Stocks shed over 1% yesterday, easily reaching our initial two targets and almost our third before being rescued.  it was the biggest drop we’ve seen in quite some time.  A little over an hour into the session, VIX decided it had had quite enough.  It plunged 8.8% from its intraday highs…just because.  And, SPX closed off only 0.6% — still an impressive accomplishment relative to the melt-up we’ve seen over the past several months.

The BoJ meeting was of no particular import.  The focus was more on the eurozone, and the ECB’s potential reaction to its little inflation problem.  Some are ready to talk taper, while Draghi is likely to continue pounding the table for more stimulus to provide a floor for the ECB’s growing pile of junk.

The focus will shift, now, to the Fed — which has its own, even bigger inflation problem.  Traders know it, and they’re more than a little worried.

continued for members…SPX almost backtested the falling red channel, but came up a bit short. ES is off about 5 points at present.  If it can maintain any downside, I’m still looking for the backtest to occur.  But, CL is breaking out and VIX is threatening to break down.  So, we’ll see. Offsetting them, USDJPY has fallen back into the falling white channel — a net negative. The .618 at 2273.82 should serve as a good trigger again for anyone who went to cash overnight.  Note the SMA20 is right there, too, at 2273.11.  I’d want to be short anywhere below it, with 2262 still serving as a good next lower target.

Note that SPX is tangling with the midline of the yellow channel — the one that SPX has been rising within ever since it broke down from the white channel.  The bottom of this yellow channel is somewhere around 2220, which would allow a backtest of the huge rising white channel (the yellow arrow.)  If things get going, that’s our real target.I’m still on the road today, but should get a chance to check back in around 1:15-1:30.

GLTA.