Futures were flat until 8:00, when VIX’s pre-opening dump was unleashed, popping ES back above its 10-DMA. ES studiously avoided retaking its SMA10 at yesterday’s close, slumping almost 40 points from its highs.

Today, the battle should be between VIX’s continuing beatdown – now 16% off Tuesday’s highs – and USDJPY’s impending death cross.

As always, ignore the politicians, particularly Dr. (not) Steven Mnuchin’s prediction that most, if not all, of the economy should be open by later in the summer.

continued for members…With CL having reached its 2001 lows, we should expect it to at least take a breather here. Time to step aside unless it can poke through 17.12.

RB has also reached obvious resistance, decision time for shorts. This leaves VIX and USDJPY in the driver’s seat, and USDJPY is not looking very positive at the moment.  It fell back below the white channel bottom on Apr 13 and has been unable to retake it ever since. Note that EURUSD is slumping again, with a drop to 1.0592 probably enough to keep DXY on the rise with a potential rising wedge or channel targeting 101.80.

VIX has plenty of downside potential, but can it keep stocks on the rise when USDJPY is tumbling?  I continue to lean toward the downside case.  ES, however, would need a big down day to allow SPX another shot at its 2.24 at 2703.

There’s a potential flag or falling wedge pattern setting up in SPX which would indicate 2703 could happen late tomorrow morning. The bond market is pretty quiet this morning. The 2Y is back up to 22 bps and the 10Y is back up to 62 bps.  This leaves the 2s10s at a neutral 40 bps — about where we left off yesterday.

UPDATE: 9:33 AM

I guess someone on the currency desk just woke up.  Remember, the white channel bottom is the major resistance at 108.

UPDATE:  11:00 AM

USDJPY has backed off its spike. According to the Nikkei, the BoJ will discuss at its Apr 27 meeting removing the limits (were there any?) to its bond buying. This should remove any doubt as to the fact that they’re monetizing the country’s debt.  The USDJPY’s rally has tempered, and keeping DXY’s rising wedge alive now falls to EURUSD. Meanwhile, SPX has reached the top of the potential flag pattern discussed this morning.  Although I get tired of writing it, and I’m sure all of you get tired of reading it…it’s decision time again.

UPDATE: 1:00 PM

Things are reversing following reports that remdesivir has flopped a Chinese study. I’d take profits on CL here and revert to short with tight stops on any decline back below 17.12 with an initial target of 12.38 and secondary of 11.

RB is back to its SMA10 on strong momentum.  A bounce here would be cause to go long, but I expect it to drop further.SPX and VIX have both backtested their SMA10s and bounced.  Bulls need them both to hold… UPDATE:  3:50 PM

Even though ES gave up 50 points from its highs……VIX is still off almost 4%.  And, SPX coincidentally keeps bouncing off its SMA10.  Sigh… The rest of the factors are just as ambiguous.  USDJPY has given up most of its gains, but is still somewhat neutral. The 50/200 cross is only .05 away and should register tomorrow.

While RB is clinging to its SMA10…could break either way. And, CL is on the bubble between long and short.

Bottom line, there is ample reason to remain short overnight. But, who knows what gimmick will be rolled out next? I still like the flag pattern down to SPX 2703.  But, only remain short if you can hedge or handle the considerable gap risk.