“I can’t believe stocks rallied so strongly into options expiration!” said no one.

Between VIX’s plunge, the euro’s ramp, and the yield curve’s decimation, bears have had no chance – even as fundamentals argued otherwise.

continued for members…

This is essentially the last chance our XLU cycle model has to play out. Coming on the eve of a long weekend, Q2 end, and OPEX, bears are understandably skeptical.

That said, consider that VIX is actually on the rise with strong positive divergence…

…EURUSD, USDJPY and DXY have completed or are very close to completing backtests…. …and CL/RB have completed backtests and, in the case of RB, channel top tags.It’s important to note that oil/gas mustn’t rally any further. If gas were to level out at current levels, the strong positive correlation between YoY gas prices and CPI indicate that inflation would be on the rise from now through the end of the year.

Obviously, the FOMC knows this. I believe it is the main reason for all the hawkish Fedspeak of late.