It’s been a long, slow decline for VIX. It’s been locked in a falling channel ever since the Jan-Feb correction. As we noted last week, a breakout could be troublesome for equities.
SPX closed about 12 points above important support on Friday, but futures are currently off about 12 points. In other words, today is a critical test for bulls.
continued for members…
There are numerous upside targets for VIX if it manages to remain above the falling white channel line.
ES is testing its Jan highs a second time this morning. If it breaks down, the white channel bottom aligns with a H&S target at 2855.
This would equate with 2850ish in SPX — which would mean a tag of the white channel .236 line – not a particularly strong feature.
USDJPY is currently offering no help whatsoever – breaking down below the little TL from Sep 7.
And, RB and CL are both off about 1%.
As we discussed on Friday, it’s all about SPX 2872.87 and ES 2878.50. Volume is light today, so it might not take much algo action to prop things up. But, if these important support levels break, we could see some stops taken out very quickly.
As I mentioned Friday, I’ll be out all day today and tomorrow. But, I’ll try to fire off an update here and there if something unexpected occurs.
Stay frosty.