The ramp job of the past six months started after SPX had broken down below the 200-DMA in June.  It subsequently saw a breakout of the falling white channel, four additional near tests of the 200-DMA, a backtest of the falling white channel, a breakout of the rising purple channel, and, last week, a breakout of the rising white channel.We’ve documented the many gimmicks, tweets and fake news blurbs used to accomplish these breakouts.  As of today, there’s nothing left to break out of — just 21 more sessions before the end of the year where the market must decide whether the breakout was the real deal or just an enthusiastic overshoot.

Clearly, holding the breakout would be a major coup for the bulls — which is why ES has tested and held that level 10 times in the past 3 sessions. If it doesn’t hold, it changes things quite a bit.continued for members…

If it breaks down, we could see another test of the red channel bottom/SMA10.

The key is VIX, which has reached overhead resistance and risen back above support. Its SMA200 is up at 15.09, which would represent a real live breakout — albeit at fairly mild levels. There are many juicy targets well below current levels. But, the most interesting would be the red channel bottom around SPX 3100-3108, about where the SMA20 is. If the red channel breaks down, then we’re looking at a backtest of ES 2.618 at 3076.93 and, if that breaks down, SPX 3047.34. CL is experiencing a nice bump, but it’s just a backtest and the Aramco deal is almost in the bag.The weekly QM chart shows how tenuous the rallies of the past year haven’t accomplished anything at all.

Although bond yields are higher this morning…

…ZN is backtesting a TL and isn’t all that far away, now, from SMA200 support. And, although the 2s10s has shot much higher, it is just backtesting the yellow TL below which it fell in Nov.  A reversal here would be a headwind for stocks, as would be a substantial drop in CL/RB and a breakout in VIX.If you’re wondering what the bulls have going for them…it’s USDJPY, which just broke back into the channel which broke down in mid-Nov.As long as it remains within the rising purple channel, the downside targets are obviously not viable.More later…

UPDATE:  3:44 PM

Nice sell-off so far, with ES/SPX coming within 3 points of their SMA20s.  VIX reversed at its SMA200, so might be done.  USDJPY found its way down to its SMA200.  Still plenty of time for ES/SPX to shed another 12 points by the close.  Otherwise, will look for the rest in the morning…