Yes, VIX broke out of the falling channel it’s been in for the past week after coming within .10 of a likely bottom.  Yes, the ECB is tapering its QE.  Yes, the EURUSD is off over 1% so far.  And, yes, the USDJPY broke below SMA10 support. So, why, exactly, are futures still positive?

continued for members…

About the only thing going for equities this morning is CL, which after dipping below the purple midline, is putting in another intraday ramp……which is threatening to break out.  It will, of course, if SPX starts dipping much.It’s been enough to keep SPX near even on the open.  We’ll see if it holds……especially, as VIX continues to climb (though, note the several shots across the bow earlier this morning.)I haven’t mentioned USDJPY much the past few days, as it’s been a non-factor.  Its rising purple post-election channel broke down Tuesday, and it’s been going sideways since then – just below our 115.59 .618 target and just above its SMA10.  In the next day or so, it will have to choose to move below the SMA10 or above the .618 Fib.UPDATE:  11:28 AM

Coming up on the euro close, and SPX is still being propped up.  CL’s breakout fell apart……so, USDJPY suddenly felt the urge to break out.  VIX is trying to find support……and, SPX is getting dizzy.UPDATE:  2:05 PM

VIX has broken out, but CL and USDJPY are still conspiring to push SPX higher.  I saw the SMA5 200 crossing 2223.74 and thought that might work as far as timing for a backtest, but no signs of a reversal yet.  In fact, I think there’s likely to be some stops that get triggered at 2250..  I’m upside down nearly 1% which is an absolute limit for me.  So, I’ll reluctantly step aside unless we get a reversal below 2250. UPDATE:  3:03 PM

Here’s a channel that does a reasonably good job of fitting SPX.  It gets SPX back down to striking distance of 2223 by tomorrow morning, and there’s another channel that would actual fit 2223 itself.  Currently, CL is pausing at a very elevated level, USDJPY is back below the little red TL, and VIX is perhaps catching support after tumbling quite a bit from its highs.  All of those algo drivers are in a position to arrest SPX’s drop with minimal effort.  SPX is presumably backtesting the purple midline.UPDATE:  3:49 PM

I’ve been staring at these charts all day long, trying to make sense of CL and VIX’s action.  I think VIX is going to backtest the white midline and CL potentially head up to the yellow channel top in a series of evolving/tilting channels. But, it’s anyone’s guess.  The analog says we’re going to be higher still by the 15th, but it feels very much as though things got ahead of themselves and SPX really needs a backtest.  I imagine SPX will close at the SMA5 100 around 2243 today.  That leaves us 0.5% underwater.  I suppose covering there is the safe play under the circumstances.  But, for those who can handle the risk, I feel reasonably good about getting back down to our original target of 2223.I’ve never liked melt up situations, as it’s especially difficult to square what’s happening in the world, the indicators, and the prognosis with what’s happening to stock prices.  Even though my analog suggested prices would be higher, I was too wedded to the idea of a backtest to accept the silliness playing out right in front of me.