The call the President’s working group the Plunge Protection Team, presumably because it protects the market from plunging.  It think they’ve got it wrong.  What it really does is protect plunges in volatility that, in turn, trigger algos to buy stocks.

The VIX smackdown that Mnuchin’s Plunge Protection Team unleashed on December 24 has now reached 65%……with the latest overnight plunge taking out both horizontal support and a key Fibonacci retracement level.In the process, ES is making new highs after breaking down from its rising wedge and a rising channel. It’s a wonderful gimmick that almost always works as long as the other factors are on board — an important caveat on days like today.

continued for members…

The big picture for VIX shows the purple .886 is well above the yellow channel bottom which has guaranteed new highs in the past.  In other words, holding VIX 13.14 is critical for the bears.

Stocks will be challenged by CL and RB, which have both reached overhead resistance again. Bonds will also continue to put pressure on stocks, as the TNX is still inching lower.On the currency front, USDJPY is still sitting above SMA support.  The 10, 20, 100 and 200 are all bunched up just below it.  So, it’s a net positive.  But, it’s certainly not making new highs, leading me to believe it’s merely stalling until Quad Witching is over.This leaves EURUSD and DXY also in limbo. Therefore, SPX is in the same position it’s been in all week. It might see the IH&S play out with the puny right shoulder in place so far; or, it might resume the dip for a larger right shoulder, a backtest of the 2.24, or even new lows.

continuing…