ES is now off 9.3% from its recent top (-7.8% from our Correction Warning), nailing our 3253 target overnight.  The decline has broadened from the overpriced tech stocks to include banks, energy and cyclicals.

The factors we’ve been watching for the past three weeks are all bearish now, and bulls are starting to acknowledge the fundamental risks inherent in the economic and political landscape – not to mention an obvious uptick in coronavirus cases in many significant countries around the world. Contrary to politicians’ cheerleading and assurances of a successful vaccine just around the corner, the pandemic is still very much with us.

continued for members…The bigger picture for ES:

…and SPX: Note that the decline has occurred despite a relatively modest uptick in VIX which, however, saw it exceed its SMA200.

DJIA and COMP are on track, with lower targets looking better daily.

The currency markets continue to contribute to equity weakness, with USDJPY making a lower low on its way to 103.43 and EURUSD more clearly breaking down. Note that DXY is making another move above its falling wedge upper bound. DXY’s strength is taking a toll on silver and gold.  SI has dipped below its .382 at 26.255 and broken down below its upper TL. GC is testing its 1923 former high yet again, with the latest red fan line from Aug 11 already broken down. Of the two, silver continues to represent the greater risk.

Oil and gas are both off several percent. CL is reversing off its purple channel backtest and should retest its SMA10 and potentially SMA100.  If those don’t hold, look for the .236 at 35.17. RB reversed nicely off the falling white channel top and should revert to at least the midline with its .382 at 1.0173 next up if the midline doesn’t hold.The 10Y cracked below TL support overnight – not by a lot, but noticeably thanks to the gap. And, the recent 2s10s breakdown through the TL off the Aug 11 lows is accelerating.  If our forecast is correct, it should continue to fall as 10Y yields come under additional pressure. UPDATE:  10:30 AM

Quick update…

Note that GC has good support at the red channel midline (goes back to 2011) and the purple midline (goes back to 2017.) If SI drops through the intersecting TLs, the next support isn’t until the SMA100 and .618 at 21.513ish. UPDATE:  3:55 PM

Interesting that SPX bounced today at the rising yellow channel midline… .seen here in the daily chart.ES was more or less in no-man’s land.

VIX is closing well below its SMA200.SI crawled back to the rising wedge lower bound and falling red TL by the close… …while GC almost made it back to the 1923.70 former high after getting a bounce on the red TL midline.