able to push through 2114, I’d probably dump this position.Getting back to the post-election picture… let’s assume, for the moment, that the election is still a toss-up and the voting machines aren’t rigged.  This weekend’s ramp job was obviously inspired by the FBI news, which might or might not have any bearing on the popular election results, let alone the electoral college outcome.

That being the case, this rally should be self-limiting unless TPTB decide they’d like a little more buffer for protection.

UPSIDE:

If SPX can push up past the SMA10, then the next resistance is the white midline at 2122.60 or so, followed by the SMA20 at 2130.05 and the 2134.72 former high.  There’s been a target there for the past two months.If 2134 is broken for the eleventy billionth time, then the top of the falling white channel intersects with the rising purple channel midline at about 2151ish. Note that 2151.78 is also the .618 retracement of the drop from 2193.81 on Aug 15 and Friday’s 2083 lows.  So, it’s a very legit upside target.

It’s important to note that SPX could reach 2151 on a backtest of the broken gray channel that dates back to Feb 2016.  In other words, as upside targets go, it could represent the last hurrah.

If SPX breaks out of the falling white channel and past that .618 then the upside targets are the usual Fib levels such as the .786 at 2170.27 and the .886 at 2181.27, followed by the former high at 2193.81 and, then, extensions past 2200.

DOWNSIDE:

If SPX is rejected at the SMA10 or white midline, then our downside targets start with the SMA200 — which is now at 2084.39.  Beyond that, we’ve had our eye on 2068.92 for a long time.  It’s the white .618 and the bottom of the purple channel and .236 line of the yellow channel.If 2068 doesn’t hold, than we should see the falling white channel expand, with a bottom or midline tag at 2034.97 — white white .786.  Note that, at this point, we’d have retraced barely more than .382 of the post-Brexit drop.

If 2034.97 doesn’t hold, then things get really interesting.  The white and purple harmonic grids don’t line up, so I’d be inclined to switch to the purple one for guidance.  And, the purple grid has a .618 retracement at 1956.68 that is only slightly below the yellow channel bottom, currently at 1963ish.

I put the yellow dot at 1956.68 out on Dec 14 to line up with a FOMC rate hike.  But, it could also line up with Nov 9 just as easily and might represent a really ugly post-election debacle.  If the yellow channel breaks down, then we’re looking at other Fib levels such as the .786 at 1892.

UPDATE:  10:31 AM

ES just broke 2114, and SPX is pushing up towards the SMA10 and white channel midline — all on a VIX dump below its earlier lows.  I’d cover the short here at 2119.02 at a small loss, and only reshort if ES reverses back below its SMA10 at 2111.30 and VIX reverses period.UPDATE:  10:43 AM

If they intend to ramp it on up past the white midline, SPX should hold these levels until the short-term moving averages catch up, then edge higher for the rest of the session.  37 points is a lot, and they might decide it’s too much to give up in order to satisfy the whims of chartists.

If it can’t push through, of course, then this would be a great place to short.My gut tells me they’ll defend the SMA10 for the rest of the day and make traders choose one or the other uncomfortable side overnight.  But, nothing ventured, nothing gained.  I’ll try a short position at 2121.29… with tight stops.  If you decide to follow along, know that the odds are not great on this call.UPDATE:  11:45 AM

Just keeps dribbling higher — all on VIX dribbling lower.  I’d cover the short here and not reshort unless SPX drops back through the SMA5 20.  If it does drop through, I’d be happy to short and hold short as long as it remains below the SMA5 20.  At this point, the next overhead resistance is at SMA20 at 2130.05. 

For the record, I consider it extremely presumptuous that the election risk is over and done with.  To repeat what I mentioned earlier, we saw the exact same thing happen with Brexit.  Knowing the downside risk, TPTB ran equities as high as they possibly could before the vote.  The subsequent downturn, thus, started from a much higher level.

As of right now, SPX is 44 points off last week’s lows.  That’s a lot of cushion.  While it might be extremely frustrating that TPTB have this kind of power over the “market”, it’s a good reminder that any gains made from shorting are typically at the pleasure of those in control of the algos.  And, today, the algos are firmly in control.

UPDATE:  12:14 PM

I’ve got a few conference coming up.  I’ll sign off for now with the advice to let the SMA5 20 guide your trades for the rest of the day.  Presumably we’ll get a backtest of the SMA10 at 2120, and presumably it will start before the SMA20 is pierced at 2130.05.

UPDATE: 12:43 PM