The big story yesterday was oil and gas, which have now fallen about 29% since our short call on Oct 23 [see: VIX Takes the Plunge.]  Importantly, the decline has occurred without decimating stocks.  And, the impact on November’s CPI – due out on Dec 12 – will be significant.

Will it matter to the FOMC, which is widely expected to hike rates on Dec 19?  PCE is due out on Dec 22.  I can only imagine the onslaught of tweets from the White House if CPI comes in at 2.1% and the Fed hiked anyway…

In any case, SPX is at a very interesting place right now.  A continuation of the drop would complete a H&S Pattern that targets 2250.  A reversal and new highs from here would complete an IH&S that targets 3035.

So far, oil and gas have been a drag on stocks.  USDJPY and VIX have been conspicuously non-committal.  What say you, BoJ?  Are you ready to sacrifice a few thousand points on the NKD for the sake of market integrity?

continued for members…I have an early meeting this morning, so I’ll pop these charts up now and come back in a couple of hours to add more commentary.  The H&S vs IH&S question is the key.  This is the bullish view from ES’ perspective.

The bearish view is still there, but will require ES and SPX to drop through their 2.24s. SPX would be better supported with a tag of its 2.24 first.  Perhaps on an intraday additional drop in RB?The yield curve model remains resolutely bearish.USDJPY – uncommitted but with obvious breakout potential.Though, DXY has that overhead resistance at 97.873.

CL and RB have further downside potential, but could bounce anywhere along here.  Note that CL is making noise around its .618, so probably a good place to cover and reshort if it drops back through.RB looks less likely to bounce just yet, with 1.4796 better support.  But, if CL bounces, it might tag along out of sympathy. Last, VIX remains a wild card.  It has multiple TLs it could bust if so desired.And, it still has plenty of available targets if it can pop through resistance. UPDATE:  11:50 AM

SPX just came within a point of its 2.24.  It should bounce here if it’s going to.It would sure help if VIX could break its triple top.Back after 2pm.

UPDATE:  3:45PM

Pretty good prop job all afternoon, but it seems to be fading.  Note that AAPL is still breaking down and COMP ain’t looking any better.  I’m still fairly bearish – the VIX golden cross and yield curve models.  But, nothing has happened yet that can’t be “fixed.”  2703 remains the key.

AAPL has used stock repurchase announcements to prevent past breakdowns. Without one, can it hold up?  Doubtful.  CL and RB’s bounces have been underwhelming – just enough to keep SPX within sight of 2703. USDJPY still on the sidelines.Note that the 10Y is potentially breaking down again.And, the yield curve still says stocks are headed lower.