Just because we’re seeing an economic slowdown amidst very high inflation in a Fed tightening cycle against the backdrop of a war that could draw the US into armed conflict…doesn’t mean the market has to react rationally.

Stocks were up sharply yesterday because they’re still driven largely by algorithms. And, yesterday, the algos were focused on the fact that VIX broke down. In fact, if you invested according to VIX’s gyrations, you’d think there’s absolutely nothing to be concerned about in the investing world.

continued for members…

The day ended with a breakdown, but VIX has managed to bump slightly higher off that breakdown and is back above the purple trend line as we approach the open. The EOD theatrics was enough to push ES up out of the small falling white channel I sketched in intraday, but it’s back to the top of the channel at this time. SPX suffered no such fate.

Bottom line, there will be no significant downside in stocks until VIX rebounds above the SMA10 and SMA200.

On the currency front, everything is fairly calm this morning, with the euro feeling some pain from the Russia Ukraine war’s already evident spillover effects on markets. Oil and gas are both up slightly… …keeping upward pressure on the 10Y. I have a series of meetings today, so won’t be able to post intraday again. If anything exciting happens, I’ll post via twitter.