The financial press usually starts to take things seriously about this point in a correction. The permabulls aren’t calling bottoms any more, while the bears are licking their chops. It never fails, someone on TV says something like “no one saw this coming.”

It’s silly, of course. What they mean is that they didn’t see it coming. Plenty of others did. Some, like us, saw it months ago. This was our Jan 3, 2022 ES chart, illustrating the downside case.

We reiterated the target, called the bounce over, and nailed down the timeline in late March.

Now, as we finally approach ES 3997, it seems that more and more mainstream bulls and trend followers are getting bearish (better late than never.)The risk, of course, is that excessively bearish sentiment would stoke another bounce and postpone the 3997 tag. VIX has some thoughts about that.

continued for members…

The problem is that VIX still hasn’t made a higher high. For this reason, it’s hard to think of ES/SPX’s bottom as being in. The VIX futures chart concurs.As does COMP.While it wouldn’t be a surprise to see the rest of the drop postponed until CPI is reported on Wednesday……the fact remains that things are unraveling fast. FWIW, SPX’s daily chart seems to favor the 3854 target – a 20% drop from the top.

Note that EURUSD still has another leg down to go……while DXY is still pointing to 106ish. USDJPY continues to lurk right below a circuit breaker move to the upside.And, though close, GC and SI probably have further downside ahead of them. Though off modestly this morning, CL and RB are still elevated, with RB in particular threatening a breakout. Last, bonds remain a bearish problem with the 10Y rising more rapidly than the 2Y… …which widens the gap between them, a bearish development. GLTA

UPDATE:  11:42 AM

ES has reached 3997.93 – the 3.618 extension of the drop from 2007-2009.The initial bounce should be solid – ideally to at least 4075 and potentially 4153. If it doesn’t bounce here, we have three primary downside targets: ES 3924.50, ES 3667, SPX 3956.64 and SPX 3855.