The SPX Premarket is down .8% as I write to 1972.00. The top of the retracement was at 11:30 am on Friday, giving us approximately 4 more days of potential decline.

ZeroHedge reports, “Yesterday, the FT triumphantly proclaimed: "Beijing abandons large-scale share purchases", and that instead of manipulating stocks directly as China did last week on Thursday and Friday, China would instead focus on punishing sellers, shorters, and various other entities. We snickered, especially after the Shanghai Composite opened down 2% and dropped as low as 4% overnight:”

While VIX merely pulled back from its Monday high, the VIX ETFs have been unwinding their shorts through the end of the week.

ZeroHedge reports on this decoupling that has traders worried, “While we have all seen how equity markets had decoupled from the 'reality' occurring in commodities, FX, and credit markets (as well as macro fundamentals), trading desks are anxiously eying the following 'decoupling' as this week's "pair trade."

TNX Peaked on Wednesday beneath a natural resistance area and is challenging its 50-day Moving Average this morning. This appears to be the resumption of the flow of liquidity from stocks to bonds.

Since we are beginning a third wave in virtuall all assets, we may expect this move to be very strong.

Regards,

Tony

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