Futures are off sharply on comments by Moderna CEO Stéphane Bancel on the effectiveness of existing vaccines against the omicron variant:

“I think it’s going to be a material drop. I just don’t know how much because we need to wait for the data. But all the scientists I’ve talked to . . . are like, ‘This is not going to be good’.”

Bancel’s comments might also apply to this morning’s testimony from Jay Powell and Janet Yellen who head to Capitol Hill to explain why 6.5 inflation is nothing to be concerned about.

BTW, WTI made it official overnight, tagging our 66.81 target.

continued for members…

ES tested Sunday’s lows overnight before the algos got busy.Note that ES is only a few points away from a bearish 10/20 cross. DJI is closing in on our 361.80 Fib target at 34,430 – only 1.1% away from this morning’s lows. VIX tested Friday’s highs before the algos kicked in.The SMA50 is only 0.17 away from crossing above the SMA200 – usually a very significant threshold.  USDJPY is finally approaching our initial backtest target. A reversal at 112.33-112.46 would be very helpful to the bulls. A failure to bounce would accelerate equities’ downturn.This yen strength allowed NKD to backtest its falling red TL, with the rising white channel midline just below at 26,800.It is being compounded by a bounce in EURUSD… …sending DXY back below the .786 channel line.GC continues its holding pattern… …while SI continues slipping toward our 21.51 target.As mentioned above, CL officially tagged our initial downside target.  If it doesn’t hold, the .886 at 64.44 is the next line of defense – followed by the former lows at 61.74, white .236 line at 58.42, the 1.272 at 55.30 and the channel bottom currently at 51.53.  I suspect it will reverse when stocks do, probably when the DJIA reaches its SMA200. RB continues to slip lower.On the bond front, TNX finally broke down.The next hurdle will be the rising purple channel midline at 14.1. After that, there isn’t much support until 10.82.

UPDATE:  11:00 AM

As bogus as the Dow is as a fair representation of the overall market, it is very frequently an excellent guide as to when TPTB will step in to support stocks. The SMA200 and the 3.618 Fib extension are two such levels. If the overall market doesn’t bounce at DJI’s SMA200, then the bottom could fall out.The SMA200 has been critically important support over the years.

continuing…