Futures came within 7 points of our 200-day moving average target overnight, begging the question: was that close enough for a legitimate backtest?  SPX itself is still 15 points away, close enough by Aug-Oct 2019 standards but nowhere near the overshoot experienced this past March.

The more important question is whether the factors driving stocks lower haven’t yet finished? As we discussed yesterday, the bearish fundamental case has been building momentum lately. What if investors started to care?

continued for members…

The Mar 2023 backtest overshot by 125 points because VIX broke out of the eventual falling white channel, shooting up to 30.81 as EURUSD, USDJPY and CL all tumbled. Where are we today?

Note that VIX has reached the red TL and reversed whilst exhibiting negative divergence with its RSI.EURUSD is still slipping lower and USDJPY is potentially stalling at a double top, keeping DXY on a steady escalator higher. CL is at another important decision point, at risk of breaking down if it doesn’t bounce here. And, RB has completed a backtest. While, TNX is threatening a push to the yellow .707 after reaching our 47.55 target earlier.Last, XLU has overshot our 56.73 target and nearly reached the white channel bottom – probably close enough for a rebound but a few days ahead of the cycle target.I think the powers that be have done a very good job of managing this 9% (so far) correction. It never got too scary or felt like it was running away. I imagine they’ll be patient in managing the bounce, if any.

Stay tuned…