The Market Is Starting To Crack

Markets are beginning to crack beneath the surface. Technical damage is mounting, volatility positioning remains unusually light and another leg higher in oil could quickly turn an orderly pullback into something far more disorderly.

The index is now trading well below its 50-day moving average, while the 21-day has crossed below the 50-day, a mildly bearish technical development. A break below 28,500 would leave little meaningful support until the 200-day moving average, currently sitting around 27,000.

The SPX is becoming increasingly compressed within a triangle-like formation, with no clear short-term trend in place. A decisive close below the 7,500 level could trigger an acceleration to the downside. The index is currently trading below its 50-day moving average, while the 100-day moving average remains considerably lower, suggesting there is still room before stronger longer-term technical support comes into play.

The Mag-7 has just posted one of its largest down candles in years. Yet despite the violence of the

move, the group is now simply back trading at roughly the same levels as last September. The next key support is the long-term trendline just below current prices. The break below the 200-day moving average is worth noting, although less significant given the average remains largely flat. All MAG charts and levels here.

Equities have largely shrugged off the latest spike in oil prices. But if complacent investors start paying attention to crude again, the sell-off could quickly become far more severe. More here.

Outlined before the latest spike in vols... Most investors missed the latest squeeze in oil and are now starting to feel increasingly uneasy about what could happen if crude continues higher and begins spilling over into other asset classes. Europe remains one of the world's biggest net energy importers, making it particularly vulnerable to another sustained move higher in oil prices. Yet equity volatility continues to behave as if the oil move were largely irrelevant. VIX and V2X remain well below levels typically associated with a sustained rise in crude, suggesting cross-asset markets are still underpricing the risk of a broader spillover. Latest read here.