Yesterday’s mind-bending rally made very little sense except for the fact that it both washed out many more weak bears and resulted in a more logical placement of ES’ downside target. I’ll explain.

continued for members…By piling on all those points, the C=A target (the dashed yellow lines) for ES moves to 3401, only 3.5 points away from the February pre-COVID highs.

This is much more in keeping with SPX, which already had that setup in place. By not making a new high yesterday, SPX’s downside target remains in place.

Yes, I’m less than thrilled about the timeline being off. But, if yesterday is any guide, the market can easily make up for the delay when it (presumably) begins its rebound at 3400. This is hardly proof that our analog will play out as expected. Let’s just call it a few points in the analog’s favour – like the fact that VIX didn’t break down below its SMA200. Although VX’s chart looks better.

I also like the fact that USDJPY isn’t creeping higher, even though NKD has reached the top of its falling channel… …and EURUSD seems to have run out of steam at its SMA20. Everything else remains pretty much the same.

UPDATE:  10:49 AM

This is frustrating… Our better fit is now a worse fit, and SPX and ES have both notched new highs.

Contrast VIX, which should get a bounce at the red internal TL at 23.40, with VIX futures (VX) which has popped up above and is holding its SMA10.