Charts I’m Watching: May 17, 2018

TNX reached 3.11 this morning, but DXY isn’t buying it.  We asked rhetorically, yesterday, whether “investors algos [will] even care about the stagnation which, abetted by inflation-driven higher interest rates, has ensnared the economy in its razor sharp talons?  Or, will a tumbling ‘risk indicator’ and copious share buybacks be enough to ward off a correction?  …hey, VIX is off 8%! Everything must be awesome!”

As it turned out, VIX dumped 11.4%, which is all the algos needed to ensure a bounce off the SMA100 and, more importantly, the 2.24 extension at 2703.62.  The game continued overnight.

With futures off 12 points from yesterday’s highs — about half of the session’s gains – someone decided to dump a boatload of VIX futures — just enough to break VIX’s uptrend and ES’ downtrend.  The timing was perfect.USDJPY, meanwhile, is taking the opportunity to rally on higher interest rates and is nearing our next upside target.  And, RBOB and CL hit new highs.  Are the algos really so easily fooled?  Have carbon-based investors — who have certainly done the math on the economic damage higher rates and rising inflation are already doing — become irrelevant?

In the midst of VIX dumping and USDJPY, CL and RBOB pumping, futures are still off 4 points.  Perhaps even the algos are tiring of the charade…

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