Fourteen out of the last 22 sessions, the eminis have reversed at or passed through the 2.24 extension at 2728.79.  There’s no question that it’s important.  The question is whether stocks are ready to push on through or need to gather more momentum first.

Our analog [see: Analog Watch, Feb 6] has been very accurate on price targets over the past month.  But, the timing differences have been somewhat nerve wracking.

We’ve finally reached Day 16, which was supposed to be a peak for VIX and a bottom for ES/SPX.  But, with ES having already tagged the bottom of a well-formed channel (less so for SPX), it’s entirely possible that the inflection point simply came early.

Watch VIX, as always.  But, we should also pay close attention to the currencies today.  Day 16 was supposed to see some pretty dramatic moves which, if they play out, could mean some nasty surprises ahead for equities.

continued for members…

VIX came reasonably close to the bottom of the rising white channel yesterday.  Where things go off track, though, is that Day 22 was supposed to be a big, dramatic drop through the channel bottom in order to power SPX/ES up to or through their .886 Fibs.

I had originally pegged Day 16 as the day that DXY tagged the purple channel bottom — currently way down at 87.5, with the .500 Fib just below at 87.259 available as an overshoot target.I also had Day 16 as the breakdown of TNX……the channel tag for EURUSD……and, the worst call of the month, an offsetting move in USDJPY.  I certainly didn’t anticipate the BoJ’s Kuroda making hawkish comments.  The fact that it broke down through the white midline and .618 makes DXY’s breakdown all the more likely……as does the spread action.Can DXY drop that much in a day?  Not likely.  It would be the single biggest drop since Nov 9, 2016 (the day after the US election) when DXY opened at 98.099, dropped to 95.885 intraday, and closed back at 98.616.  In other words, it would be a very big deal.  But, we’ll find out soon enough.A drop like that would easily enable ES to reach its channel bottom around 2660 again.  The SPX equivalent would be about 2640; though, SPX’s gray channel bottom at 2612 would make for a more convincing (but, scary, and therefore less likely) bottom.

UPDATE:  11:45 AM

Update on ES and SPX, coming up on trendline support.   A drop through would really get things going. Likewise, a strong push up through this red TL would really get things going for EURUSD and DXY.