Having pushed back into the rising white channel and falling red channel in advance of Friday’s PCE print, stocks have a decision to make.continued for members…

VIX’s breakdown would suggest that the equity channel breakdowns are forgiven, that the upside case for stocks is still intact.Currencies are also generally supportive of stocks here, though the interest rate picture could change that come Friday. CL seems poised to test its SMA200, which would be a slight decline from here. And RB is similarly positioned for more downside. All this means that unless PCE comes in hot, interest rates should continue to moderate.

Durable goods’ beat is yet one more hint that the economy is doing fine and that the Fed will wait until the end of the year to lower rates, if then. But, moving averages are still bearish. And, a hot PCE would push stocks back into bearish mode.

With the 2s10s so close to a breakout, the risk of a sizeable downturn can’t be ignored.

Stay tuned…