Following last night’s plunge in AAPL shares to our 144.48 target [see: Jan 2 Update on AAPL] the S&P futures plummeted as much as 58 points from Wednesday’s highs. There, the tightly correlated pair went their separate ways.

ES is off only 25 points (1.1%) while AAPL is indicating an 8% loss. Blame the majority of the divergence on VIX, which is undergoing the same kind of operation that rescued stocks yesterday.The other dramatic rescue was in USDJPY, which plunged to levels not seen since the night of the 2016 presidential elections (the yellow arrow.)  As occurred then, and in Brexit before it (the other yellow arrow) USDJPY has recovered most of its losses as the opening bell approaches.Can the market shake off this latest crack as it did both of those times?  A critical test lies ahead.

continued for members…If VIX can repeat yesterday’s slick trick and AAPL bounces at this important level of support, no problem.

ES has held the yellow channel bottom once again. If it can break out of the falling white channel and Powell doesn’t screw the pooch tomorrow, it has a good chance of recovering.  The key will be what happens if/when SPX reaches its SMA10 at 2474.74.SPX has a nice 36-pt buffer above its SMA10, 58-pts above its yellow channel bottom.

CL and RB continue to help out.  Remember, a few days of breakout wouldn’t hurt the CPI picture.  And, the December numbers are already baked in for the upcoming report due out on Jan 11. EURUSD has taken up the slack, protecting DXY yet again. GC has reached our next upside target well ahead of schedule. So, it could cooperate by reversing to backtest the broken channel.Last, the bond market continues to shout warnings that practically no one is listening to. UPDATE:  10:55 AM

Coming up on the euro close, and SPX has reached our lower target – the bottom of the yellow channel which had once broken down and has now been rejoined.USDJPY continues to make progress……while VIX reaches potential overhead resistance… …but, AAPL continues to leak lower… …and, the 10Y has collapsed.It will be important to the bulls that CL holds its SMA10. UPDATE:  1:40 PM

Bulls need VIX to break down and oil and gas to rally. A close below 2447 is theoretically bearish. A reminder of our downside targets if it breaks down… Don’t look now, but our yield curve model is hinting at another breakdown.I have to take off early this afternoon.  I’ll plan on updating charts this evening if anything unexpected happens.  Remember, Powell speaks tomorrow.  Although my base case is SPX2138, anything can happen – especially if the more dovish members of the FOMC press him to ease up on the hawkish comments.