The Empire State Manufacturing Index came in at a dismal -3.9 versus expectations of +12.5 and prior +18.7. In traditional “bad news is good news” fashion, futures are up nicely…

…but have a lot of work to do to top recent highs.

continued for members…

Bears are right to be concerned, however, as we’ve seen two H&S patterns busted and the continuation of a significant VIX smackdown.

The DXY continues to break down, courtesy of the euro. EURUSD has ignored the arrival of the SMA200 at its recent lows and has resumed its ascent toward our longstanding 1.2028 target.

CL and RB are awfully close to breaking down…

…which has done little to prevent the rise of the 10Y…

…of the steepening of the 2s10s. Of all the charts we watch, this is the more problematic for equities.  Our 10Y cycle chart suggests big drops in the 10Y in the next couple of months. This could be driven by many things: a collapse in oil/gas prices, the tariffs being struck down, an equity crash, etc. If the  2s10s reverses by 85 bps, the damage would be minor. Anything north of that, however, would likely unleash a significant downturn.

Stay tuned.