Futures are up moderately ahead of today’s FOMC decision.

continued for members…

The breakout above the channel midline is significant, not just because it gets us to the 1.618 extension well ahead of time.

It opens up the possibility of a steeper channel guiding prices higher from here – even as it increases the odds of the bubble bursting.

Although VIX is about to experience a bearish (bullish for stocks) 10/20 cross…

…it’s significant that VX has done a pretty good job of holding its SMA50 and remained broken out from that falling purple channel that dates back to early May.

All this isn’t to say that this volatility measure will send stocks plunging. But, it is happening at the same time that ES is reaching its 1.618 at 6980 and SPX is reaching its purple 1.618 at 6958.

Is there a possibility that the FOMC will punt on a rate cut? We don’t have a lot of economic data to go by due to the shutdown – now about a month old. But, financial conditions are certainly quite loose. And, the large layoffs recently announced would hardly have been prevented by 0.25% lower interest rates.

Then there’s the problem of breadth. According to the BofA Global Equity Risk Love index, we’re at levels of exuberance not seen since the 1990s.

continuing…