Charts I’m Watching: Feb 3, 2021

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Futures melted up again overnight, reaching the .886 retracement of the late January swoon.

Stocks have been well supported the past three sessions – not by fundamentals, but by a 37% hammering of VIX, an engineered surge in oil and gas futures, and the obligatory breakout in USDJPY.In other words, it’s the same algo nonsense that got us here in the first place. With all the talk about market manipulation, funny how no one is talking about the Fed…

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The big picture for stocks:

It’s not clear yet whether this is a right shoulder or an attempted breakout to new highs. Closing well above the TL resistance and SMA10 as well as preventing/delaying the bearish 10/20 cross was a nice touch.

VIX bounced off its last SMA10 earlier this morning. It has little support left other than the white channel bottom at around 21.80. The currency picture shows the DXY breakout continuing, with EURUSD breaking down and eyeing its SMA100 target and USDJPY eyeing its SMA200.

GC was reined it with its breakout attempt throttled – for now. While SI is backtesting its broken falling white channel.Oil and gas continue to make nice gains – though I expect things to turn around very soon. EIA inventory will be released this morning.

UPDATE: 4:00 PM

EIA inventory data came in much less rosy than API’s 4.26 MM barrel draw.

The EIA showed a draw of 1 MM barrels of oil and a build of 4.5 MM barrels of gasoline for a total build of 2.9 MM barrels.

Yet, oil and gas both gained about 2% on the day in order to prevent ES from dipping appreciably around 10:30AM.

VIX also continued to wither, losing another 10.37% on the day for a total drop of 53% since Friday’s highs. This, in order to achieve a 4.8% gain in ES from Friday’s lows. This, in addition to the fact that it made a lower high and never pushed above the .886 Fib at 3838.75 gives the bears hope.

SPX and RSP continue to offer a potential path lower despite today’s failure to decline.