Another ugly open for markets as ES, down about 1.25%, completed its H&S Pattern we’ve been watching take shape.

More grist for the bearish mill…as though we needed any more.

continued for members…

Note that by dropping through the purple neckine, ES has backtested the purple channel once again – just a little lower. There is no Fib justification for a bounce here, but with an FOMC meeting next week, we always want to be aware of potential support.

As has been the case for almost a month, the key will be whether or not VIX can push through the resistance at 27-28.   USDJPY continues to tightrope higher, not actually making much headway but, importantly for the algos, not breaking down. EURUSD continues its dead currency walking routine, with parity looking increasingly tenuous. And, DXY should push through to the 1.618 pretty soon. The 10Y is making news this morning with a breakout to new highs. So, there’s that.The 10Y’s relationship with oil and gas is growing ever more tenuous. As 10Y yields rise, CL appears ready to move lower…

…as does gas.

This follows, given the observation we made months ago that inflation is no longer just an oil/gas story. It’s much more widespread. Yields will respond to strong declines in oil/gas prices. But on a day like today, when oil and gas are biding their time, yields have lot of other factors to consider.

Be careful out there…