It’s enjoyable to nail a target like ES did last Thursday… …and VIX did on the 9th. It’s a lot less enjoyable to see ES and VIX tag those very same targets over, and over, and over again.

But, it’s exactly the sort of action we often get around holidays when the algos are at the mercy of the MIT grads mashing the Short VIX button.

Fortunately, there’s a little action in the currency space that’s much more interesting for traders. DXY is finally breaking down.

continued for members…

The bigger picture shows plenty of downside should ES/SPX ever be allowed to fall again. It would require, of course, that VIX move off of its .886 Fib.The other complication, though, is that the SMA10 has now dropped to just above the recent highs. So, VIX would have to push up through both of them in order to usher in any equity downside.The algos do have help today from CL and RB, which are getting a bump from this being another Vaccine Monday. The headwinds they face are from DXY – which is finally breaking down……but will require USDJPY to dip appreciably… …because EURUSD is again out of upside. Remember, DXY has a pretty solid target at 91.358 but could easily overshoot to 89.88. Depending on whether EURUSD is allowed to overshoot, this should result in USDJPY reaching 102.37 or even 101.37ish.

Interestingly, DXY’s demise isn’t helping GC, SI or BTC one bit.  Note that GC’s SMA200 finally reaches its falling white channel bottom today. TNX, still on its way to the white channel bottom, is getting a bit of a bounce – perhaps in order to slow DXY’s descent. And, 2s10s is still stuck at 69 bps.

With DXY on the move and ES already up over 20 points, USDJPY has an excellent opportunity to dip down and tag one or both of those downside targets as early as today. Friday, when volume will be even lower, is also a very likely suspect.

More later.

BTW, we’re having thunderstorms in the area today. If the power/ISP goes out, I’ll do my best to update via cell connections – as long as they don’t also go down.

UPDATE:  6:40 PM

After reversing following a test of its SMA10, VIX closed right on top of its .886 at 22.66. That, and USDJPY kept creeping higher all day.  And, if that wasn’t enough to encourage the algos, Biden has selected uber-dove Janet Yellen as his Treasury Secretary. You can’t make this stuff up…