Stocks: Back to Reality

S&P futures are off a little over 4% since our Correction Warning post on Aug 28. As it turned out, we were slightly early. ES didn’t top out until three sessions later in spite of the multiple warning signs we detailed at the time. Most significantly, ES/SPX both broke down below their Feb 20 highs on Friday. While SPX bounced back above its, ES has plunged back below its in the pre-market.

This potential backtest represents a critical level of support and will determine the course of the market and, likely, the outcome of the presidential election.

The bigger disruption, of course, has been in the Nasdaq. COMP plunged 9.9% from its Sep 2 highs to Friday’s lows and is set to decline further this morning.

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