(Preface from Tim: I'm going to be – – yes – – quite busy today. More than normal, even. So posts might be a bit fewer and farther between than usual. Be strong.)

Friday looked like a pretty solid bullish reversal at first glance. ES broke back up through 1315, and the Russell 2000 crossed back over the island gap of the island reversal. Yet another potential HS pattern formed on ES, a smaller IHS in the right shoulder of the larger IHS. This is nothing unusual and supports the larger pattern:

There are now three HS patterns forming on ES of course, as there is also an H&S with the neckline at 1300. You sometimes see clusters of H&S patterns forming like this. That gives us a series of targets and key levels today. For the small IHS with the neckline at 1318.5, the right shoulder target would be 1305. A move to 1300 would kill that small IHS, though nor the larger one, and bring ES to the neckline of the HS pattern with the neckline at 1300. An hourly close below that would look very bearish. A break up through 1318.5 would indicate to 1337, at the neckline of the large IHS:

Nothing so far on ES looks incompatible with a bullish reversal at 1300, but looking elsewhere there are some very worrying signs from a bull perspective. The first thing to look at is EURUSD, where support at the broken rising wedge upper trendline was broken on Friday. EURUSD has now returned to test the lower wedge trendline and the strong support level at 1.428. If EURUSD breaks down through both, then EURUSD may well have made a major top at 1.4525. That isn't necessarily immediately bearish for equities though, as the last EURUSD high was several months before the equities top a year ago:

The next three indicators are much more immediately bearish. The first of those is the Vix, which has returned to test the December to February lows. This level is very strong support on Vix, and has held four times when tested since July 2007. The last test of this level was over a couple of months between December and February, but it is a warning signal for bulls that Vix is now testing it again:

The other two indicators are at major support / resistance levels, and breaks through those levels might well signal that the February highs were a very major interim top on SPX. The first is on bonds, which bottomed a couple of weeks ahead of the SPX top last April, and bottomed again in early February last year. The rally on TLT since April failed at declining resistance from the high, and retraced nicely, but on Friday TLT returned to declining resistance, and looking at the action on Treasury futures overnight, TLT is likely to break that declining resistance trendline at the open. If so, that would be a very serious topping signal for equities:

The other indicator is copper, which like bonds, tends to peak and trough slightly ahead of equities. Copper didn't follow equities up on Friday and is still sitting at support. If that support trendline breaks, as with bonds, it would be a serious topping signal for equities, though unlike bonds copper support has held in the futures market overnight so far:

I'm very concerned about the picture on EURUSD, Vix, bonds and copper, and we're very close to seeing a major technical breakdown across the board this morning. That's not to say that equities won't rally from here, but there is a very real possibility that this will go the other way, and a relatively small move for the bears here would strongly suggest that the February high was a major interim top that will hold for several more months.