About a month ago SPX/ES pushed to new all-time highs, suggesting stocks were off to the races.  I wasn’t convinced.  From our April 29 post:

A move above the Sep highs is technically bullish. So, trend followers will be compelled to go/stay long with the former highs as their stop.  Personally, I would be extremely cautious in chasing it, keeping an eye out for rejection and shorting it if/when it drops back through 2940.

We labeled the downside targets and waited to see if the rising wedge would break down.  Spoilers…it did.

Now, 7.7% later, we’re presented with a new challenge. ES came within a few points of our 2728 target overnight.  Will it get a bounce here or is it susceptible to additional downside?According to our bond charts, there’s more pain to come.

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For a guy who has so often touted the stock market’s performance as a measure of his own prowess, Trump has been the bears’ best friend lately.  We’re certainly not complaining, as our downside targets are being tagged one after another.

The 10Y has gained a spectacular 7.7% in the nine months since our bottom call last September. Futures are now off about 6.5% since our April 30 top call and are closing in on our next downside target.USDJPY is closing in on our 108.50 target.RBOB is closing in on our 1.76 target.COMP, having already reached our SMA200 target, appears likely to tag our 7391 target. Even AAPL has compliantly continued to sink toward our next lower target.The big win would be VIX…but the other factors have been so effective in driving stocks lower that VIX is still languishing in the teens.  Perhaps not for long…continued for members… (more…)

TNX nailed our 22.94 target last week, completing the move we forecast in December when the red trend line shown below broke down [see: Dec 26 Update on Bonds.]It has taken considerably longer than originally anticipated because the more violent downdrafts in 10Y rates prompted violent equity sell offs.  Some cooling-off periods — long, drawn-out bounces — were necessary.

While the rising purple channel has now been fleshed out, our price charts indicate the move might not be complete — a view shared by our yield curve model.  We’ll take a fresh look at the big picture, and the dramatic move it implies for stocks.

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SPX and ES got within a point of our neckline targets yesterday before the algos panicked.

It’s not that the necklines or SMA200s won’t get tagged – keep an eye on the close — it’s just that not enough wildebeest had gathered at the watering hole.  With VIX safely back down below its SMA200, this shouldn’t be a problem for long.

Targets that were tagged yesterday included CL, RBOB and TNX.  Targets yet to be tagged include USDJPY, COMP and ZN.

Should be an interesting day ahead!

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It seems like it’s been forever, but most of our targets are now being tagged or are on their way to being tagged. So, if I hear one more talking head on CNBC say “no one saw this coming,” I’m going to lose it.

After two weeks, WTI’s flag pattern finally broke; it’s off another 3% this morning and likely to reach 57.93 later today — completing a sweet 13% short from Apr 23.  If 57.93 doesn’t hold, look for 55.55.

USDJPY also finally broke down and is headed south fast.  If/when it breaks 109.88, look out below.As soon as VIX pops back above its SMA200 on its way to a 20 handle, we’ll know SPX/ES are finally going to be cut loose.

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Futures regained most of yesterday’s losses on the back of a VIX smackdown and a sharp ramp in USDJPY.  Still, ES is hovering just below its SMA10.

For those playing BA, note that it has finally joined AAPL in backtesting its SMA200 – clearing the way for the next leg down as long as it remains below 363.41.

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