As we stated in yesterday’s update…
…the downside case would be damaged considerably if NVDA were to come out with stellar earnings and outlook that boosted ES back into the rising yellow channel.
NVDA’s stellar earnings and outlook did, in fact, boost NVDA back into its previously broken channel.
The resulting algo spasm, however, boosted ES back to but not into its own broken channel. It has stalled right there on the brink, leaving both bulls and bears scratching their heads.
continued for members…
The bigger picture:
SPX needs to hit 5048.40 to register a new all-time high. Based on where the futures are now, it should do so with ease.
Note that its RSI actually broke down yesterday. 
Now, as to how the algo spasm unfolded… it wasn’t all NVDA. VIX gapped down below its SMA200, for starters, though it’s clinging to its SMA10 which is still above the SMA20. Note that the RSI hasn’t yet given up on the upside case (downside for stocks.)
And, EURUSD momentarily shot above its SMA200. It’s back below it now and still bearishly aligned. However, the bear case is becoming somewhat tenuous, with the SMA10 sloping upward and not far from a bullish 10/20 cross. I think TPTB are pretty well aware of what happens if it plunges back to 1.05 or 1.02 and are possibly working overtime to prevent that.
As a result, the DXY momentarily broke down below its red channel bottom and SMA200. It recovered, but not before sending equity futures much higher.
The tumble, in fact, opened up the possibility of a less steeply rising red channel that fits the recent highs much better. It moves the upside target out to mid-March.
Oil and gas remain muted, with CL still holding its SMA200 and RB still slipping toward another rendezvous with its SMA100.
And, TNX finally actually tagged its SMA100.
In sum, the bears are under pressure again – though not completely out of the game just yet. A failure of the cash markets to hold these highs would open up another opportunity for a backtest of some consequence.
Philip Jefferson, the Vice Chair of the Fed Board of Governors, will be speaking at the Peterson Institute at 10am ET. The speech and Q&A can be see HERE.
GLTA