Despite the ample support markets are receiving from the algos (witness yesterday’s knee jerk reaction to VIX’s smackdown) our yield curve model continues to sound the alarm for equities.
The only question is how long the delicate equilibrium can be maintained. 
Rates can decline for many reasons. When due to central bank easing, for example, stocks tick gleefully higher. When it’s a response to fear, on the other hand, we can expect additional equity market instability.
As the 10Y approaches our next downside target from Dec 26 [see: Update on Bonds] it would be wise to consider why rates are declining this time.
Of course, the decline has been postponed repeatedly over the past 4 1/2 months.
But, the bond market has a great memory. It isn’t as easily fooled as equities.
In other words, there’s more downside ahead for yields and stocks.
continued for members…
A reminder of the immediate target…
Wouldn’t you know it…the 2s10s is in danger of breaking down again. 
Equities look likely to pursue our lower targets despite yesterday’s rescue. 
But, as always, we’ll look to the factors propping stocks up. CL, which is now experiencing a golden cross, looks likely to retest the SMA200. Watch out for a drop through to the white midline at 59.63.
RB is nearing our initial downside target – a backtest of the yellow channel top at the SMA50 at 1.9322. Here, watch for a drop through to the SMA200 at 1.7744.
The USDJPY has re-entered the falling white channel again and has plenty of downside. 
And, VIX should finally reach the white midline at 19. If it pops above it, stocks’ decline should accelerate.
One of the most concerning charts for bulls has to be AAPL which, in the absence of significant support, could easily plunge to 129.36 — a 6% drop from here.
UPDATE: 10:10 AM
RB has reached the SMA50 and yellow channel top at 1.9322 and CL has reached its SMA200 again.
VIX has reached the midline.
Remember, if it pops through 19, it has huge upside potential.
USDJPY still has plenty of downside potential.
Decision time for stocks. I’m betting lower.
Bottom line, SPX and ES are headed for a backtest of the channel from which they broke out on Apr 12 — with the help of USDJPY, CL and VIX. Now that those factors are faltering, SPX is in danger of dropping back through the channel top (SPX 2873-2880, depending on when), which would be quite bearish. The same thing happened to AAPL back in November.
So, the exact movements of the factors and whether or not they can hold support is quite important.
I have to run out for an appointment – should be back around 1pm.
UPDATE: 2:00 PM
Stocks have reached the backtests we discussed above. ES and SPX have both tagged their .886s and SPX has backtested the channel it broke out of. 
While 2S10s has broken below its yellow TL and is backtesting its red TL from Feb 2018.
RB backtested its broken channel. 
COMP has nearly reached its .886. 
And, CL seems content to fake it…for now.
VIX has broken above its midline.
AAPL still has a ways to go. 
It wouldn’t surprise me to get a bounce here. But, I believe SPX’s and ES’ SMA50s are probably still in play.
UPDATE: 2:34 PM
ES just backtested its 3/21 highs. SPX is still about 7 points above its. Elliott Wave fans take note.
UPDATE: 3:50 PM
ES and SPX have almost reached their SMA50s and channel bottoms. A failure to hold here would be very bearish. Having said that, be aware that many rescues over the past year or two have come in the after-hours.
ES just tagged its falling white channel bottom and is bouncing without having tagged its SMA50.
Note that AAPL is making nice headway.