Futures have ramped almost 1% overnight – a common occurrence lately, especially in advance of a Fed decision.

Even the durable goods orders beat (a miss if you’re looking for the Fed to slow their rate hikes) did nothing to thwart the algo-driven meltup.

continued for members…The big picture shows ES backtesting the latest little H&S pattern to complete.  It targets the SMA20 and flag pattern midline at 3880.94.

It’s no surprise that VIX collapsed overnight and is in position to spoil the bears’ party with a breakdown below the little red TL. Currencies are still on the bubble, with USDJPY and EURUSD both hanging by a thread. Oil and gas are both testing their SMA10s, which have proven to be formidable overhead resistance ever since mid-June. Likewise, the 10Y should be done backtesting its SMA100 and proceed with its channel backtest.UPDATE:  4:15 PM

I suppose you could say it was a slightly dovish press conference from the standpoint that Powell suggested that the neutral rate was only 3.25% (in a 9% inflation environment) and that the economy wasn’t in a recession (despite all the indications, including regional Fed forecasts.)

But, the bottom line is that algos continued to be driven by VIX – which is down below its SMA200 – and VIX futures – which spent most of the last hour below its SMA200.

This really wreaks havoc with our analog. But, if VIX/VX do indeed bounce and USDJPY and EURUSD head south from here – which they should – then the next leg down has already begun.

Note that ES and SPX have both completed very well-formed flag patterns.