SPX was testing the daily lower bollinger band again on Friday, and that isn't far above the main support level for SPX at the 200 DMA at 1390. We could well see that tested today:
On the SPX 15min chart the decline seems to be resolving into a bullish broadening descending wedge. The upper trendline only has two hits but the lower trendline has three, and so is of good quality. Wedge resistance is now in the 1414 area:
On ES there was a very significant decline after the SPX close on Friday. That made it as low as 1382.5, but I'm seeing this overall as the test of the 1388 area that I was talking about on Friday morning. I have declining resistance on ES in the 1405 area and since I capped this chart ES has spiked back into the mid-1390s:
Vix has been riding above the daily upper bollinger band for some days now.
Looking back the closest equivalent I can see is during the equities decline in August 2011. That example is suggesting that downtrend should be respected as long as this lasts, but that a decent low may well be made when Vix closes back within the bands:
CL is still holding the 90 area. This may hold, but if it breaks then channel support is in the 89.3 area, and the double-top target is in the 88.5 area
I've been looking at the DX chart this morning.
I was talking last week about seeing a hit of the IHS neckline and possible channel support trendline in the 78.9 area. That didn't happen and DX has rallied into the 80 area from a near miss. That near miss looks bearish to my eye, as these are generally followed by a break of the missed trendline in my experience. I'm watching with interest to see whether DX can break back over 80:
If the declining resistance (and wedge) trendline on SPX in the 1414 area can be broken today I will be looking for a low. Downside risk is obviously very high however, as there is still no sign of a fiscal cliff agreement, and we may well see the SPX 200 DMA tested at 1390 today. Fiscal cliff permitting I will be very cautiously looking for a possible low around there, but if we see a conviction break below we could well then see a test of the November lows not long afterwards. If we are to see a low around here I would like to see a decent low with positive divergence on the 60min RSI, as there is obviously a very real risk of a waterfall decline on US equities as we move into 2013 without any budget agreement. Everyone have a good New Year's Eve and a great new year in 2013. :-)