It’s gratifying when a model plays out nicely as this one has.  But, just a reminder, it’s not over just yet.  There are plenty of ways it could go sideways.  CL and RB could continue falling after reaching our next downside targets, which could drive ES/SPX lower than our H&S targets.

From last week’s Trump: “Falling Oil Prices…That Was Me:”And, ES this morning…

We’re now seeing the unintended consequences of Trump’s mini-crash in oil prices.  Not a great mystery — though attaching his name to it might not have been the smartest move.  As stocks continue to fall, however, look for the Fed to shoulder more and more blame.

Tie in the strong decline suggested by our yield curve model, and this was not a terribly difficult forecast.  The tricky part lies ahead: what will COMP do when it reaches our 6730 target from Oct 12 [see: Are We There Yet?]

Then……and, now.

continued for members…

We could see a bounce or at least a pause here at the .786.The 2s10s has bounced, potentially delaying the rest of the pain.  USDJPY is backing off its earlier plunge towards the SMA100… …providing DXY a TL bounce.CL and RB are testing last week’s lows.  If they make new lows, we might not get much of a bounce at all from SPX/ES. A reminder of what could lie in store if SPX doesn’t stop at the 2608ish neckline.VIX has plenty of room to run before hitting overhead resistance at 26.30ish.If it exceeds it, stocks are in for a lot of pain.Note that COMP is back below its YE2017 value.  At these prices, the entire BS 2018 rally was a wash.  I strongly suspect our initial target will hold.  If it doesn’t, COMP is a few days away from its first death cross since Jan 2016.I’ll check in later if I get the chance.  GLTA.

UPDATE:  1:20 PM

For those trading RBOB, note that it just reached our 1.4796 target.  Since CL is still slightly above its 51 target, I assume they’ll either diverge or RB will overshoot as CL continues lower.  But, CL could also bounce here and delay the inevitable until SPX is ready for its next leg down.  Bottom line, watch your stops. Stocks have bounced, though COMP has bounced much more than SPX/ES.  No guarantees regarding a bounce if RB and CL continue dropping, USDJPY continues backtesting, and VIX continues to be suppressed.