Futures are off modestly as the algos have backed off their assorted breakouts and breakdowns now that the bearish H&S Pattern has been busted.continued for members…VIX has rejoined its rising white channel bottom – taking its foot off the gas for stocks.

SPX and ES still have 3.618s to tag, but ES could react at its 1.272 first. It could pop up there any time, but a backtest of one of those fan lines around Feb 17 would be the preferred timing.

The only hitch to that scenario is the CPI data which is due out tomorrow. Inflation is getting more and more attention and a significant bump – which we’re not really looking for until March – could cause stocks to stumble. Oil and gas are still on the brink of breakouts – which I don’t expect to occur.

DXY continues its backtest of the red TL from cycle lows as USDJPY and EURUSD continue their backtests. This is relieving a bit of pressure on GC and SI.

Note that TNX is holding just below a breakout. A tumble would elevate ZN which has recently been positively correlated with GC.Last, BTC reached our next upside target overnight: the 2.618/3.618 combo at 46,337-46,433. The next upside target would be the blue 3.618 at 62,977. First, I would look for a backtest of the blue 2.24 at 40,180. It goes without saying: TIGHT STOPS.

There has been a lot of talk about bitcoin and the Tesla position in particular. I understand the potential for BTC to be used as currency and for corporations to accept it as such and utilize in their corporate cash investing.

Having worked with hundreds of corporate clients over the years, I think we’re a long way off from such a development. Corporate cash has to be stable in value, and BTC is anything but stable. Will Tesla shareholders be happy that the company’s BTC holdings appreciated in value?  Of course.

But, in its current form BTC is a speculative endeavor. I know of no responsible corporate treasurer who would use BTC as a substitute for cash unless it is just to have enough on hand for day to day transactions. That, alone, should amount to quite a bit of holdings when multiplied by millions of small and large consumer-facing corporations. But, don’t look for Walmart or Amazon to amass billions.

Speaking of which…if you’re a big believer in BTC continuing to skyrocket in price, why in the world would you use it to purchase anything? Wouldn’t you use your fiat currency and hold BTC for its inevitable 50,000 or 500,000 valuation?

I like BTC. I think it has great potential. But, Tesla’s investment in it is speculative and should be viewed merely as an opportunity to rack up capital gains in a very volatile instrument that can and has been driven higher by Elon Musk’s tweeting his book.

more later…