With futures up 18 points and the S&P 500 closing 17.37 points below last week’s all-time highs, we should know pretty quickly which way the winds will blow today.  As is often the case, VIX has been driving the algos with shots across the bow as needed — three so far.  It’s enough to establish an obvious trend line which could easily be broken.

We got the test of the SMA200 we expected on Friday, and the subsequent very precise test of the red channel bottom from Nov 2017 at 8AM this morning. At this time, however, the key will be whether that little red TL from the overnight lows can hold.

continued for members…VIX’s bigger picture charts show how important this morning’s lows are to the algos. It was a very precise tag which needs only to drop a tiny bit lower to drive stocks to new all-time highs.  So far, however, it hasn’t happened.  And, the little TL from 8AM is holding.The view from ES’ perspective shows some indecision here at the .886.

And, SPX’s:

Oil and gas are on the sidelines.

And, USDJPY is marginally back above its SMA200. Note, however, that NKD has backtesting its very broken channel – indicating more downside while Japanese markets remain closed for the remainder of the week.The bond market is also still indicating trouble ahead with the 2s10s widening to 35 bps.Interestingly, ZN is getting a boost even though it hasn’t yet tagged its SMA200. This is allowing TNX to decline as we have been expecting.

The big picture for both ES…

…and SPX.

If I had to guess, I’d say the big boys are still on vacation but have left strict instructions to nudge stocks up to new highs but to stop the ridiculous price gains typical of the past several weeks.  In other words, continue the meltup at a saner pace.

I’m going to work on updating the gold forecast and, after that, will finish the oil/interest rate/inflation forecast.

More later.

UPDATE:  EOD

No big surprise, but VIX did break down below the red channel bottom from 2017…

…and both the small, recent TLs. In addition, USDJPY stopped short of tagging its SMA100… …and RB/CL are still loitering. Why all the machinations?  Although SPX made new highs on the open……ES fell short. So, more heroics into the close.  Sigh…

I got hung up with some macroeconomic calculations, so will have to finish the oil/interest rate/inflation forecast either tomorrow or over the weekend. Gathering relevant data has been a PITA. I have multiple appointments tomorrow, so will only be able post in the morning and around the close.

Quick random thought…given how influential the algos have become, what would everyone think of a new series that laid out buy/sell signals based on my own interpretation of what the algos are doing?  It would be heavy on moving averages, more for swing traders and buy-and-hold investors.

Please sent me your thoughts via this link or via email at michael-at-pebblewriter-dot-com.

GLTA.