VIX’s beatdown continues to nudge algos higher, finally dropping through its Sep 16 lows.

continued for members…

If ES – already past its .618 – can break through the rising red TL, it has a decent chance of testing its highs. SPX has already topped its .618 and faces a backtest of its broken rising white channel at 3507ish. We’ll continue to show the downside support because if the rising red TLs break down again, those targets still matter. Note that DXY is finally breaking down, which has been net positive for stocks as long as it comes at the hands of the euro and not the USDJPY.

As USDJPY backtests its “breakout”…

…and EURUSD pops.

The drop in DXY is giving GC and SI a much-needed boost. With Hurricane Delta about to make landfall, CL andn RB are holding their breakouts…for now.

The biggest threat to stocks remains the bond market. Every time ZN has broken out, it has correlated with a sharp decline in stocks.With DXY breaking down, we should look for TNX to break down as well. UPDATE:  3:40 PM

CL and RB have fallen back into the channels from which they broke out.VIX is backtesting the horizontal support at 24.92. And, USDJPY is looking weak as DXY tumbles and GC and SI break out.

Anything can happen, but with CPI likely to come in hot on Monday, I think we’re setting up for a breakdown despite ongoing manipulation.