Technical analysis and chart patterns are sometimes regarded as akin to witchcraft. Yet, fairly often, they prove incredibly accurate in forecasting reversal points and targets.

In honor of the latest such eerily accurate forecast, and since tomorrow is Halloween, we’ll take a fresh look at whether something wicked this way comes.

And, since many investors are very nervous at the moment, we’re offering a wicked smaht membership promotion. Through Nov 3, we’ll knock $60 off the initial month of a monthly subscription and $100 off the initial quarter of a quarterly subscription. To sign up, CLICK HERE.

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Back on Oct 12 [see: A Cure?] as the market’s daily meltups inspired the tongue-in-cheek observation that central bankers might have found a cure for market corrections, we noted that the latest rally might have finally run its course:

ES just reached its .886 retracement, meaning we are very likely to see a reversal here. My favorite target remains the yellow channel midline, currently at 3218ish.

This morning, ES backtested that yellow channel midline (now at 3226) for a garden variety 8.9% correction. [Note: we adjusted the price target to 3225 and the timing to Oct 30 the next day.]While the charts have been good to us, the question remains: is a garden variety correction all we’ll get, or is something more wicked coming our way?

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The neat little falling channel guiding stocks lower since our Oct 12 top call [see: A Cure?] has broken down – slicing right through our ES 3329 target and accelerating toward our backtest targets.Every single one of the factors responsible for driving algos higher over the past 7 months is having a very bad day.  Consider VIX, which blasted through its SMA200 and is closing in on our next upside target at 39.49…

…or CL, which has dropped through our 38 target, opening up the path to 35.45 and lower.Given the impending lockdowns in Europe (and the fact that the US is only 2-3 weeks behind it in terms of case growth) and the lack of any stimulus package any time soon, the prospects for the market stabilizing are not looking good.

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Despite better than expected economic data this morning, both ES and SPX have now seen their channels from last March break down. Most of the algo factors driving them have also broken down.

Unless Congress or the Fed pulls a stimulus rabbit out of their hats, things are going to get even messier going forward.

ES fell through our next downside target yesterday, reversing only after SPX had shed over 100 points and DJIA approached a 1,000-point loss……and VIX tagged our next upside target.Note that while September Durable Goods Orders beat expectations, it has yet to regain its former highs.

And COVID-19 cases and deaths continue to rise in most countries, with many posting alarming rates of growth and new all-time highs.

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According to Missouri Republican Roy Blunt, “If we’re going to do it this year, I think it’s now or never.”  Of course, a $2 trillion package will face stiff opposition in the Republican Senate, especially with more and more senators prudently distancing themselves from President Trump.

The bond market is torn on whether or not to believe it, with the 10Y again testing overhead resistance. And ES, which tagged our next downside target after hours yesterday, isn’t very optimistic at all.continued for members… (more…)

For the past several months, we’ve been patiently waiting for DXY’s next leg down. Given the importance of preventing a EURUSD breakout, it seemed apparent that USD weakness would need to come courtesy of JPY strength. Today, push finally came to shove.

The implications for equities are significant.

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