ES tagged our 50-DMA target late yesterday.

It was one of the least surprising outcomes one could imagine. In fact, SPX and ES have tagged or come close tagging their SMA50 (the purple line below) eight times over the past eight months.

Central banks have practically guaranteed this outcome ever since they enabled the market to become untethered from the real economy.

Could this time be any different?

continued for members…

SPX hasn’t quite reached its SMA50, so we’ll probably see at least a little more downside before a bounce is in order.

It will require VIX to pop up above the SMA200, at least a little bit. The danger, of course, is that the SMA10 has now moved above the SMA20 – bullish for VIX, bearish for stocks. And, sometimes, we get some momentum which is difficult to tamp down.

USDJPY might provide all the downside impetus needed by virtue of its (finally!) breakdown.Or course, it would help if DXY weren’t drifting lower.Maybe time for EURUSD to complete its move? Arguing against any equity downside: oil. It’s still slipping higher, despite the grumblings from various political leaders. This latest move takes it back to the top of the falling purple channel – so an important line in the sand.Given the marked breakout from the falling white channel, I’m going to move the next “downside” target to the top of the white channel – roughly 65.40, where the SMA200 is likely to emerge in mid-October. It’s right out of the USDJPY playbook – which has worked pretty well to prop up stocks. It’s a 10% move from this morning’s 73.14.After bottoming 4 sessions after its bearish 10/20 cross, RB finally gt its bullish 10/20 cross on a push back through its SMA100.Although it’s a fairly bullish move, I wouldn’t chase it. Even if it can remain above the SMA50, the TL from the Jul 30 highs is just above at 2.25…

…and the sell range has been pretty consistent over the years.