The DOW is now down 160 points. After trying to break out higher, the move ended in a diamond formation that broke to the downside and is now collapsing back into its channel.
Below is a snapshot of the /YM (DOW), and /ES (S&P) futures. Note the diamond formation and collapse. Diamonds are EITHER a continuation pattern OR a reversal pattern.
On the SPX chart below note that we are heading back down beneath the inverted H&S neckline (double red lines) and towards the bottom of the blue channel. Be careful if we close at the 870 area! If we don’t break that area, then it can be a springboard in the morning! If, on the other hand, we do break down beneath, say, 860, then we will have a broken trendline (light blue) which is bearish. Again, caution! That dark blue line at 860 is the bottom of the old triangle that has been acting like a giant price magnet!
The next chart is the VIX. Note that we have broken back inside the triangle after throwing underneath. Typical headfake, I was not suckered (this time)!