SPX needed about 22 points downside to reach the support of its SMA50, a rising channel bottom, and a falling channel bottom.  ES, which finally reached our 2655 target from last week [see FOMC: Endgame] is currently off 30 points. At this rate, SPX will breach its support on the open, especially if USDJPY doesn’t bounce here at its new lows.Is it time for bulls to get nervous?

continued for members…

In short, yes.  If ES can’t hold its rising white channel… …which is nestled in the top 25% of a much larger rising gray channel, then it’s destined to seek the gray midline — which just so happens to be right where the SMA200 is.

SPX is in the exact same situation. The yield curve model is still suggesting more downside.  Note that the 2s10s is dipping below its initial yellow TL again.And, the 2Y is again threatening to break down. TNX and ZN still point to lower rates — the fear trade. CL and RB are still in bounce mode.  If SPX and ES are meant to break down, they should join in with breakdowns of their own. It will be easy to see: RB’s purple TL and white channel bottom… …and, CL’s red channel bottom.  A breakdown should be shorted with tight stops.UPDATE:  9:33 AM

At the open, SPX is sitting just below its SMA50 and channel bottom.We’ll want to keep a close eye on ES as it approaches the white channel bottom at 2843ish.  Its bounces on the channel bottom have been very precise.UPDATE:  9:53 AM

ES has reached its channel bottom and .500 Fib, while VIX is near its .500, CL has broken down slightly, and USDJPY is pushing new lows, tagging its own .500.  We should look for a bounce here all around.  If we don’t get one, look for things to disintegrate rapidly. UPDATE:  10:50 AM

AAPL watchers take note…The bottom of this channel has always been a little fuzzy, and I still like the SMA200 target, but we’re near a potential bounce point.  Those who shorted at the channel backtest on May 1, take profits or watch your stops.

UPDATE:  1:05 PM

Trump says Xi Jinping wrote him a beautiful letter and that a deal is still possible.  Good grief…   What he really means is that the market’s dump finally unnerved him so much that it’s time to put the brakes on.

CL and RB have more than recovered……VIX is backtesting the white midline…

…and, stocks are back inside the broken channels.  Quite a bounce. Obviously, ES’ arrival at the falling midline represents potential resistance — countering the bullishness of rejoining the larger rising white channel.

With the results of the negotiations with the Chinese so binary in their outcome and affect on stocks, everything from here on out is a crapshoot.  The algo factors are all back in bullish territory, but I wouldn’t trust that any further than I could throw a 239-lb POTUS.

UPDATE:  3:40 PM

As we approach the close, I just want to reiterate the fact that any bet one places on where the market is going to be tomorrow is a total coin flip.  Things with China could go either way.  And, despite which way they go, who knows what Trump might say?  My gut tells me we have more downside, but I would be very cautious in placing any directional bets given the gap risk that’s entailed.