S&P futures are off sharply, exceeding a 100-pt drop at their lows as the month- and quarter-end rebalancing has concluded and the coronavirus pandemic continues to worsen.

As expected, the rising white channel from the recent bottom has broken down and the less aggressive purple one is the next line of defense between here and ES 2155/SPX 2138. The bottom is around 2352 (SPX 2363) – an 8.5% decline from yesterday’s close.

Everyone ready to resume trading halts?

continued for members…

The daily chart illustrates the big picture.The SPX version…Remember, SPX’s 1.618 is well below ES’ at 2138.

VIX might or might now make new highs in order to accommodate the lower lows.Remember, that .886 Fib at 80.3 is quite important to the big picture.

Oil and gas are still stuck at their channel bottoms while we await the weekly inventory data from EIA. On the currency front, USDJPY continues to slump……so DXY is counting on EURUSD to keep it aloft.

The 10Y is currently back below 60 bps as the 2Y reached a new low of .191 overnight.Since 2Y yields are back above .22, this takes some pressure off stocks. The drop in 10Y yields has flattened the 2s10s well below the 48 bps threshold.

This is technically safer for stocks than a big breakout. But, it’s also technically a breakdown, which is also not beneficial to stocks per our yield curve model.UPDATE:  2:50 PM

I don’t know exactly how it’ll play out, but I expect ES/SPX to drop through their SMA10s in the next hour or so and we’ll get a trading halt after SPX drops 7% – about 2403.67. If it happens quickly enough, we could theoretically push as low as a 13% drop on the day before the next one comes along (20% after that.)

Our 2138 target represents a drop of 17.3% from yesterday’s close, so it could be split over several days – with multiple cliffhangers along the way.  Tells: watch for VIX to break out above 58.6 and for USDJPY to break down to new lows.

One random thought…if Japan’s Abe/Kuroda and the EU’s Michel/Merkel/Lagarde have had enough of Trump, they could really do a number on him via currency manipulation.  Remember this handshake and rolling of the eyes? Things have hardly warmed since then.

The BoJ could refuse to allow the yen to be depreciated in service of the carry trade, and the ECB could hold the euro stead, thus preventing the dollar from strengthening in the midst of this or any subsequent meltdown.

Then again, NKD is sitting at a channel bottom that should matter.  So, I’m not holding my breath. Just a thought.

UPDATE:  4:15 PM

SPX and ES closed just below their SMA10s.  From here, its 13.5% to SPX’s 2138 and 11.97% to ES’ 2155.GLTA.