Is Monday Going To Be A Mess?

In just breezing through a few of the key charts, it appears that, yes, Monday may be a mess. So much so, it’s hard to know where to begin to convince you of this possibility so let’s just start with plain vanilla and this means my favorite the S&P.


Not only is the S&P trading in a confirmed intraday Bear Pennant not shown above with a target of 1358 but the S&P has closed below its 50 DMA once again and appears to be showing a nice Pipe Top within a Bear Pennant. Relative to Monday, it is the Pipe Top that is worth watching and it confirms at 1357 for a target of 1327 while the Bear Pennant confirms at the same level but carries a target of 1310.

Both possibilities are showing in the chart of the VIX with its inside candle looking less violent than before but nonetheless one that supports fireworks and probably up and off of yesterday's low for a target of just below 22 and a level that is consistent with the sideways range shown below even though the VIX provides some room for the mess to come mid- to late next week rather than on Monday.

Rather than turning this into a charting bonanza, though, and perhaps break some of those charts out over the weekend, let’s turn to the chart that may make the most bearish case of all and that is none other than the XLE and a chart that’s been watched here closely for weeks now as a Complex H&S developed, confirmed and an event that the took the XLE below its 50 DMA.

Now there’s a lot of busyness going on in that chart above but it all boils down to the XLE’s position below the ascending trendline marking its near-term uptrend and something that took the XLE below its 50 DMA on that Complex H&S only to trade into a Bear Pennant below its 200 DMA. Maybe the XLE somehow uses that consolidation to put in one last shoulder between $71 and $72 but based on the look of the previous charts it seems doubtful.

Rather it seems that the XLE will confirm that Bear Pennant by dropping below $68.10 for a very conservative target of $63.20 and a level that the XLE is likely to hit in the weeks ahead unless it climbs above $70.14.

When the bulk of this potential drop takes place is to be seen, but there does seem to be a decent chance that Monday is going to be a mess.