S&P approaching pennant support
The S&P is working on a short-term pennant (4 months) within a larger pennant (4 years) pattern. In the chart below, you can see that the S&P is fast approaching the support levels of its shorter-term pennant:
It may be a decent time to lighten on shorter-term shorts and adds some long positions. Interestingly, the VIX (and SPY puts) have not rallied much at all with this move to the downside. There isn’t any real fear accompanying this leg down. That might mean that the market is just coasting down to technical support because there’s not positive catalyst to reverse its course. It might also mean that a break of support would catch a lot of investors off-guard. Much of the banter on CNBC, etc, is that many pros are out of the market at this point, so there isn’t much hedging to be done.