Futures have dropped through our 200-day moving average target – a significant move that opens the door to a more important backtest.

continued for members…The yellow 3.618 extension is coming into play for ES…

…though it is quite far away for SPX. Note, however, that SPX is nearing the bottom of the falling white channel at 4189ish.

The most critical support for SPX is way down at 3730 – the purple .786 and the bottom of the rising yellow channel.

Significantly, VIX has broken above TL resistance and now has a good possibility of reaching our 26.42 target. A drop back below 21.19 would stop equities’ bleeding.On the currency front, USDJPY is headed for its SMA200……but, EURUSD is breaking out slightly.

The net result is that DXY continues to go sideways – remaining in the narrow purple channel.GC has broken above its SMA200 and its next important resistance is a triple top at 2078ish… …while SI continues to struggle after backtesting its SMA200.Oil and gas futures are both off about 1% despite worsening conditions surrounding the Middle East conflict. Though the correlation with rates is being severely tested, this drop is quite important if the 10Y is to be held below 5%. It has come very close two sessions in a row.This puts the 10Y within spitting distance of reversing the inversion with the 2Y. As we’ve discussed countless times in the past, breakouts in the 2s10s have corresponded with the most significant equity crashes of the past 23 years. If the 2Y should plunge while the 10Y remains elevated, equity markets will very likely make new lows.

Stay tuned…