Losses Accelerate

Written by

Futures are off sharply this morning as important support for various instruments/indices/currencies begins to break down.

continued for members..

ES’ little red channel is trying to hold, but it looks iffy.
ES is now firmly back inside the falling purple channel it broke out of. Same for SPX.COMP tested its purple channel bottom yesterday, with the .886 and Jun lows likely to face tests in the next day or two. Even the Dow faces a test of its Jun lows which already backtested the 2020 highs. And, note that NKD is back inside its falling white channel and is breaking a trend line off its Mar lows.VIX, although making higher highs, continues to be pinned in the 27-28 range. Not sure how long this can go on… …but if the red TL from the 2020 highs is broken, the white neckline at 37.50ish is the next important resistance.This is shaping up as quite a battle. Remember that the breakdown which produced that huge bounce off the Jun lows ultimately failed. If VIX ultimately reaches the TL connecting the Jan, Feb, Mar, Apr and Jun highs, we might just get our next significant bounce.

For now, it’s enough to offset a great deal of the damage that would otherwise be done by USDJPY’s pullback… …EURUSD’s breakdown… …and DXY’s parabolic rise.GC has dropped through the 1670 support will apparently accelerate its drop to 1587.While SI appears to have given up its breakout attempt.And, BTC is eyeing new lows.From the demand destruction department: oil and gas are taking it on the chin. CL is breaking down to new lows as expected. Judging from XLE’s 7% loss this morning, energy stocks are about to catch down with oil/gas prices. And, RB is testing its lows from earlier this month. I’ve saved the best for last. Consider the 10-year, which in January broke out of a channel dating back to the 90s and is making new highs.It has essentially disconnected from oil prices, which spent too long going sideways. Having already reversed at its .618, it is now aiming for the .786 at 42.64 and/or the .886 at 47.55. My gut tells me that 42.64 will align with the next interim low for equities (SPX 3393?) and VIX reversal at 32.50ish. But, we’ll see.Though it is racing higher, it still can’t keep up with the 2Y……which means an even more inverted yield curve. Just a reminder, an inverted curve causes corrections. The race back up to 0 and beyond causes crashes.