Live by the algo, die by the algo…so the saying goes.  ES continues to make good progress toward our downside targets, with the usual assistance from currencies and commodities AWOL so far.

continued for members…

The bigger picture shows plenty more to come.

DJI, which backtested its 3.618 last week, should reach its SMA50 today with potential to tag its SMA100 or SMA200.

And, NKD looks more than ready to tag its SMA200.

CL is finally throwing off a blatantly bearish signal, breaking down below the red TL. RB shouldn’t be far behind. Remember, EIA inventory is due out at 10:30. USDJPY hasn’t broken down, but it’s definitely not breaking out.The dollar is catching a bid as a fear trade.

While GC and SI have backtested their breakout levels from a few days ago.

Inflation continues to be the problem, though tonedeaf bonds are still not showing much of a reaction. Will the 2s10s breakaout finally pay off?  Remember, a breakout means the spread between 2Y and 10Y treasuries is widening. In past equity routs, this meant the 2Y was plunging ahead of and faster than the 10Y. Note the 2Y dropping farther and faster than the 10Y during the crashes. The start and finish of each crash/correction are highlighted in the charts below.

The same thing happened between 2007 and early 2009.

The equity recovery which began in March 2009, on the other hand, featured a fairly flat 2Y and a rapidly rising 10Y. The post 2020 crash period took this to an extreme. In what could be described as a banker’s dream scenario, short rates have gone nowhere while the 10Y has more than tripled.