While stocks are causing whiplash for investors everywhere, bonds continue their predictable ways — begrudgingly getting the respect they deserve.

Yesterday, the 10Y tagged our 15.54 target set late last year [see: Dec 26 Update on Bonds.] It now sits at critical support, seemingly holding the fate of equities in its hands.

continued for members…

There are two potential paths for stocks today.  If the adjusted timetable for our analog holds, the lows are already in and we should see a sharp rally today that reverses back to near current levels by the middle of next week. If the original timetable holds, ES will drop through its SMA5 200 and today would mark the lows of this cycle… …with SPX ideally tagging 2816.47 or breaking down to tag its SMA200.VIX is positioned for either eventuality.

Oil and gas continue to go sideways, holding off until needed to usher in the next downturn.  CL dropping through the yellow TL would be a strong signal of the market’s intentions.

The euro continues to slump, again slumping toward the falling channel bottom.

It has driven DXY back towards its recent highs, threatening a breakout. USDJPY continues to loiter just above support. Since tagging our interim target on the 13th, gold hasn’t given up much.  It’s obviously unusual for GC and FXY to rally at the same time — so one of them will need to fall away sometime soon.I know I’ve said it a dozen times in the past week or so, but these early stages in the analog are fuzzy.  It’s not terribly important that prices tag the precise level or that a turn occur at the precise time forecast by the analog.

It’s more important that it shape up within a day or two and that the highs and lows are generally consistent with what the analog forecasts.  After 3-4 such turns — particularly those which go against general Street expectations — we can develop some confidence in some of the bigger swings ahead.

Personally, I anticipate using these interim swings to prepare for some lottery ticket type downturns and rallies in September and October.

I have a few meetings this morning, will be back around 1pm.

GLTA.

UPDATE:  1:20 PM

With SPX now 74 points above 2816, it appears we’re going with the first scenario.  Yesterday’s lows were within 3 points of the Aug 5 lows, so were almost the cycle low.  If we add two days to yesterday, we get a Monday high and then a new low next Wednesday Aug 21.  However, since yesterday’s “low” was a day late, there’s still a little wiggle room in the timing.  A drop to 2833ish that completed the channel bottom tag would work nicely.

More later.