There's a lot of positive divergence on the 60min charts, but the overall picture is looking distinctly bearish to my eye this morning. ES has gone slightly below the 1279 support level overnight and if that breaks with confidence then there's little support that I'm seeing until the ES and SPX retest the March lows. I'd be looking first at the SPX March low at 1249 rather than the ES low at 1241, though we might see the lower target hit:
On NQ we are approaching the 2250 level which saw important lows in January and April. There's decent support there and I have some weak channel support there as well. If that breaks then the path is open to retest the March low at 2188:
On TF the next obvious target is slightly above 780 where there's decent trendline support. Below that there is very strong support and another potential H&S neckline at 770:
One thing that is looking particularly bearish this morning is copper's break down from the sloppy rising wedge that it has formed over the last month. That may well signal more downside on equities as well as more downside on copper. I'm seeing strong support on copper at 395 and the rising wedge target is at 385:
Vix is still trading within the range established after the March lows on equities. I was struck this morning by an observation I read that significant lows are generally made after a big spike up on Vix, like the one we saw in March. We haven't seen that spike yet of course:
One thing that is showing a lot of positive divergence, apart from USD, is bonds. Looking at this TLT chart the obvious next move would really be to trendline support in the 92-3 area. That would be bullish for equities of course. There's no reason though to think that equities can't make a final move down before that happens but it's something I'm bearing in mind:
The case for a strong bounce here this week looks much weaker this morning in my view, and I'm leaning much more towards seeing a further flush downwards this week towards the SPX March lows, where there is very strong support. There is a lot of positive divergence of course though, and equities are already looking very oversold so shorts should be cautious here.
