Anyone playing the “patient” drinking game while watching Powell’s press conference has quite a hangover this morning.  To no one’s surprise, the FOMC statement and Powell’s comments were dovish. The algos were quite pleased, rewarding the Fed’s awareness that inflation is no longer a problem.  In the wake of the oil and gas crash, the new problem is deflation.  How the Fed handles it this go ’round will determine what to expect from stocks.

If you’ll permit a small pun, the bond market is well ahead of the curve.

continued for members…

SPX was left on the edge of a breakout of the megaphone pattern.  As we discussed yesterday, it could break either way — plenty of pull from above and plenty of dead air below. In looking for clues…VIX is back to test its recent lows, with plenty of support at the nearby SMA200. RBOB got a nice boost off its channel bottom and is backtesting the yellow channel bottom and purple channel midline.  Where it goes from here will tell us much about whether TPTB have a good handle on what to expect.

CL, on the other hand, has already made a nice recovery and is trying to find a balance between helping stocks and fine tuning PPI. Currencies continue to be a drag on stocks as USDJPY has backtested the gray channel top and EURUSD/DXY look ready to complete their moves. UPDATE:  10:22 AM

A nod from VIX is all it took. UPDATE:  12:43 PM

Important line in the sand for SPX here — the 2.24 extension.  Happening right as ES tagged its .618 Fib at 2706.24.VIX is bumping higher, but hasn’t yet broken out of the little falling wedge it has constructed.

CL has ground to a halt at the purple .618. We should finally get that .500 Fib backtest we’ve been waiting for at 51.47. RBOB, on the other hand, is reversing sharply after testing the yellow channel bottom.  We’ll want to watch closely to see how TPTB react here at SPX’s 2.24 hump.Just a reminder…if we push above the 2.24, I’m still intensely interested in 2732.47.  A reversal there would be the perfect B for an A-B-C that terminates at exactly 2138.04 — the downside target that’s nearest and dearest to my heart.