When Phase One was announced, stocks established a new steeply rising channel that aimed straight to 3300. When the channel was repeatedly tested, a new, steeper channel was established. Watching Peter Navarro this morning on CNBC, I hear that Phase One is really, truly, definitely, almost, pretty much sort of in the bag.  Or will be soon. The more relevant factoid is that the end of the year is finally here.

The algos, having produced some pretty impressive numbers, can take a breather. From the looks of VIX, USDJPY and CL, they will.The question is: Might it turn into more than that?

continued for members…

The culprits…

USDJPY has broken below the purple TL and SMA200 and is likely headed for its SMA100 or lower.Along with the euro, which is breaking out in a big way… …it is producing a significant drop in DXY — which has finally dropped through its purple channel line.  A reminder…a weaker dollar contributes to rising inflation.RB is (finally) falling like a rock. And, for the moment anyways, VIX is pushing above its SMA200 — though we’ve seen this reverse very quickly before. This leaves SPX in a precarious position if it drops through its SMA10 at 3215.03.Our yield curve model continues to suggest more downside.

A reminder of what happens when the spread widens sharply…I have an appointment at 11AM, but will return around 1PM to finish yesterday’s post on oil, inflation, interest rates and currencies.

More later.