Thanks to continuing yen weakness (due to the ongoing consternation in the Japanese bond market)… …and another timely shot across the bow in VIX……futures are back in the green, with yet another chance to break out even as RB and CL hurtle toward our downside targets.Can the algos continue to ignore the damage being done?  Perhaps they’re focused on AAPL, which rose to new highs after solid earnings and guidance after the close yesterday.  With its 2.24 in the rear view mirror, can AAPL break out above the troublesome channel top, or is the COMP model still in control — with a tumble due early next week?

And, then there’s the FOMC.  With currencies and rates right where they want them, there’s little chance they’ll ruin the fun.

continued for members…

VIX is in a nice position to be able to boost stocks with a breakdown of the rising white channel — something it only threatened to do earlier.  I’d be a buyer at 12.5, with reasonable stops just in case.

For the time being, it’s doing a pretty good job of diverting attention from CL and RB. The dollar and euro remain stable… …as all the action is in the yen. Between the USDJPY and the VIX, it might be enough to keep stocks from breaking down.  As tempting as it is, I wouldn’t bet the farm on a 120-pt drop. Though 2703 remains a viable target as the SMA200 is now within 6 points. A reminder: EIA’s inventory report is due out at 10:30 this morning.  Yesterday, API reported a crude build of 5.59MM barrels versus expectations of a 2.8MM draw and last week’s 3.16MM draw.  Gas inventories came in at a slight draw of 791K versus 1.29MM draw expected.

UPDATE:  10:30 AM

Mostly a non-event so far from a price standpoint — a smaller build for oil and larger draw for gas than API reported.

UPDATE: 11:55 AM

The initial bump for RB and CL has faded and they’re probing new lows.  Likewise for ES/SPX.  I have a meeting which will last a couple of hours, will check back in prior to the FOMC announcement at 2pm. UPDATE:  2:13 PM

The FOMC just called the economy strong, but took no action on rates at this meeting. Note that USDJPY broke down a bit.Getting fairly close to completing a little H&S Pattern that targets 2748.

UPDATE:  2:25 PM

Apparently the drop was making folks nervous.  VIX experienced its second shot across the bow of the day, and even though it bounced sharply, is on its way down again. 

SPX has rebounded nearly 8 points from its 11:12 lows.  This doesn’t mean the H&S won’t play out, simply that it’s (at least) being delayed.  We’ve seen many of these V-shaped recoveries end up failing lately.