Day 22

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In our analog from Feb 6, today was slated as the day that VIX collapses sharply in order to get SPX just a little higher before a pause. But, as we noted last week, VIX broke down 6 days early and hasn’t as much firepower left.

And, stocks have run into resistance so strong that it would take some pretty powerful assistance to get them any higher.

In early January, WTI broke out of a rising channel and made multi-year highs, enabling ES to break out of the rising channel it established in the wake of the US election (below, in white.)

ES fell back into the channel during the February correction and, despite making a strong comeback, has failed in five separate attempts to break out again.

Needless to say, we don’t have the exact same set of political and economic issues which were making headlines over a decade ago. But, on the other hand, stocks are significantly more sensitive to VIX’s every twitch.

With ES, SPX and RUT bumping up against strong resistance, does VIX have enough juice? Don’t look now, but it’s creeping higher and our yield curve model is hinting at serious trouble ahead.continued for members…

TNX is still hanging in there, despite the lukewarm PPI numbers released this morning. If it can drop without the 10Y2Y spread also collapsing, then stocks should be okay. Otherwise, we could see a crack in SPX/ES.

RUT is soooo close to a breakout. Will they let this opportunity pass by?

At present, VIX is about even on the day. A drop to the .886 at 13.27 would help stocks immeasurably.

If SPX can’t hold 2770, then the white midline at the .618 at 2742.92 looks like a good fallback position. And, if Day 22’s peak simply came early, then the 2.24 at 2703 would make a reasonable pullback target.ES’ .618 is at 2745.

I have several meetings throughout the day, today. I’ll update things as often as possible, but it will be spotty. Please watch your stops, and be prepared.