It’s pretty simple, really.  VIX got SPX up to 2872.  It got it back down to 2580.  If it’s not stabilized right here and now, SPX is going lower.Fortunately for the bulls, VIX made a lower high yesterday.  SPX didn’t care.  It made new lows anyway.  Because, after years of being tweaked by VIX managing to go just a little lower when needed, the algos need to see VIX stop rising at all before they’ll trigger any buying.

The inverse VIX ETFs have thrown a 300-pt monkey wrench into the works, forcing buying that would otherwise have dissipated by now.  But, one has to ask: where are the central bankers?  We know they have hammered VIX in the past in order to prop up stocks.  Will they come through this time?

And, if so, what about the dollar and, by extension, the USDJPY — the other factor which, along with oil prices, engineered the post-US election rally [see: Why the “Trump Rally” is a Fraud.]

Oil and gas hit our downside targets moments ago, providing one more measure of support for stocks which are desperately in need of it (update coming.)Will it be enough?  Not if VIX can’t be wrestled under control.

continued for members…

The daily picture on RB and CL.  RB slightly overshot interim support, with the SMA200 available if the TL from Jun 2017 doesn’t hold.  CL has completed its backtest of the channel from which it broke out.

Seen better on this chart.How tenuous is this morning’s “rally?”  SPX is clinging to its SMA5 10………in hopes that VIX will drop below this little red TL (currently at 28.50.)Yes, it would help if CL and RB bounced and USDJPY bounced.  But, the key is VIX.  If it rises above 32.50ish, then the potential falling channel is damaged and might not deliver the help that stocks need.

SPX’s path, if they do pull it off:

For those playing the downside on GC, it reached our initial downside target (1315) yesterday. I suspect it has more downside, but this is pretty obvious support. It would be worth taking a shot at a bounce with tight stops.

UPDATE:  10:40 AM

Just how sensitive is SPX to VIX at the moment?  This 0.80 blip in VIX… …produced a 15-pt drop in SPX.It’s not looking good for the bulls, especially if DJI breaks down.Get ready for the SMA200 tag at 2538.10.

UPDATE:  11:45 AM

Based on the way if VIX is slipping higher……the SMA200 certainly looks like it’s on the way. I’m going to take a 20-min break and will be back with the oil and gas update.

UPDATE:  12:45 PM

Quick update as SPX approaches its SMA200 as 2538.10.  I’ve adjusted the VIX channel to reflect the more likely top at 40.80ish — or wherever it is when SPX reaches 2538. UPDATE:  12:56 PM

Pretty darned close — within 2 points.  Might be a little difficult to find someone who’s looking to sell just above the SMA200… Judging from CL and RB, TPTB are making an effort to tag the SMA200 — come hell or high water.  CL is overshooting the backtest target…And, RB’s falling channel is breaking down.Here’s the best argument for SPX not rebounding at 2538.  DJIA is still a good 3% away…UPDATE:  1:37PM

SPX just tagged its SMA200 as VIX tagged the top of its falling channel and RB tagged its .886.  Less finished looking charts include CL and DJI. I think you have to take a crack at playing the bounce here — SPX, CL and RB.   Daredevils might wish to even short VIX.  I’m not so sure about equity targets any more, but everything else is acting pretty much in line with analog expectations.