A Technical Recovery

Thanks to VIX being hammered by 20% from yesterday’s highs, futures have recovered almost .50% – just enough to reach the bottom of the channel from which they broke down. SPX experienced a similar recovery late in the day, preserving (for now) the integrity of the channel that has produced a stunning 23% return since Oct 27.

Stock prices almost always melt up into OPEX days. When they don’t, however, they often perform a nosedive instead. SPX remains long overdue. A lasting breakdown of the channel, such as we almost saw yesterday, would be the first sign.

Another would be the 10Y shooting up past our 200-DMA target, which it came within 0.19% of yesterday. The bulls really need rates to settle back down – which will be very unlikely if oil/gas don’t reverse lower.

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