October PPI came in at 8% annually and 0.2% monthly versus expectations of 8.3% and 0.4%. Core PPI remained unchanged at 6.7%.
Futures popped up to our 4050 IH&S target on the news, but had already ramped over 40 points prior to the print.
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Seemingly on a rail, VIX’s bump took it only to the top of the falling red channel in place for over a month.
A failure to break out means ES can top its 361.8 Fib extension and reach its IH&S targets. 
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It was more of a red ripple than a red wave. So far, it appears that Republicans will hold a five seat majority in the House and might actually lose ground in the Senate. Futures are moderately lower.
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With the election today and CPI coming out Thursday, things are bound to start getting a little more volatile again.
VIX can’t stay in this channel forever…
Don’t forget to vote!
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More of the same…perhaps until CPI comes out on Thursday.
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The market is essentially unchanged from yesterday, with VIX in a position to make or break this rally unless the FOMC delivers a significant surprise.
We’ve seen this movie before: a sharp rally into a Fed meeting or CPI report that wipes out the put buyers and positions the market for a drop from a higher price level once the disappointing news is delivered.
There is widespread expectation of a 75 bps hike, but less agreement about whether the FOMC will be as dovish as the market’s latest rally would suggest.
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In yet another reminder of their sway over the markets, the algos have brought stocks to the brink of a breakout by putting VIX at the brink of another breakdown.
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The thinking goes like this: a strong jobs report is bearish for stocks because it might delay the Fed’s eventual pivot; while, a weak report would be bullish because it might accelerate the Fed’s pivot.
The futures are on the fence, but not for long.
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If the enemy of my enemy is my friend, is the friend of my enemy my enemy? The relationship between the US and the Saudis has been through plenty of ups and downs, but it’s been years since it was as fraught as it is now.
The West is trying to put the screws to Russia, which in turn is trying to put the screws to the eurozone by enlisting the help of the Saudis, who are arguably US allies… Around and around it goes, with a decision due out later today that might spell a 2MM bpd (about 2%) cut in production.
Will it be enough to revive the correlation between oil/gas prices and interest rates? ES is positioned to at least backtest its SMA10.
Stay tuned.
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Futures are up about 1%, backtesting the June lows as we approach the opening bell.
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