With futures off 12 points a little while ago……VIX suddenly plunged 33%, tagging our downside target for all of 3 seconds.  Futures rallied 10 quick points, but then dumped even lower.Bottom line, the bears called BS on the whole exercise.  While not completely out of the woods, they’re looking to have a pretty good day — if VIX doesn’t pull any more shenanigans.

Regular members recognize this maneuver which I’ve dubbed a “shot across the bow” – a naval warfare term referencing a warning shot intended to halt one’s enemy in their tracks. Sometimes it works remarkably well.

This one is interesting in that it backtests (and, potentially dispenses with) a downside target that has been hanging out there for weeks: the long-term yellow channel bottom.  We’ll find out soon enough whether this shot across the bow dispenses with VIX’s downside potential or (as it was probably intended) clears a path, as if to say “look what I can do.”

Our downside targets remain unchanged.  May the fourth be with you!

continued for members…

Decision time for VIX… COMP remains 3.38% above its SMA200, the equivalent of 2540.58 on SPX.  I’ll stick with this scenario until something more logical pops up.UPDATE:  10:44 AM

That should just about do it.  Could go a little higher to the SMA10 (2651.95), but this should be a good entry for those not already holding short. UPDATE:  2:10 PM

Thanks laregly to VIX and CL, SPX melted up through its SMA10 and SMA20, only to backtest the broken white channel as ES fleshed out its falling red channel.

If things don’t reverse here, then a drop on Monday/Tuesday becomes more problematic.  I’m still looking for a reversal.  But, as always, keep your stops where you’re comfortable.

I’m jumping on a conference call, will be back in 45 minutes or so.