Futures were off sharply overnight, tagging our SMA10 target, and even a little more as the moving average actually dropped a little (a rarity lately.)

As is so common these days, the rest of the backtest came after the close and before the cash market opened this morning – the better to keep the bigger players out of the mix. Meanwhile…remember that trade spat with China and how it disrupted markets? You know when Larry Kudlow goes on CNBC talking up King Dollar, it’s front and center all over again. And, with Trump looking to blame China for everything coronavirus related, you ain’t seen nothin’ yet.

continued for members…

The bigger picture for ES shows support at the white channel midline and then the 2.24…

…with the SMA20 and red TL at 2785.Though, remember, SPX’s is lower – which sets up a mismatch between ES and SPX. VIX is up against important TL resistance…

…and the flag pattern which hinted at lower values is officially busted. And, DJI is coming up on its 2.24 at 23781 – very important support.USDJPY’s spike has come back to earth……and the EURUSD has continued to rally… …contributing to more weakness in the DXY.CL finally reached the white channel bottom, which creates a nice short opportunity with very tight stops  – much safer than the 17.12 target offered.

Likewise, RB is pressing up against its resistance. Make or break time for our short.

The ES and SPX 2.24s at 2728 and 2703 as well as the DJIA 2.24 at 23781 should continue to be the dividing line between another bounce and another test of the March lows.

UPDATE:  10:35 AM

Quick update on ES and SPX, which has come within 2 points of its SMA10. DJI is slipping below its SMA10 and is only 50 points away from its 2.24.

I’ve had quite a few questions about AMZN lately. The last time I can find any mention of it in the daily posts was on Nov 12, 2019 when I wondered why the stock hadn’t been able to break out.

This was the daily chart on that day which showed that after a number of bounces on the SMA200, AMZN had dropped below it and was now finding it hard to climb back on top. It tried again and failed on Nov 27, then on Dec 26 shot up about 100 points, leaving the SMA200 and falling red channel in its wake. On Jan 31, it gapped again, this time by 130 points to new highs.

When the market crashed in March, it shed 559 points – about 25% – and, of course, has since made up all of that and much more as AMZN has benefited from consumers’ withdrawal from shopping in physical retail stores.

Though the original white, red and purple channels all ran their course, note that AMZN did backtest both the red channel, backtest the large white channel midline, and backtest the broken purple channel in the course of almost reaching its purple 1.618 extension. If we dispense with the minor channels, we can see that the rising purple channel below does a pretty good job of containing/forecasting the moves.Zooming in, we can see a few natural targets, depending on how far the overall market falls. The first, assuming AMZN isn’t able to hold its SMA20, is the gap at 2180. Following that, we have the purple midline and SMA100 around 2000-2050 (depending on when), the SMA200 currently at 1886, the white midline again at 1753, the red .786 at 1556-1591, and the white channel .236 line at 1307. Of all the deeper drops, I’m partial to the white channel midline at 1753 and the 1556-1591 target – which would keep the rising purple channel alive.

FWIW, AMZN hasn’t dropped through the white midline since a brief incursion in 2016 and hasn’t touched the bottom of the channel since Nov 2008.

UPDATE: 11:49 AM

DJIA just tagged its 2.24.

ES is closing in on its channel midline.But, having broken below its SMA10, SPX is now about 40 points away from the nearest support at 2788-2792.I need to run out around 12:30-2:00.  Will check back in later.

UPDATE:  3:35 PM

ES/SPX got a little bounce courtesy of VIX. If we get the usual last 30-minute VIX meltdown, it should be an interesting battle between short covering and get-me-outism.It’s hard to imagine ES wouldn’t backtest even the .500 after failing at the .618 – with even the .382 at 2641.38 looking like a gimme. Therefore, I’m more comfortable than usual holding short over the weekend. But, by now everyone should understand the risks…

CL and RB are holding up pretty well, so I’m slightly nervous going into the weekend short.  Assuming stocks are off come Monday, CL and RB should be as well. Ditto for USDJPY, which is catching another intra-day bounce but should face weakness either at the close or before Monday morning’s open. DJI is struggling to hold its SMA10. And, RUT is back below the yellow channel .786 line.