A substantial correction seemed a little farfetched two weeks ago.

Now, not so much…

continued for members…

If we get a big bounce on the SMA200, the 2.24 up at 4884 is still an option. Otherwise, there are much lower prices ahead. I think those lower prices are in the cards. The question is the timing. Is it right away in order to switch focus from the rising white channel to the much larger yellow channel or later when important Fibs cross those channel lines?The 200-week SMA has been pretty reliable support over the years. I’m drawn to the idea of a backtest of the Feb 2020 highs (yellow dot) when the 200-week SMA crosses it in late Feb or early Mar. That wouldn’t even get it to the bottom of the rising yellow channel, currently around 3100.

I think the white channel will break down, aided by a still useful drop in oil/gas…

…and a breakdown in USDJPY and EURUSD and rise in DXY.

…which would ideally prevent breakouts for GC and SI… …and put BTC investors to the test. The whole point of this exercise, to prevent rates from keeping up with inflation, has had limited success thus far. The 10Y has pulled back, but is a long way from where it needs to be.

I’ve been suggesting for about a month now that the Fed needs a scary equity pullback to put interest rates at a desirable level, to break the bond with high inflation until the YoY comps come back down. What we’ve seen so far won’t do it. VIX hasn’t even come close to its former highs.

It will help if, as I expect, SPX and ES drop through their SMA200s.

Stay tuned…

UPDATE: 10:30 AM

Just got the SMA200 tags and the obligatory bounces. If our lower targets are to be hit, expect USDJPY and VIX to keep going.