Futures are up nicely after yesterday’s VIX-inspired stick save  Recall that ES had completed a bearish H&S Pattern and VIX had completed a bearish Inverted H&S Pattern at the opening bell. Futures were off over 30 points and heading lower.

If VIX’s IH&S had held, ES’s pattern targeted 3832 – a drop of 3.2% from recent all-time highs. But, as bears know all too well, even a minor drop in equities has been verboten lately.

Instead, VIX’s neckline failed and ES’s pattern never played out. It rebounded at the nearest convenient trendline and repeated a very tiresome pattern of ramping overnight. Such is the power of algos.

continued for members…

I’ll post the usual assortment of charts below and continue working on the inflation forecast I was working on yesterday. The key will continue to be VIX, which would have topped its SMA200 yesterday had the IH&S been allowed to play out.

By holding its SMA10, SPX’s 3.618 remains in play. Note that TNX is at a very critical point – backtesting the lows established in 2012 and 2016.A closeup: On the currency front, USDJPY has gone a little past a normal backtest of its SMA200 and tested its SMA10. This bears watching, as there seems to be an attempt by CBs to support DXY via higher rates.As a net importer, a stronger dollar moderates US inflation. If, as I suspect, EURUSD drops further, it will help bolster the dollar…

…which finished its TL backtest and has just today executed a bearish 10/20 cross.Let’s not forget how important this backtest will be for EURUSD. Not only will the SMA200 be tested, but the entire falling red channel dating back to 2006 which EURUSD broke out of in November.Remember, in March-April, YoY CPI will go from too low (1.4%) to much too high – unless oil/gas prices crater and/or the USD soars.

more later…