In the immortal words of Ron Burgundy, “that escalated quickly!”

Sure, the algos weren’t happy with the phrase “mid-cycle adjustment.”  But, you can’t help wondering how many algos and carbon-based investors were disappointed that with 3.7% unemployment and 2.1% GDP growth the Fed saw the need to cut in the first place.Maybe the Fed knows something the market doesn’t.  Maybe the rosy economic statistics don’t tell the whole story.  Or maybe, just maybe, all the market cares about any more is how vigorously the Fed will support equity prices.

In any case, futures have bounced back 27 points from yesterday’s lows and are back atop the SMA5 200.  All is well, right?

Not so fast.  The knee-jerk pop in USDJPY has already reversed, oil’s protective pop is unwinding, and VIX seems to have more room to run.

Our analog pointed to July 30 as a cycle high.  But, we’ve been within 1% of our upside target 7 of the 13 sessions since July 15 when we first pulled the trigger.

Again, when we’re only 1% away, it could turn at any time and may indeed have turned already.  I’d be very comfortable being short here at 3017.

This is not like every other “buy the dip” setup.

continued for members…

I have to be out of the office for a couple of hours this morning.  Here are the charts I’m watching so far…

USDJPY is back below its recent highs…

DB has yet to break out. VIX didn’t quite reach its SMA200.AAPL gave up most of its “breakout” gains (those playing the breakout should use tight stops.) BA continues to sink……as does AMZN. And, bonds are IMO clearly not done.

Here are some alternate views of the analog path that make it easier to see.  We go from messy to very clean in order.  The dots were targets I placed in advance of sketching out the analog path, so give preference to the solid yellow line.UPDATE:  2:14 PM

SPX is very close to our initial analog downside target (even though it’s over two weeks ahead of schedule.)  I’d look for a bounce here based on RB and CL having reached interim support.  RB has reached its .786, which is where it should bounce in order to set up a drop to the 1.272 extension at 1.56.

CL has reached a simple TL of support and the rising white channel .236 line.  I see it dropping to its 1.272/.786 at 47.55-47.81, so I’d be happier calling for a bounce at 52.82.  But, the .707 isn’t a terrible alternative.Note that VIX, having broken out of the falling white channel/fan line, is approaching its white .618.  This is a decent place for a reversal IF SPX is going to bounce here.  Otherwise, the .786 at 20.88 is more appealing.  Again, I think it will come down to whether TPTB wish to arrest this plunge in stocks and stretch it out a bit — which I think they will. If SPX drops through 2950 and VIX exceeds 18.91, I could be convinced to re-short for the SMA50 at 2924 or SMA100 at 2897.  But, I think we’re more likely to see a bounce first.

Note that TNX is pushing slightly below the white channel .236 line.  If it pushes on to 17.04 now, that would also be a good signal for lower stock prices sooner.

A slightly better view…