It’s not Trump, it’s the algos. While the mainstream media focuses on rumors regarding Trump’s return to office, the algos are zeroed in on VIX’s latest failure push above its 200-DMA.This is a kitchen sink moment. Oil and gas are pitching in, with 4.5% and 5.5% pops respectively in the pre-market. And, even USDJPY is threatening a bullish 10/20 cross.

continued for members…

VIX’s failure to top its SMA200 is important… …but look  beneath the surface.  A close-up of VIX shows that the SMA10 is only .10 below the SMA20. The last time we had a 10/20 bullish cross was on Aug 28, just before SPX shed 370 points.The goal, of course, is to maintain ES’ rising white channel and SPX’s red TL. If these can be held, the falling channel from the Sep 2 highs will be broken to the upside.

As mentioned above, CL and RB are doing their part. And, though USDJPY is still backtesting, it is now in position to break out should the SMA10 (thin red line) cross above the SMA20 (thin white line.)EURUSD continues its bounce… …which continues to put pressure on the DXY…  …that not even the bounce in 10Y yields can prevent.Gold and silver continue to hold on to support and are both above their SMA10s. The insinuation is a breakout, but it’s not all that convincing a case without a breakout. I continue to believe the market is seriously discounting the coming second wave of pandemic woes. What I don’t know is the extent to which the huge infusion of liquidity sloshing around in the markets, combined with algo factor manipulation, will be able to offset it.

The charts point to a significant selloff later this week. But, we’ve been here before and seen stocks forced to higher highs on little more than a timely VIX smackdown. In addition to the headline risk (will Congress pass a stimulus bill?) we have some important economic data and Fed minutes coming out this week.

In short, be careful. Wait for confirmation on these breakouts/breakdowns. You might miss some return, but better that than be caught on the wrong side of a trade overnight.

I have numerous meetings this morning but should be able to post more later.

GLTA.

UPDATE:  3:50 PM

Just plain silly that Trump’s change of hospital room address should make any difference to the market, yet here we are.

USDJPY’s SMA10 and SMA20 are exactly the same: 105.448. VIX backed off its earlier threatened bullish (bearish for stocks) 10/20 cross. And, though CL and RB are up bigly, no breakouts here. Note that the 2s10s is nearing its most recent highs and a breakout. The last time TNX made a new cycle high, DXY took a big dip. A little counterintuitive, perhaps.  Importantly, that was Aug 27, the day before VIX’s bullish cross and a few sessions before SPX’s Sept tumble.