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.

continued for members…The bigger picture for ES and SPX: And, SPX:

And, COMP – the race is on for a backtest of the SMA200 or the white channel midline at 9150.

As always, VIX will play an important role – testing the yellow TL from its lows a second time this morning.

CL and RB have both broken down as expected following their bearish 10/20 crosses.

And, USDJPY has held its bearish 10/20 cross… …dropping back below both.  This dollar weakness… …has been easily offset by its strength relative to the euro.  The EURUSD, though, is testing the bottom of that rising white channel from April.Thus, DXY’s bounce could fizzle. The 10Y backtested its red TL and is backing off Friday’s spike.Combined with the 2Y’s test of its lows and continuing slump……this has put pressure on the 2s10s which is reversing off its failed breakout attempt.

One index we don’t talk about that often, the XLF, illustrates what the market thinks of the ability of banks and insurance companies to make money in this interest rate environment.

more later…

UPDATE:  3:55 PM

Close is looking weak, except for VIX which is slipping going into the close.