A Backtest That Could Matter

Ordinarily, when a channel breaks down and is backtested, it means more downside. SPX nailed our backtest target yesterday.  And, sure enough, the futures are currently off about 12 points.Yet, we’ve seen way too many instances over the last couple of years where a backtest overshoots and the broken channel is rejoined after, say, VIX is crushed or WTI or USDJPY is ramped higher.

Indeed, VIX remains within striking distance of last week’s 11.25 lows and CL, which broke down overnight, is suddenly bouncing as we approach the open.With major currency moves still ahead of us, can this backtest hold or are we in for another of those V-shaped recoveries?

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