According to Commerce Secretary Wilbur Ross, the U.S. and China are “miles and miles” away from resolving their trade war.  Moments later, Mario Draghi declared that “significant stimulus remains essential” and that risks are to the downside.

The twin salvos sent the futures back to flat as we approach the open, despite the support they’re getting from VIX and the dollar. Yesterday, we got the lower low we were expecting.  Can SPX pick up the SMA10 tag as well?  And, might this be the early stages of a rollover?

continued for members…

VIX was instrumental in yesterday’s dip and subsequent recovery.  Blame it for the bulk of the whipsawing.

USDJPY is continuing its bullish ways — though just barely. Combined with the euro’s weakness… …DXY is getting another boost.Interestingly, if we expand and extend ES’ falling red channel… …we get to the same 1.618 Fib backtest SPX indicates.  I’ve adjusted SPX’s falling purple channel to fit the recent lows and Jan 18 highs into the .236 and .786 channel lines.  This would imply SPX doesn’t quite make it to the SMA200, which was important (more on that in a minute.)  But, it does put SPX at 2138 in mid-March in what is a pretty solid looking falling purple channel.

I had liked the SMA200 target not only because it’s often a strong magnet, but because an A=C pattern would put the terminus almost exactly at 2138.04.

In any case, 2138 still makes plenty of sense (unless, of course, the China trade deal and the budget crisis are resolved on the same day that VIX is crushed to single digits.)

Keep an eye on several key price levels: the neckline at 2622, the SMA50 at 2619.49, the SMA10 at 2616.51, the SMA20 at 2553.97.  At that point, the small rising purple channel is at risk of breaking down.

AAPL reached its SMA5 200 yesterday and still needs a backtest.  A drop below 152.70 would be a good signal that it’s time to short for a backtest.UPDATE:  3:50 PM

What an exciting day.  Not. After a lot of whipsawing (thank you VIX) the market is up about 0.01%.  A potentially important development – the SMA10 is finally up to the neckline at 2622ish.  So, if TPTB wish to prevent a selloff, they now have two important levels of support.

Looks like VIX will break down into the close.  Finally heading for the SMA200?It’s about the only development of any consequence, except that AAPL continues to look weak. RB and CL have been weak, but it might be simply to keep SPX near the neckline until the SMA10 arrived.  Wouldn’t read too much into it just yet. Same old, same old with USDJPY.Along with a very weak euro, it has propped up the dollar yet another day.  If the pattern repeats, this should be an interim top for DXY.  But, it’s not exactly a huge opportunity.  For now, I’d continue to stay away from currencies. Bottom line, we have little more information today than yesterday other than that the global economy is still weak and is likely to continue getting weaker.

The best indicator we have going remains the 2s10s yield curve model.  The last time one of these yellow TLs broke down, it triggered nearly a 200-pt loss in SPX.  I remain cautiously bearish in the medium term — even though as approach the end of the month and an FOMC meeting we’ll continue to be subject to algo-driven meltups.