While not official, it looks like the presidential election just might be in the refrigerator. Futures are off almost 1% after reaching our upside target (improbable as it was) yesterday.  But, the big action is on the currency front, where USDJPY has reached our next downside target and is contemplating more.continued for members…

ES has multiple levels of support, beginning with the neckline at 3425, the SMA20 at 3416 and the SMA10 and red channel backtest at 3368. Remember, yesterday’s highs were a backtest of the broken rising white channel from March 23.

SPX’s version  – with its own backtest back on Oct 13.

VIX is still in the driver’s seat, with a potential breakdown…

…as the tool that could undo the damage done by USDJPY… …and CL/RB. Note that CL has a chance to catch support at its falling white channel midline…

…but the longer term trend is still bearish. Ditto for RB. The bond market remains on the bubble, with the 10Y still threatening a break down…

…which would punish stocks……and presumably financials – which have rebounded to the top of the aging triangle. DJI tagged its C=A and SMA200 back on Oct 30 – but neither ES nor SPX ever did. That remains the downside case – but only if VIX will cooperate.

I have to run out for a couple of hours. More later…

UPDATE:  12:00 PM

When stocks are kept afloat by VIX threatening a major breakdown, it’s a very dangerous time to make directional bets.My gut tells me that DXY and USDJPY are going to dive down to their targets shown above and then bounce strongly – meaning that stocks could be in for a roller coaster ride. The more specific threat, however, is GC, SI and BTC.

All are at or near resistance. GC and SI have bearish 10/20 alignments and BTC has a serious negative divergence set up on RSI. I would be very cautious going into the weekend with long GC, SI or BTC positions.

Chances are if GC, SI and BTC were to crater, stocks would too. And that would explain the move I expect from DXY – a sharp decline followed by a sharp spike.

More later.