With the overconfident bulls emboldened by the 200-day moving average looming just above, the bears have run a trick play and have the goal line in sight.To be sure, there are half a dozen defenders in between here and a score – starting with 380-lb All-Pro VIX.  Its 200-DMA at 16.54 is now resistance, and it has a reputation for cheap shots.Thanks to exhaustive scouting, though, our yield curve model suggests there’s a weakness in the defense that offers bears a clear path to the end zone — if they don’t fumble the ball.

continued for members…If ES can push below its SMA100 and red channel line, our SMA10 target awaits at 2694.48. After that, ES will get a chance to test the white channel bottom at 2670. If/when that breaks down, the bears are in charge.SPX’s version…note that the SMA100 is right on top of the 2.24 at 2703.62.  If the 2.24 breaks down, I’d be more aggressive.Again, our yield curve model has proven quite useful — at least so far. Breakouts above the red dashed TLs (white arrows) has always produced at least a small decline and, sometimes, a big one. As discussed yesterday, the bigger the TL, the more substantial the drop. This one is a big one, dating back to Feb 9 of last year.

If, instead, 2s10s drops back through the yellow TL, we also see very consistent drops in equities — some quite large.

TNX still looks likely to reach 24.97 or, if things get rolling, 21.72. Even though the yen is gaining at the expense of the dollar, the euro’s weakness is preventing DXY from breaking down. CL and RB are both down again overnight. CL has dropped below its SMA10 and might give the purple channel bottom a test.  RB has dropped back below its neckline and purple channel midline, leaving some doubts about a run to 1.56.  Keep an eye on the yellow channel line at 1.4362 – an important line in the sand for the bulls.Last, note that AAPL is behaving itself so far – reversing off of yesterday’s 175.57 high.  If it falls through the channel midline, I might be worth shorting for the channel bottom.  But, the .382 is still our primary target.DJIA is still sitting above SMA200 support, seemingly intent on a backtest at 25000.COMP is still just below its SMA200 with a SMA10/SMA100 cross coming to the rescue.  A drop below 7250 would be a nice short signal.

UPDATE:  9:55 AM

Getting close…  Apparently VIX will have to push north of its SMA200 in order for SPX to test its 2.24. More later.

UPDATE:  10:55 AM

SPX just tagged its 2.24 extension.  If it doesn’t bounce here, then it’s on to 2688 and 2673.  Since I’m bearish in general right now, I’d give it some rope.  But, keep an eye on ES as it approaches its SMA10 at 2695. UPDATE:  11:31 AM

ES just sliced through its SMA10 and it appears SPX will get a crack at its.  VIX is nearing a potential interim turning point. COMP and DJI are very close to their initial support.  I imagine all hell will break loose if DJI drops through its SMA200. Checking in on GC, which looks like it’ll probably close its gap at 1303.70 in the next day or two before (potentially) shooting up to at least 1346.30.More later…

UPDATE:  12:03 PM

SPX’s SMA10 and VIX’s SMA20. A note of caution: VIX is in that range where it sometimes reverses hard — the midline of the falling white channel.  If TPTB are going to make a stand, it’s probably somewhere in this vicinity. Today’s high of 17.89 probably marks the end of the easy money.This is a very busy chart, but it’s easier to spot the potential significance of the white channel.  There have been times when SPX’s downturn was stopped cold by a backtest of VIX’s white channel midline.  UPDATE:  12:58 PM

DJI has reached 25000 and CL has reached its channel bottom.  I’d play a likely bounce here at SPX’s SMA10 but want to be short again on any drop through 2687. Likewise, traders might wish to play the bounce in CL and RB (which has reached its SMA50.)  At this point, RB is following CL’s lead.  A drop by CL through 51.60 would do a lot of damage to both and give RB the kick it needs to reach 1.36ish on Monday. Here’s a cleaner version of the VIX chart above — easier to make out the major channels.UPDATE:  3:55 PM

All done, or just getting started?

ES’ channel is obviously not done.  A path to the channel bottom would likely target a busy intersection at 2670ish.

SPX will close just above the 2.24, but below the SMA100 — clear as mud.