The futures are lock limit down again this morning, with ETFs trading in the after-hours indicating losses on the (eventual) open of up to 10%. This is probably not what the Fed had in mind when they unleashed the massive, emergency rate cut and $700 billion in new QE an hour before the futures opened on Sunday.
As before, the factors are all aligned bearishly, with the bond market failing to swing back to a bullish alignment yet despite the Fed’s desperation move. There are, however, some glimmers of hope.
continued for members…First, an overview of SPX and ES…looking at both log and arithmetic scales. The channel picture is unsettled as yet, but the Fib targets are clear. Remember, we’re likely to see the S&P halted for 15 minutes on the opening (7% loss.) The Level 2 circuit breaker (another 15 minutes) happens at -13%. At -20%, trading is suspended for the day.
The most interesting targets to me once it reopens are the purple .618 at 2414.97 and the Dec 2018 lows at 2354.24 — an overlap with the white .382. If/when those break down, we’re back to my favorite downside target at 2138. Remember, this was the Fib level which
First, the log charts:
SPX arith: 
ES log: 
ES arith: 
The currency picture shows the EURUSD backtesting its SMA200 again…
…and USDJPY backing off last week’s ramp job. 
NKD has broken down despite stepped up buying by the BoJ.
Look for central banks to keep applying pressure to achieve a rising dollar, net beneficial to stocks. 
This is putting pressure on GC which, as we discussed last week, is dropping through its channel midline and SMA200. A failure to rebound above 1495ish would be troubling for gold. The next level of support is 1423-1427.
Oil is off 8-9% this morning, with last week’s little white channel having clearly broken down. The key is obviously holding above 27.74, last Monday’s lows. Central banks will participate. 
But, RB’s drop is nothing short of stunning. It’s closing in on its next downside target and channel support around .64-.65. The key for bulls is to get back above .7867.
It’s the bond picture which continues to look bearish. The 2Y, which was as high as .53 during Friday’s short squeeze, plunged as low as .27 last night. 
It has since rebounded and is backtesting a horizontal resistance at .35. If it can push back above this resistance, it would be quite helpful for stocks.
The weekly chart:
This obviously placed pressure on the 2s10s, which tested the white TL from previous lows and then backed off. This is the last line of defense before a clear, obvious breakout. To the extent it can back off 48 bps, it would be extremely helpful to stocks.
The 10Y itself is back below the 1.272 extension, with 1.54 the next downside target if last week’s lows are taken out. 
ZN is hovering just below the 1.272, with the channel top at 144’195 remaining our next upside target. We’ll have to wait and see how aggressive the Fed gets in managing prices.
UPDATE: 11:11 AM
The good news: USDJPY and CL are pushing higher and VIX has thus far avoided new highs…
…so, SPX got a nice bounce off the purple .618/red .886/channel bottom.
The not so good news: The 2Y has bounced a little…
…but the 10Y has bounced a lot…
…which puts the 2s10s back at 48 bps.
UPDATE: 3:30 PM
Coming into the close and this morning’s lows are still holding – though it’s looking dicey. USDJPY just backtested the broken channel bottom again…
…and VIX is about to test the .886. 
It could break either way, but I’d be nervous holding long overnight under the circumstances. If you do, you’re betting that the CBs are able to pull a different, more effective rabbit out of their hat than historically significant QE.
Here’s a wild card for you, though…hasn’t the BoJ been oddly quiet during this whole affair? Can we count on them staying on the sidelines?