As we speak, the VIX is trading BELOW its 11/04 low at 44.25, which COULD imply that the e-SPH (890.25) and S&P 500, including the SPDRs (AMEX: SPY), are about to take off to the upside. As I noted on Thursday while the VIX was at 44.62 and the e-SPH at 903.50:

"Purely from a chart perspective, the pattern that has developed -- and its near-future implications -- suggests that the VIX has lower values directly ahead -- possibly acutely lower when compared to where it has come from since late-October. Let's notice that during Oct.-Dec. the VIX has carved-out a massive top formation that is testing key intermediate term support between 46.00 and 44.25, which if violated, should trigger downside acceleration towards EITHER 36.50 to satisfy a "swing" target off of the Oct. high OR 23.00 to satisfy the optimal breakdown target off of the massive top formation. As we speak, the VIX is nearing a full-fledged test of its Election Day low at 44.25, while the e-SPH remains about 11% beneath its Election Day high. If the VIX breaks and sustains beneath support, then I have to think that it will continue lower -- and that it will coincide with more additional strength in the equity market. Perhaps a sharply falling VIX will coincide with a retest of the Election Day High in the e-SPH at 1006.25?"

Let us also look today at oil, as today the front month Jan. contract expires.

On Sunday evening the front month will become February, which currently is trading about $5 per bbl, or 15% ABOVE the front month. All of us will be interested to see if the Feb. contract preserves a $40 "handle," or if the market continues to dump product on the futures market to alleviate near term oversupply (lack of demand) within a possibly severely slowing global economy.

Purely from a technical perspective, the US Oil Fund ETF (NYSE: USO) is screaming for a recovery rally (that holds), but as we have seen and experienced during the vertical assault on bond prices since mid-Nov., during "special" and acute fundamental situations -- that are unprecedented -- the technicals take a back seat ... until they don't (which should be very soon!) MJP 12/19/08 9:25 AM ET ($34.85)