When the Fed says they’re not particularly concerned about inflation… it’s not because they’re not concerned.  It’s simply that they know the economy cannot function with higher interest rates — not with the level of debt sitting on personal, corporate and government balance sheets.

They recently started slipping in the word “symmetric” to describe their inflation goal because it will accommodate a rise well above 2%. What this really means is that they failed to address the inflation elephant in the room (looking at you, oil and gas) but explained their inaction as a judgement that inflation isn’t a problem.

Bond investors are hip to these verbal contortions — meaning TNX has finally broken a minor trend line and can now take a crack at the one from last November.Of course, as rates moderate, so will the dollar — unless an equity selloff driven by falling oil and gas prices keeps it on the rise.Equity selloff?  Not so fast, insists VIX.  For now, at least, the algos are listening.  But, I doubt they’ll be able to ignore the yelps of pain from oil and gas longs.continued for members…

CL has quite a ways to go before reaching trend support and backtesting the channel it broke out of.

The dollar’s weakness shows in the USDJPY……but, it’s being offset by its strength against the euro. Gold is loving the rising inflation/falling dollar scenario — getting a nice bounce off our TL from Dec 2016. The SPX scenario hasn’t changed one iota except that the SMA200 continues to rise.  I wonder if the timing isn’t simply “whenever the SMA200 rolls over.”

UPDATE:  10:55 AM

SPX is closing in on 2703.62 as VIX approaches the upper falling wedge bound.  There will be some resistance to selling as we approach 2703.62, meaning it could have some difficulty reaching it.  I suspect VIX will need to break out.  Implications: take profits now or be prepared to wait for a series of headfakes that might not pay off until tomorrow or even next Tuesday/Wednesday. Note that COMP still has a long ways to go — which, along with the need for CL and RB to fall, makes me bearish beyond 2703.UPDATE:  11:18 AM

Bond folks take note: ZN broke out of the lesser TL and is testing the next higher one and our 119’180 target.  A breakout would open the door to 121’030.  This corresponds with TNX testing the TL from last December.  In other words, a break here would be significant. UPDATE:  12:27 PM

The white channel and SMA5 200 backtested, VIX’s TL backtested.  This would be an ideal place for a reversal if we’re going lower. For those of you who have been following along, DB hit our longstanding 12.30 target today.  I’m working on a full post to bring the charts up to speed.  But, in the meantime, know that there’s decent support here.  I would play a bounce here, but with tight stops.  The next support isn’t until the former low of 11.19, followed by 10 and then 8.54. UPDATE: 3:15 PM

It’s almost a replay of yesterday, with VIX declining just enough to keep SPX afloat — but, not enough that it breaks out (at least, not yet.)  I continue to see lower prices ahead, still driven by lower CL and RB.  Note that both dropped through their SMA10s today.  The last few times this happened, stocks dropped plenty.