In our December update [see: Update on Bonds, Dec 3, 2015] we announced the arrival of 10-yr yields at an important level of overhead resistance.  TNX had reached a trend line that dates all the way back to 2007 (23.08.)  I noted at the time:

Remember, a retreat from this red TL from June 2007 means a correction.  Pushing above it — which hasn’t happened since, well, ever — presumably means a rally.

Despite the best efforts of TPTB, TNX was unable to push through that TL.  It even tested it twice more, but was unable to push through and, instead, broke through support several times over.

The latest was yesterday, when it broke through a short-term trend line (below, in purple) that’s only two weeks old.

While it bounced back above it by the close — helping to spur a 25-pt overnight ramp job in ES — it’s not quite done.  And, yes, that means there’s more downside for stocks.

continued for members…Note the white dot at 20.21.  This is not only a key Fib level (.618), but the bottom of a TL off the Jan 30 lows.  As support goes, it’s of average strength.  But, it likely lines up with our 1882-1887 SPX target.  So, I’m giving it the benefit of the doubt.  If the trend line breaks, then the next major support isn’t until 1.90 or so– the Aug and Sep lows — which would probably mean SPX 1882-1887 didn’t hold either.

Stay tuned.