Things got off to a nice start for bears yesterday…until our old friend the V-shaped recovery showed up.  Even when it looked like it would falter, it just kept melting up.

So, instead of a clean, simple channel to 2875.15, ES has this ridiculous path to follow — all for the sake of delaying the inevitable for a day.As usual, blame the algos.  USDJPY was in on the action, pushing up through its SMA200 every time stocks started to falter.  As we expected, it was a head fake.

continued for members…

Likewise for CL, RB and VIX.  RB overshot its channel top and made a new high……while CL overshot its .618 after already overshooting its SMA200. VIX ignored a perfectly good opportunity to tag its SMA20 at the top of its falling channel so it could overshoot it today. Overall, it doesn’t destroy our downside case, but it sure put a dent in the nice, pretty downside channels.

And, instead of a nice, clean channel down to backtest the .886, we get this messy hybrid, expanded channel.My theory is that days like yesterday are all about insiders positioning themselves for days like today.  I know it’s cynical of me, but it sure feels like it.  In any case, our downside equity targets are unchanged — with a backtest of the .886s the likely goal.

Note that COMP is very near its just after the open as AAPL backs off its 1.272 and is likely to backtest its recent highs. In addition to USDJPY breaking down, we see EURUSD having another strong bump.  This has dinged DXY, of course.  Maybe this will be the start of the move we’ve been waiting Maybe. UPDATE:  9:47 AM

SPX found its initial support – a little TL from last week.VIX has broken out…for now, at least.

BTW, our yield curve model is behaving as expected.  Note the reversal off the red TL is producing a downturn in stocks, though a day late. Thank the bump the 2210s saw over the past week which kept the spread going sideways instead of breaking down.The good news is that it reversed off that TL.  The bad news (for bears) is that it could go sideways for several more months without breaking out or breaking down. UPDATE: 3:07 PM

Almost there…

UPDATE:  3:56 PM

SPX and ES are slightly out of sync.  So, while SPX has essentially tagged its .886, ES stopped at its TL (it can always complete the backtest after the close.)