SPX closed below important support yesterday, suggesting that the current leg down isn’t yet over. Indeed, things could get worse.continued for members…The futures have bounced around a bit this morning, but are currently being held up only by a channel that I doubt few would even recognize.

It’s the sort of channel that makes perfect sense…until it breaks down. The more reliable support levels are the .382, the 20% off haircut, and the 1.272 Fib extension.I still like the SPX chart much better.  It also features a pretty well-formed falling white channel. But, there’s confluence of support a little lower. Note that the 20% off mark at 3854.90 nicely coincides with the rising yellow channel midline. This combination should provide nice support for at least a bounce. Recall that the 2000-2003 crash featured a nice, neat bounce at the 20% mark (not to mention an eerily familiar channel) that resulted in a 10.3%, 6 week headfake back to the channel midline – a common occurrence. Rest assured, it’s on my radar screen as a possible analog.COMP has already broken down below its equivalent support and certainly appears headed for our next downside target at 10,291.

We’ve talked a lot about VIX, and how it isn’t really helping the downturn along. That remains the case. The fact that it has held below the fan line/channel top from Mar 2020 has almost certainly kept the algos in check.If/when it breaks out, it will be of great help in unleashing additional downside for stocks.  But, until then, a pullback from the line will continue to support a bounce.Things are getting more bearish in the currency space. EURUSD is finally breaking down and USDJPY is retreating too. Silvers flag is fizzling… …and GC has only a little ways to go before it backtests its neckline.Oil and  gas remain in a very weird place. Historically, a rise in either is good for stocks. But, with inflation being the biggest headwind, this is no longer the case. And, given the situation in Ukraine, central banks appear powerless to do anything about sky-high prices. In fact, RB appears likely to make new highs.Thanks to Khashoggi’s murder, Trump got a massive concession from the Saudis. Biden is getting no such love and/or hasn’t figured out how to leverage them into cooperating.

UPDATE: 2:55 PM

SPX came within 4 points of a 20% drop. I would expect a modest rebound here, but only if VIX pulls back.

continuing...