Algos took off following yesterday’s “news” that a China tariff deal was in the works, ignoring the admission shortly thereafter that the news was, indeed fake.  Why no repercussions? Simple.  By then, ES had topped the H&S neckline — stopping out shorts who then piled in on the long side.

VIX’s ongoing smackdown didn’t hurt either.  It continues this morning, along with rises in oil, gas, and USDJPY. continued for members…

SPX closed above its neckline, with the purple midline and the 2017 close targets just above.

At some point we’ll get a pullback — perhaps at the SMA200 in order to construct an IH&S.

But, for now, VIX seems intent on tagging the horizontal support that has provided previous bounces.  This should provide the signal for a pause in stocks’ meltup.The breakthrough comes just in time for DJIA which, as we pointed out yesterday, is sitting at its own neckline……and COMP, which is sitting at the top of a megaphone. The supporting cast:

CL might be working on an IH&S soon.  But, for now, it’s content to keep melting up.

Ditto for RB.USDJPY continues its “breakout”… …which, along with EURUSD, continues to help DXY postpone its backtest. The bond market still warns of a dip up ahead. If 2s10s breaks above the dashed red trend line, it’s bearish for stocks. If it reverses here and drops back through the rising yellow trend line, it’s also bearish.

It can certainly go sideways for a few sessions, which is probably the plan. But, within the next few sessions, it will be forced to break out or down. I suspect TNX will resume its decline…... which will also drive the 2Y lower in order to avoid an inversion. Lots of talk this morning about NFLX.  As we pointed out the other day, it has reached important resistance at the white channel midline.  I’m not saying it’s going to crash here.  But, those playing the bounce should be aware of the elevated risk of a reversal.AAPL, on the other hand, has broken out of its falling channel and faces little overhead resistance any time soon.  Time will tell, but it’s quite likely that the company opened the taps on its buyback plan down around 144.48 and again in order to ensure the breakout.UPDATE:  9:50 AM

It’s important to note that SPX just tagged its purple channel midline — one of the last logical turning points if we were to see new lows. As such, it’s one of the last lifelines for bears.SPX has largely ignored the purple channel lines, preferring the more bullish yellow channel. Even though it broke down in December, it has sprung back to life. The temporary failure, though, leaves the door open for the purple channel to reassert itself.It’s a bit of a long shot. But, for those who don’t mind beating their heads against the wall from time to time, it might be worth opening a short position.  For those who want a stronger signal, wait at least until ES and SPX drop through their SMA5 200s.And, note that since it is OPEX and a holiday weekend, there’s a good chance any payoff will have to wait until Tuesday. More later…