Market Analysis for Week of 2/9/2014

Here's a brief big picture outlook, also known as my best guess based on current information.

Dollar daily.  Me likes higher.  I'm thinking $99 then $90 then $120.  Note how the dollar held the 20-day.

  

The Euro is doomed.

   

ES daily.  The clue of breaking out for a run higher now will be putting in a higher low by holding either the 2045 Friday low or the 2031 20-day/50-day convergence.  The Greece situation could determine whether we need one more trip down to the lows of the range or not.  Regardless, I'm still thinking one more leg higher in equities before this bull dies.  

NQ daily.  Same thing.  Need to hold a higher low to go.  Can't rule out one more trip down first, but I'm thinking a breakout that holds will double this range for another 300 points.  

Gold weekly.   I think gold will make its way down to the $1205 area and hold that uptrend line off the Nov lows and make a solid rally, possibly back to the recent $1300 highs.  But I believe gold will eventually resolve this triangle to the downside and we will see triple digits either later this year or 2016.  Note how gold couldn't even make it to the downtrend line from last year's highs. 

Bonds weekly.  If we assume equities hold and breakout now, I'd expect bonds to continue being weak, possibly as far as that uptrend line off last year's lows.  A lot depends on the Greece can being kicked further down the road.  Eventually, though, the equity bull dies and bonds return to their highs.  I'm thinking either later this year or 2016.  

Oil weekly.  You have to be open to a further bounce here.  Too early to tell.  A simple 38% Fib retracement would take us all the way back to $68.  The 50-day looms at $55 though.  Wherever this does stop, I'm thinking we roll back over and test the 2008 lows at $32.  I would need a risk point to play in order to get involved.  

Obviously, as information changes, I will adjust, but that's what I'm thinking at the moment. 

Bonus Track: 

For your amusement, here's one of the funnier bits I've seen lately.  Give it a minute.  

Market Analysis for Week of 2/1/15

A brief comment about the Fed, then I'm done with them for awhile.  It occurred to me that they fit the definition of a crazy person.  Meaning, the map of reality that exists in their head doesn't match the real world outside of it.  The problem with ALL of the data points the Fed apologists are using to make their case for an improving economy is that they are all distorted by (and, imo, dependent on) ZIRP, QE, and the hope that the Fed knows what it's doing.  To back me up, I would point to the markets.  There is a massive amount of money that is all trading in a way that is opposite of the reality the Fed is trying to propose.  And if you pick apart the Fed's map of reality - like using the unemployment number as a reflection of "full employment" - you'd have to be willfully blinding yourself to not see the gaping difference between the map of reality the Fed is proposing and the map of reality the markets are proposing, particularly the bond and commodity markets.

So my last comments about the Fed for awhile is that it sounds like they are intending to raise interest rates later this year.  Are they bluffing, or are they crazy?  I've been pretty poundy on the tabley about the fact that it's never going to happen.  But that's because I'm listening to the message of the markets and the structural reasons at the root of the problem that they can't fix.  But the Fed seems to be operating from a different map.  If they believe their map is what is actually happening, maybe they are crazy enough for a token 25 or 50 bps rise.  But they're going to find out that they aren't in control anymore and it won't be long before they reverse back to ZIRP and likely more QE in 2016.  They might talk like they don't care what the markets do, but they'll start caring when the trillions in inflated stock prices starts to disappear and their wealth effect becomes a poor effect.  They created the box.  Now they have to live within it. 

My market comments will be brief because it's a whole bunch of I don't know.  I do believe there are inflection points approaching for several markets though. 

ES daily.  My overall bullishness about equities was based solely on a continuation of the positive reaction from the ECB QE last week because the fuel for the broad market has been QE.  However, we just put in a lower high and reversed back into selloff mode, so I'm thinking the fear is coming from the Fed's insistence that they can raise rates, which could easily turn into a downward spiral for equities (not to mention dozens of other reasons).   The only reason we're at the height we are is because it's been impossible to stay short due to the parade of Fed governors who emerge at the slightest downtick and cause a short squeeze.  So I have little confidence in either direction at the moment.  There are a few red flags though.

First, there's a head and shoulders top forming in the ES.  If this breaks down it should lead at least to the uptrend line from the Oct low currently crossing through 1900 area.  But equities have a way of suddenly reversing due to Fed comments, not to mention the Commercials like to cover shorts into high volume areas, which breakdowns tend to be.  So clearly the breakdown would happen under 1960.  I'd rather wait at support for equities to bottom with high volume buying coming in and play the bounce.  THEN I might be interested in the short side if it appears to fizzle out.  

Second, this selling has been different than other corrections, which were more like two days screaming down, followed by a day straight up, then screaming straight back down...  This selling seems to be spending a little more time, as if it's more of the big money sitting on the offer and unloading.  Do I know that for sure?  No I do not.  But it does have a different flavor to it.

Third, the Large Spec long position has been liquidating, which isn't slam dunk evidence by itself, but another red flag to be aware of.   One of the bigger red flags that could happen would be if a Fed governor comes out and tries to stick save the market by promising patience and the possibility of more QE, but the bounce only lasts a couple days and then rolls back over.  1960 is important.  And the 1890/1900 trendline is vital.  

NQ daily has a clear downtrend channel that will run into the weekly uptrend around 4000.  That is the battlefield that determines the next couple month, imo.  If we lose the uptrendline this will get very nasty very fast.  But I'm thinking we bottom there and break the channel to the upside.  It should be noted though I am currently flat and won't get hurt if I'm wrong.   

Gold had a perfect backtest of the 20-day EMA and a solid reversal.  It should at least climb back to 1300 and potentially to the downtrend line thru last year's highs that currently runs through 1320.  I would be very attentive if you're long at both of those spots.  So far it's doing everything it needs to do to be bullish.  However, the net long position of the Specs is over a two-year high and it's at a level where the market peaked twice last years.  (See next chart after gold.) 

You have to remember that the motivations behind what drives the "paper" futures market is not the same as owning the physical metal, which is essentially an insurance policy against inflation and a currency crisis.   The futures market doesn't go long because all fiat currencies eventually fail.  And they have buying capacities which are more determined by market sentiment, not to mention they actually have to deal with unrealized PnL.  Meaning, they have to cut positions eventually, which shapes the psychology of their strategy on the profit taking side too.  You also have to keep in mind that the crazy run in 2011 was based in the unknowing of the inflationary consequences of QE, plus the geopolitical events at the time, including the Middle East flare up, the tsunami in Japan, and the downgrade of US debt by S&P, all of which acted as catalysts for a blowoff top of the decade long bull run.  I personally believe the physical metals will be very valuable one day, but I don't know that for certain, and I have no idea how long that will take, or the path it will take because I also believe there's more need for hedging physical risk than there is for speculating.  

If you look at the COT positions in silver at the time, most of the move in the $40s to its peak at $49 was the rare Commercial short squeeze.  They lost control of the market.  Ever since, though, they've capped every peak as the Specs run out of bullets.  There is a great danger of that happening again soon.  If gold can clear the downtrend of last year's highs at $1320, it opens the door to the $1525 breakdown, but based on positioning it's at least time to be cautious.  I've played the long side lightly lately and fairly short-term.  But I will be looking for an opportunity to get short in the battleground of $1300-$1320.  That area is another inflection point just like the $1220s.  Failure there and it could be the top.  A breakthrough there should lead to a big move and renewed interest from outside money.  Either direction, you just have to know your risk of where you're wrong.  I personally like to see a high get put in and then use it for my risk point. A lot of times it will consolidate near the intraday high it just put in and have one last blip that falls short.  That's the ideal entry for me, using just beyond the high as my stop.  Sometimes it can be as little as a couple of points.  Trading is much less about knowing what's going to happen and much more about finding the inflection points.  A true inflection point will lead to a very profitable trade even if you're wrong by simply reversing directions.  

Dollar daily.  The Spec long position here is at a record.  Likewise for the short position in the Euro.  So while that is always dangerous, the difference between gold and this is simply the sentiment.  I still think the dollar goes much higher, but I hate being in trades that get this lopsided in positioning.  With NFP this Friday, sometimes they use a news event to take profits, which leads to a spike down that others buy up.  It's just a matter of how much tolerance you have for pullbacks if we have one.  I personally have very little tolerance for pullbacks, which is what I'm trying to improve on the most as a trader.  I have no answers here.  Bigger picture it's going higher until the Fed starts backing off, which doesn't seem imminent, although a tumbling equities market could change that.  Like everything else if you find a low you can use as a risk point, you take it and move to breakeven when you can.  

Euro monthly.  Like the dollar I don't know if we pullback further or not.  But I do believe the next spot is the 1.07 low and eventually parity, possibly beyond.  Greek turmoil will only help in this regard.

Oil had that strong move to close Jan above $47, except it happened on Friday and not Wed.  I missed it.  I have no interest in this.  No idea what happens from here.  There are still a ton of Spec longs in this market, so it's important to see if there's any follow-through to the upside this week.  If we roll back over, I agree with the people who've been saying we won't see a bottom until there is complete long side capitulation as stubborn funds blow up.  You have to be aware that they did get their Jan. close, though.
    

Bonds weekly.  I'm thinking they should test those highs, especially if equities breakdown to their possible support points.  I'm currently thinking equities will bottom and at least make a sizable run back up, which may coincide with bonds piercing to a new high and reversing.  It's just an idea.  I'm not interested in playing bonds short, but I will be watching closely if we pierce to new highs and reverse, so I will be trailing a close stop.    

My overall philosophy is that every year there are times when things seem fairly obvious and it's your job as a trader to reasonably push it to maximize the opportunity, and then there are times when things are shifting and there's way more uncertainty so you have to change gears and slow it down, unless of course you're selling volatility.  Sometimes the most profitable trade is not taking one.   

Market Analysis for Week of 1/26/2015

So Draghi finally does QE.  At least he didn't disappoint for once.  It's not going to work, but that's irrelevant at this point.  I don't understand all the confusion about inflation and deflation.  A deflation of prices due to increases in efficiency is unambiguously good.  A deflation of prices due to structural employment decline or the deflating of a falsely inflated asset bubble (which is what we have) is unambiguously bad.  Deflation is always bad for producers like miners and farmers, it's always bad for people in debt, and it's always good for consumers who buy stuff.  There is no casual link between inflation and economic growth.  They only happen simultaneously in a system that doesn't restrain debt issuance to the projected growth.  Then you get too much money in circulation at once.  When you combine that with optimism about the future it increases the velocity of money as people spend, but that doesn't mean inflation is desirable, nor does it mean that inflation leads to growth, especially when you're dealing with structural employment and demographic issues.  Why does a boob like me know this and not the big brains running the joint?  I guess it really boils down to the people who understand sound money and free markets (and how central banks and governments distort them), understand what is happening, and the people who don't, don't, especially the people doing the distorting.  Strange world we live in.

Dollar monthly.  Couldn't be happier with this.  I've moved in and out of it unnecessarily a few times to avoid the binary events, but still tracking $99.  A strong dollar can not work in the debt saturated world the central banks have created, so the Fed will be forced to stop this.  I agree with the folks who think the Fed will raise rates in August.  Except I think the year will be 2027.

EURUSD monthly.  The next spot for possible support is 1.0750.  It seems like this wants parity and eventually the all-time lows.  I'm doubtful we don't get a sizable bounce at some point that I'd like to avoid.  I'm hoping to see it through to the 1.0750 mark and see where we stand.

Gold daily.  Gold is kinda remarkable.  While I got the inflection point in the $1220s right, I was mistaken in the urgency of the Commercials to lock in prices.  They obviously have more confidence in the Specs to push prices up than I thought they would.  Technically, both gold and silver have head-and-shoulder bottoms.  Gold tends to be backtesty, so actually the most ideal price action for the bulls would be weakness down to the $1225/$1235 area and a V-shaped bottom.  But that doesn't necessarily have to happen.  It could make it to the next resistance point at the downtrend line from last years highs that runs through $1330.  I suspect a pullback from there if it happens first, which may in fact turn into a backtest.

USDJPY daily.  This tends to be a continuation pattern.  Equity bulls will want to see this break to the upside.

ES daily.  This is a little sloppy, but it broke the downtrend line.  If it holds the 20/50-day for support, it should continue higher.  Barring a breakdown in the USD/JPY, I'd expect new highs in the coming weeks. The top of that channel hasn't been broken in three years, so you have to be careful there.

I've been playing the NQ.  It's still in the daily downtrend, so it was an easy spot to take profits at the top of the channel.  I'm looking to reload this week, even if it's at higher prices.  I just want to get past the Greek election thing.  Apple earnings are Tuesday.  I'm thinking strong earnings will break this downtrend and we're off to the races.  We'll see.

NQ 4hr chart.  I used this uptrend line a couple times for entries.  If it comes down there again, I'll give it another go.  If this uptrend line breaks for some reason, I'll step back and see if it wants to go lower still.  I bet Apple resolves this issue.

Nasdaq composite monthly.  If we breakout this week, I'm still thinking we're headed for dotcom bubble highs, fueled by central banks of course.  You have to separate the corporations, who are doing fine as they expand due to globalization, and governments who have unfixable balance sheet issues as the jobs in their countries are stripped away, leaving them with exploding debt and dwindling workers to pay it.  

 Bonds resolved the giant triangle to the upside.  Equities would sure like to see bonds pullback a bit.  While short-term pullbacks could happen, I think they are buying opportunties.  Looks like we're headed to the highs.  I can't really reconcile being bullish on equities and bonds, but that's bubblenomics for you.  I think stocks are staying bid due to central banks and bonds are staying bid due to reality.

Oil daily.  The bounce at the monthly trendline was not even worthy of calling it a bounce.  It's been holding the 10-day EMA, which is what the strongest of trends do.  The monthly uptrendline around $47 isn't completely dead until Jan closes, though.  Here's a possibility to consider.  What if we get a final washout on Fed day this Wed that leads to a sharp reversal to get that close on the $47 monthly uptrendline?  I'm not predicating that or anything, but if they want to respect the technicals, it could be a fast lucrative trade.

Oil monthly.  If Jan closes below $47, it's likely headed to the 2008 lows, which is another thing equities would like to see reverse.  While the central banks forcing stocks upward should continue there certainly are more cracks appearing in the illusion of their recovery.

I sure would like someone who thinks a real recovery is happening to explain why oil, copper, steel, iron ore, lumber, and all the rest of the commodities that actually create stuff in the real world are moving dramatically from the upper left to the lower right on the charts.  And why long-term bonds are staying bid.  And why the labor participation rate is at 38-year lows.  And why we keep going into greater and greater debt with nothing to show for it.

These three charts are pretty much the only thing you need to know to understand what's happening is not fixable by central banks.  Employment since 2000 and the demographic spending pattern of the baby boomers.

Ever since 2000 when globalization stripped the manufacturing base from the developed world and transferred the jobs to the emerging economies, the central banks and governments have been scrambling to fill the hole by creating false demand through a stock market bubble, a housing bubble, repressing interest rates, flooding the world with money, and deficit spending.   What should have happened in the late 90s as corporations sought higher profits through cheap labor is a lowering of developed world wages to keep the jobs onshore.  But governments impose a minimum wage on the free market and unions priced themselves out of work.  So the jobs went overseas and there's been nothing to replace them.  Globalization is deflationary.  When you compound the problem with the demographic spending pattern of the baby boomers on the decline and a world already awash with debt, there is no source of real sustainable demand, and certainly none capable of paying back the debt.  The central banks are trying to jumpstart a car with no engine in it.

Market Analysis for Week of 1/4/15

I hope everyone enjoyed their holiday.  Let's start with the dollar monthly.  While I still think we're headed for the 99 handle, there is an upcoming point of resistance at $92.60 that could lead to a profit taking pullback.  If you look at how the dollar trended up in the late 90's, it's rare to see 7 months straight up.  This also corresponds to an upcoming support level in the Euro.

Here's the dollar daily.  I'm not personally interested in stepping in front of this train to short it unless it creates the perfect scenario where it establishes a high and then retests it and gets rejected nearly to the penny.  Sometimes that happens intraday and if you happen to be sitting there watching it, you can literally have like two ticks of risk for a shot at the pullback.  That's the only way I'd do it.  The uptrendline, which was the bottom of the Fed day pullback, is a buy until it gets taken out.

Here's the Euro futures weekly.  It looks like it has its eyes on the 1.1880 horizontal support. Also take a look at the EUR/USD monthly.  The risk/reward for staying short diminishes as we approach those levels.  The next Draghi day isn't until the 22nd.   Ideally, it would be nice to see a dollar and Euro push into their levels for NFP, pullback for a few weeks, and then return to trend resumption on Draghi Day.  But he's a very disappointing man, so we'll see what he comes up with.

USD/JPY monthly.  Not sure if it can make it to the 124 handle if the dollar index respects the resistance line at $92.60, but this too could align altogether.  Just something to be aware of.  It would be nice to see a cup and handle form here.  Japan has no shot of avoiding inevitable default, so I can't see how their QE ever ends until the Yen is worthless.

The ES popped right back to the upper channel line from yet another VIX crush into Dec expiration.   I decided to trail a stop under the 20 period EMA on the 4-hour chart and got knocked out as a victim of The Law of Trailing Stops: when you take profits, you should have trailed a stop, and when you trail a stop, you should have taken profits.

I'd like to see how it acts this week before getting involved again for more than a day trade.  Every time the ES has taken out a swing low for the past couple years it has rather quickly made a new high.  Until we see a swing low get taken out and then fail to make a new high, I'm not interested in the short side.  I'd rather just wait for support.  The first spot to watch is the 2014/20 area of old highs and uptrendline from Oct lows.  Below that is the weekly trendline at 1990.  

NQ monthly.  There's room to pullback quite a ways and still be extremely bullish.  I don't see any reason for dire concern of a final top yet.  Is the oil meltdown problematic?  Yes it is.  But that could take months for real world effects to kick in.  There's all kinds of other reasons that could happen first, but until one of them does, it ain't ovah.  Yet.

 Nasdaq Composite monthly.  Dot-Com bubble highs.  Why not?

NQ daily.  It held the 50-day on Friday but not convincingly.  I'm waiting to see if we test the old highs again around 4100.  

Gold is doing its triangle thang.  I'm thinking it breaks down, but I am noting the extended dollar and the possible need for a pullback.  I will short the downtrend line but that spot is an inflection point.  If it closes to the upside, I will likely look to go long for a short-term trade.  I'm currently expecting that downtrend line to hold, but the market tells me what to do, not the other way around.  Note the two previous lower highs at $1255 and $1240.  Gold usually respects its trendlines, but it could maintain that structure by putting in another lower high in the $1220s and remain bearish, but it should close beneath the trendline if that happens.  I'm also looking at the 1200 area where the 50-day EMA is for a possible rejection short.

Same thing for silver.  Any move up to the downtrend line is a gift until proven otherwise.  This looks more like a bottom than gold, but it ain't acting like one.  If the metals break down it will get ugly fast.  $13.10 silver is my next target.  Like gold, if it happens to breakout of that downtrend line for whatever reason, I will look to go long.  I just don't think I'll have to do that.

Oil monthly.  I would be surprised if oil doesn't bounce at the monthly uptrendline around $47.70, possibly as high as $68-$70, but I would think the Commercials will be eager to lock in prices, and the longs currently have the fear of God in them, so it seems more likely we'll see a return trip back down in the months ahead.  And if it fails on the return trip, all hell breaks loose in that industry, which may finally affect equities.

Oil daily.

Bonds weekly.  I had the right idea for bonds in 2014 but I didn't trade them much.  I should remedy that.  I would think the short end would come up in yield until the Fed realizes it has to back off from its tightening fantasy, but the long end should continue pricing in the depression we're headed for and headed higher in price.  Maybe we get some short-term positive data that causes the long end to pullback to its uptrendline, but I'm thinking they grind up to the downtrendline off the highs and eventually resolve this giant triangle to the upside.

I don't really trade the Russell, but check out the weekly TF.  If this consolidates along the highs and holds its uptrendline and breaks out, watch out upside in equities.  At the moment, though, it's a failed breakout, so time will tell, but it's worth noting.

I updated the VIX chart, using the index this time.  The vertical red lines are monthly expirations.  Eventually, there will be news driven price action that overrides this, but if it's working, it's working.
 

Draghi Day is Thurs Jan 22nd
Fed Day is Wed Jan 28th
Options expiration is Fri Jan 16th

Smack My VIX Up

I don't have time to expound on this, so I'll leave you to draw your own conclusions.  Presented below are 4 charts that show the VX futures over the last 3 years. (The VIX itself follows the same pattern).

The vertical red lines are equity monthly option expiration days.  Keep in mind that the purchase of put insurance generally peaks with the spikes higher in the VX.  That is when they are most expensive, which leads to the ensuing VIX crush that transfers a lot of money from the put buyers to the put sellers.  

There are two ways I consider a VIX crushing to be successful.

1.  If the VX spike happens early in the expiration cycle and then leads to a slow drain into expiration, as seen in the upper left to lower right chart movement.

OR

2.  If the VX spike happens near the end of the expiration cycle and then gets crushed into the current expiration and also has a slow drain into the next expiration because a lot of the puts purchased will be made in the next month out.

Utilizing this definition of a successful VIX crush, there has been only 3 months in the last 3 years that haven't been a success, and all were muted months.  As you will see, some months are more dramatic than others.

The fourth one from the left is the closest to a VIX crush fail.  But note there was still a crush into friday and how dramatic the continuation was into the next month where most of the puts were likely purchased.

March 2013 - Oct 2013

Oct 2013- May 2014

Here's the current month.  Keep in mind, even if something was 99%, you never know when you're dealing with the 1% it doesn't work.  So while I think equities will bottom this week and have a VIX crushing rally over the holidays, there is no certainty in trading.

May 2014 - Dec 2014

Market Analysis for Week of 12/15/14

For me, everything revolves around the reaction of the dollar to the Fed.  Will they change their language or not?  Does the dollar need to pullback further or not?  It had a great run but even strong bull markets don't go straight up.  I still believe the dollar is going much higher, but if we need to pullback to $85 first, I'd like to avoid that.  It's probably all about the language.

Here's the dollar monthly.  I'm open to the idea of a deeper pullback if they don't change their language now, but if I was the Fed and I knew I had to remove "considerable time" from one of the next few meetings, I'd do it right before the holiday break to give the equity markets a couple weeks to digest the news in low-volume-senior-traders-away-from-the-office trading,

Here's the dollar daily.  Notice how the green 20-day EMA has supported price for six weeks now.  That's typical of strong trends.  This chart looks great.  It's just about the Fed. 

Check out the monthly Yen futures chart.  I usually look at the USD/JPY.  But on the futures you can clearly see the horizontal support that gave it pause.  If the dollar pulls back we could see this triangle fill up a bit.  

Yen futures weekly.  I don't know how people stay short when it gets this oversold.  

The Euro had a pretty strong week.  Knowing the LTRO was Thurs, I should have trailed my stop tighter.  I gave back more than I should have.  I'm looking for reentry short, but I will wait till after the Fed. It would be a gift to do it from higher prices.  The long-term future of the Euro is doomed. 

I was feeling pretty good about being so patient before I bought my gold and silver puts, but it was clearly not patient enough.  This is how I do damage control: if I still like the overall trade but I think I'm early, the first thing I do is cut the position in half and look for opportunities for short-term trades in futures to make up for it.  Clearly, this too will depend on the Fed.  It's entirely possible gold grinds up to the larger downtrend line just under $1300.  If it does, I will add back the other half of my puts at really cheap prices and look for it to rollover again.  Only a strong close above that trend line turns me bullish.  I don't currently believe that will happen and am open to the idea of a dollar pop, gold drop out of the Fed.  

Gold weekly.   We've seen this before.  The net Spec positioning in gold gets too close to net short, there's a short squeeze with new long buying that runs out of steam and topples over to continue the downtrend lower.  This is why I chose puts instead of futures.  Even if the premium is jacked, the risk is contained without worrying about a stop.  If I'm right I'll be able to cheaply re-add to the position because I gave myself until spring.  If I'm wrong, I expect to lose money, and with puts not only is the risk contained but it frees up futures to trade against it. 

Silver daily.  Notice how it's clinging to the underside of the downtrend line.  That's typically bullish.  If it breaks through there it may backtest the $18.17 breakdown area, but $17.50 is a spot to watch too.   

    

The RSI on the crude weekly is 12.  Would you believe the Spec longs added again?  As a group they've been long since $105.  And while there are a lot of individuals within that group, and I assume there's a good deal of hedging in other ways, the fact is they are averaging down their long position.  Which means when the inevitable bounce comes, the Spec longs will be selling into it. This could stay ugly for a long time, especially in the face of a strong dollar.  The risk/reward of the short side is diminishing as we approach the lower $50s.   

Sidestepping the pullback in the ES was one of my better decisions lately.  I didn't anticipate the selloff as much as I thought the risk/reward wasn't good.  It was a a day trader's market last week.  The old weekly uptrend line is at 1975-ish, but since it's already been violated in Oct, it's not as strong, so we could see the 200-day EMA get tested at 1938.  If you take a look at my VIX post, I'm thinking we bottom this week and see a VIX crushing over the holidays, so I'm looking to buy the ES but I will wait till after the Fed. 

 While I do think the oil collapse could be a game-changer for equities it may take some time before the impact is undeniable.  Every selloff feels like the end and there's always a good reason, but they keep popping back up.  Clearly, the bull market is weakening internally, but there's no reason why the inevitable bounce here won't pressure out the shorts and continue the same pattern we've seen for the last two years.