Futures have given up all of Friday’s rebound gains and then some, again testing the IH&S neckline and the bottom of the rising white channel from last March.

At the risk of sounding dramatic, a failure of the channel would mark the end of the current rally and usher in the correction suggested by our yield curve model as detailed on Oct 12 [see: A Cure?] and reiterated this past Friday [Yield Curve Model: Correction Imminent.]

Stay tuned…

continued for members…The bigger picture for ES shows it has again fallen below the IH&S neckline and the channel bottom. The key will be whether these levels hold. Remember, SPX has already broken down from its rising white channel and even backtested it. VIX’s bullish 10/20 cross is picking up steam, with another test of the rising SMA200 looking likely.

The 2s10s has backed off its breakout…

…as TNX’s breakout failed as expected……and ZN is attempting to regain its former support.As we discussed last week, a breakout in 2s10s would be devastating to stocks. But, as we saw on Mar 4 and June 5, a failure to break out would also do considerable damage.

The USDJPY is rallying slightly in an effort to mitigate equity weakness, but it remains in a fully bearish alignment – with the 10/20/50/100/200 SMAs all order.

The EURUSD is backing off slightly… …meaning that the DXY is getting a slight bump. Note that its RSI has already broken down but is set up for a breakout.  This follows with my forecast of a plunge in DXY followed by a sharp rally. Last, the oil market continues to pick up on the prospects of additional lockdowns from rising COVID-19 case load both in the US and abroad.

UPDATE:  11:40 AM

ES is approaching the first serious potential support – the intersection of two channel lines and the .500 Fib retracement.  SPX has a similar setup. If they don’t bounce here, the next support is 40 points lower. GC and SI are holding up pretty well, all things considered. But, note that GC is dangerously close to a bearish 10/20 cross. SI, a little less so. UPDATE:  12:55 PM

ES, SPX and VIX are almost there.

UPDATE:  4:00 PM

VIX’s rising white channel is looking pretty accurate after the reversal at the midline. Although ES and SPX fell below their channel bottoms, they rebounded pretty sharply once back above them.  Probably not a coincidence that SPX reversed course just after registering a 100-pt drop (100.53 from Friday’s close.)