While it might be too early to panic, there is a whiff of unravelling in the air.  CL, which hasn’t closed below its SMA10 in almost a month, is pushing well below at the moment.  USDJPY is seemingly in freefall. And, SPX is putting in an honest to God reversal at its .618.

continued for members…

Look for SPX to tag 2068-2070 in the opening thrust, and potentially test 2060-2062 if that doesn’t hold.

UPDATE:  9:37 AM

USDJPY and CL are ramping big time.  I’d close the short here and take a wait and see attitude re the rest of the move. UPDATE:  9:46 AM

Looks like we’re getting the rest of the drop courtesy of USDJPY, which looks likely to test the purple channel bottom.  And, CL’s bounce is already losing momentum.  Back to short.If this is a real, live flag pattern it targets the SMA50 at around 2036.  But, the yellow TL/neckline at 2054.22 — if we reach it — could prove tough support.

UPDATE:  9:53 AM

SPX just tagged the .236 white channel line.  Should be a bounce here, but CL is still dropping even as USDJPY is rebounding.  If CL pushes back above the white channel bottom, then I’d cover.   Otherwise, looks like 2054 is a real possibility. The potential H&S Pattern is shown in yellow below.  The neckline is at about 2054.22.UPDATE:  10:15 AM

There are a few more points, but they’re ramping CL and USDJPY to try and save ES’ channel integrity.  Could get a bounce up to the SMA5 10 now at 2062.21.  Back to cash for the bounce. Note that ES’ falling purple channel crosses its neckline at 12:15ish.  Obviously, it could cut loose before then, but it looks bad.UPDATE:  10:30 AM

This should be the extent of it.  Back to short. UPDATE:  11:11 AM

Not going to play this game this morning.  We’ve had a nice run, and with 3-4 more points of downside, USDJPY is spiking, breaking out of its (nonsensical) channel.  Back to cash for the time being. UPDATE:  11:32 AM

SPX just came within 0.67 of the neckline and .618 extension.  If you haven’t covered already, it’s about that time.  Note that ES already tagged its neckline, even though SPX came up a tad short.  It could bounce, then return to actually tag the neckline, so mind your stops. UPDATE:  1:11 PM

This is a significant enough Fib level and the SMA5 200.  Depending on what the ultimate channel will look like, this could be a decent reversal.  I’d take profits and sit on the sidelines until we get more support from CL and USDJPY. 

If it pops through, I’d reassess.  The next higher major resistance is the white midline: 2070.45 at the EOD.  After that, it’s up at 2080.44 to close this morning’s gap. UPDATE:  2:19 PM

SPX, ES and NKD all just lost trend.  Didn’t catch the news, but this is a sell signal.  Back to short with tight stops until we figure out what’s going on.

UPDATE:  2:30 PM

Whatever it was, it has passed now.  CL, USDJPY and NKD are all heading higher again.  Though there’s a chance that a backtest of the broken purple line (2065.50ish) will produce additional downside.  Back to cash, though a sustained push through the SMA5 200 would be a good signal to go long.UPDATE:  2:39 PM

Backtesting the purple line, and USDJPY its purple channel top.  Will try a short position here and see if it can’t gain some momentum into the close.  Tight stops are recommended for obvious reasons. UPDATE:  3:48 PM

Getting a last minute VIX bashing here.  Back to cash.UPDATE:  3:54 PM

Given the way this is shaping up, I think we’ll get more downside tomorrow.  I’d short here at 2064-2066 and hold overnight if you’re able to watch or hedge your position.GLTA.