As we’ve discussed several times over the past month, VIX’s trend line from Jan 24 was overdue for a revisit. Now that we’ve got it, will VIX nosedive as usual or are we in for something decidedly less bullish?
The algos are geared up for a bounce.
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For months, VIX has facilitated higher equity prices – plumbing new lows, breaking down, refusing to rise in cases of obvious market distress. Today, it reached a trend line off the previous highs, all of which corresponded with sizeable bounces in the equity markets. It’s an extremely important test for bulls.
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Futures are off sharply this morning as important support for various instruments/indices/currencies begins to break down.
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It’s unusual for stocks to sell off in the lead up to an FOMC meeting. Its also unusual for a bearish pattern such as a Head and Shoulders pattern to complete during those days. Yet, here we are.
As has been the case since late August, the only thing preventing a severe downturn (aside from the hope that the Fed will suddenly change course and be less hawkish) is VIX – which keeps getting smacked down every time it reaches 27-28.
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Another ugly open for markets as ES, down about 1.25%, completed its H&S Pattern we’ve been watching take shape.
More grist for the bearish mill…as though we needed any more.
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August CPI came in hot, rising 0.1% in August instead of the consensus 0.1% decline. Core was even worse: 0.6% versus 0.3% consensus. The annual print also disappointed, coming in at 8.3% versus expectations of 8.0% or less.
Having slightly overshot our 4153 target overnight, ES is now reversing sharply.
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Futures are up modestly on light volume algo action in advance of tomorrow’s CPI data.
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Futures are off moderately in the wake of the ECB’s decision to impose a 75 bps rate hike – its highest ever – on an economy already reeling from spiraling inflation and weakening economic activity.
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Futures are flat after enjoying a modest overnight ramp.
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Yesterday marked the second day in a row of sharp declines in the equity markets following the 200-day moving average backtest and the passing of OPEX.
There’s more where that came from.
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