E-mini S&P, Russell, Nasdaq Futures at Inflection Point (Head and Shoulders, Descending Triangle, Dark Cross)

The E-mini S&P, Russell and Nasdaq are at a serious inflection point. They all formed a head and shoulders pattern, are trading inside a descending triangle from the April peak to July low and all have overhead "dark crosses" in play (when the 50 day moving average crosses the 200 day). We can't hold this sideways channel forever. I wouldn't want to be long the market until the descending trend gets violated. I could see SPX testing the July 2010 low, which is about 4.5% downside from here on the S&P index. We are technically still in a sideways channel but the chart looks creepy no? Hopefully you're already hedged accordingly with short exposure or put insurance, given the Hindenburg Omen and 1987 crash signals out there (Aug 12: Bob Prechter: Dow Chart Similar to 1987 Top, Bullish on US Dollar, 100% Cash (Video).

The VIX futures curve (volatility index curve) is steep with spot at 25 and October at 32, meaning volatility traders are expecting a higher read between now and October expiration. This same type of action occurred in late 2009. Check the Daily Options Report and VIX and More for more information on the VIX. Get ready for some interesting action in equities and Treasuries. Blow off top coming for TLT? Charts are after the jump link.

NQU E-Mini Nasdaq Future (September, 2010)


TFU E-Mini Russell (September, 2010)


ESU E-Mini S&P Future (September, 2010)


Charts courtesy of optionsXpress

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