Stocks tumbled yesterday on inflation numbers that call into question the pace of the Fed’s taper and rate increases. Then they rallied overnight on an 11.4% collapse in VIX. The most significant chart on my screens at the moment, though, is the US dollar. DXY has had great difficulty breaking out of a tightly controlled consolidation pattern that dates back to July 2020. It tried this past September, but was smacked down to support stocks’ recovery from that terrifying (sarc) 5.8% slump.Now, it’s making another bid for a breakout — one we’ve been expecting for months (a very lonely stance BTW) — which wouldn’t bode well for stocks. Is this one for real?

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Futures are teetering on a bubble. The overnight bounce left ES at the top of a tiny little falling channel, with plenty of downside potential if it doesn’t break out.

As usual, VIX is calling the shots, threatening to break back below the white channel top and the red TL from the June lows.DXY’s breakout will depend to a great extent, of course, on EURUSD’s willingness to break down. Note that gold is still testing the purple neckline – a signal to short with tight stops IMO. While SI is much closer to our upside target at the SMA200 (25.45) which would also be a signal to short with tight stops. If it breaks through, it should seek the red TL (26.40ish) off the Feb 1 highs.

As expected, BTC reversed at the yellow channel top. The longer it takes the break down, the higher a cloud backtest would be.

If DXY breaks out, oil becomes cheaper – which would help address the inflation problem. 10Y yields shot higher yesterday, recovering the red channel bottom in the process. Yet, it stopped short of a breakout – preserving a path to a breakdown. The bond market is closed today for Veterans Day. As I mentioned yesterday, I will be out most of the day today and tomorrow.  I should have a chance to post late tonight if anything unexpected occurs. But, so far, so good.

GLTA.