Non-farm payrolls came in hotter than expected, a result that initially sent markets lower as it reinforces the Fed’s rate hike plans.

But of course…VIX.So, instead of a selloff on news which is obviously bad for the market, futures spiked over 1.5% higher.

Think of all the market leaders which suffered massive declines after reporting horrid results or guidance, the 75 bps rate hike, Powell’s comments re the supposed Fed pivot —  any of these events should have resulted in large declines. But, the algos have been able to protect the S&P 500 from any serious damage.If you’re wondering how long this can go on, take a look at VIX’s 15-min chart.  Ever since the SMA50 crossed above the SMA200 (a golden cross for VIX, ordinarily very bearish for stocks), it has been locked in a very precise falling channel – hence the market’s inability to react to bearish news.continued for members…

The bigger picture shows that breakdown we’ve been wondering about is happening right now. Unless it reverses today, equities will not fall.

Remember, a drop through the channel bottom on Aug 1 is what broke SPX out of its falling purple channel and turned a 12% bounce into a 19% bounce.The equity charts don’t show the behind the scenes machinations – just the results.

Currencies are again playing the same role. USDJPY is back above 147.65…

…and EURUSD, which broke down yesterday, is rallying back into the flag pattern and testing its SMA50… …leaving DXY unable to break out for now.Oil and gas were on a tear overnight. Both broke out and are up sharply. Between currencies and oil/gas, 10Y is stuck going nowhere at the moment.