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The Fed will release its June minutes this afternoon, potentially shedding some light on why they paused their rate hikes. But, thanks to plenty of Fedspeak – including Jay Powell’s testimony – we already know that they are as confused and conflicted as everyone else. As always, they are more concerned about markets than anything else.

Futures are off about 0.50% as we approach the open.

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Although VIX is again suggesting more downside for stocks (back above the SMA10)… …we should note that it fell below its July 2021 lows – the head in the IH&S pattern that had set up but never completed.At the same time, we can see very significant negative divergence – meaning that VIX has made a series of lower lows even though its RSI has made a series of higher lows.

Just to confuse things, the RSI has also made a series of lower highs! And, as we’ve noted over and over, whatever gains VIX makes in the low-volume, easily manipulated after-hours are typically erased as VIX plunges during market hours.

This morning is a great example, with the apparent breakout above the red TL quickly erased.

Currencies have also contributed mightily to equities’ rally over the past few months. USDJPY has pushed right through all resistance – though it will probably backtest its .618 now.

And, EURUSD, which broke down in May, has staged an impressive backtest which was folllowed by a very gentle decline. It will soon be able to backtest its SMA200 without making lower lows. This is world class manipulation which has been quite supportive of stocks. DXY’s breakout in May was quickly corralled without tagging its owns SMA200….yet. CL and RB, as we’ve discussed, are in the penalty box. While they occasionally rally in support of stocks, they can’t make any meaningful gains lest they dash the Fed’s hopes for lower inflation and, of course, lower interest rates.

The bond market doesn’t seem to trust them, however, as the 10Y continues to threaten a breakout to 4.37% or even 4.76%. Note that the 2s10s has now dropped through the March 8 lows. Perhaps the greatest hope for bears comes from a very unlikely source – the Nasdaq. COMP tested its yellow .618 on June 16 and has – so far at least – failed to push past it. Note that it has made substantial pullbacks at previous .618s.