We’re seeing a nice start to the correction we forecast last week.
We’ve reached our next downside target in the 10Y, which seems to finally have attracted attention from the algos. Remember, there’s still a gap to fill at 1.20%.
As expected, USDJPY, CL and RB have rolled over and broken down – leaving futures without much support at all. Our downside targets, essentially the same since May 26 [see: What’s the Holdup?], remain unchanged. The upshot: a wild ride ahead.
continued for members…
Although CL has reached its SMA50, the red midline and SMA200 are a realistic goal over the next few weeks.
And, USDJPY’s dip definitely has further to go. If the channel backtest fails, it could easily shed another few percent – with more dollar strength against the euro.
VIX remains a potential savior, but only if it can stop at the SMA200. It came up .07 short earlier this morning – suggesting that it will probably leak past it later. The falling white channel top is closer to 23.75.
If it breaks out of the channel, the bears will have a field day. 
This leaves our downside equity targets in pretty good shape. ES’ small white channel bottom is the initial objective. This channel has held up nicely since the May 13 lows…
…with a cyclicality that can’t be ignored.
Once it breaks down, however, then we can focus on the larger purple and, assuming it breaks down, the white channel that would accommodate the SMA200 tag at the 361.8 Fib extension anywhere from July 30 to Aug 13ish.
The SPX version strongly suggests the same: the SMA200 and 3.618 Fib at 3956.64, which would be 9.95%. A 10% correction (exactly) would be 3954.31. 
Silver finally broke down below its SMA200 this morning, putting it at the purple channel .236. If this fails the next support is the flag pattern bottom and red channel midline at 23.15. And, if that fails, then the purple channel bottom at 22 comes into view.
As expected, GC fell back from its SMA200. But, it’s getting a bounce off its SMA100, with the purple channel bottom just below at about 1761.50. This is clearly important support for it. I would be very cautious in this range – especially if ZN pulls back and the 10Y bounces off 1.20. 
SI is testing the purple channel .236 line. If it holds, then we’ll get more chop. But, I suspect it will break down and test the white flag pattern bottom and red midline at 23.17ish. If that doesn’t hold, then the purple channel bottom at 22ish is the next downside target – the white dot.
continuing…