While VIX’s 31% collapse in the past week… …has, as expected, fueled an impressive rebound……we shouldn’t forget about the 2s10s. The 10Y retreated from our upside target on cue. But, the 2Y has been gradually rolling over.

As long as the 2s10s inversion persists, the year end rally should be safe. But, history shows us that when it unwinds things can get ugly in a hurry.

continued for members…

The biggest issue for bulls at the moment is continuing the breakdown in VIX. Note that the RSI has reached (dotted red) TL support. It provided a bounce in VIX and a reversal in stocks in December 22, Apr 23, June 23, and Sep 23.

The bulls need it to break below this TL – though a bounce here to allow stocks to backtest their SMA200s would make a lot of sense more sense at this point. There’s a lot of time between now and Dec 31.

SPY illustrates the gap to be filled at the SMA200 – perhaps after tagging the SMA50.

EURUSD, USDJPY, and DXY are each headed for their respective SMA200s, though USDJPY’s will be the one which accommodates stocks’ backtest of their own SMA200 if it happens.

As expected, CL and RB continue to accommodate lower bond yields.