The biggest headlines of the year yesterday, and the S&P 500 gave up one point. And, as the plot thickens this morning, futures are virtually flat — propped up by pure algo action as VIX continues to slump and USDJPY continues to bounce off our downside target.

With Jackson Hole coming up, there is much at stake in the markets.  So, as we’ve been discussing, don’t be surprised if the “markets” continue ignoring both headlines and fundamentals.

continued for members…

USDJPY got a nice bounce off its SMA100/200 and has returned “breakout” mode.

This takes a lot of pressure off CL and RB, which can now make those SMA200 tags official without registering lower lows.

VIX is still creeping lower toward its yellow channel bottom.  No reason it can’t go below it.TNX is testing the triangle bottom as expected, and the 2s10s has recovered from yesterday’s dip. Overall, SPX and ES are well supported at these levels, though are still susceptible to the selling pressure which the algos have been holding back.

Keep an eye on ES’ red channel bottom.  Even though its SMA10 has caught up to Tuesday’s lows, there has still been no official tag yet.  Much like RB and CL, this current holding pattern should allow them to make their SMA10 tags without registering lower lows. I will be in meetings all morning, but will check back later in the day if anything exciting happens.

UPDATE:  11:58 AM

VIX tagged our downside target, the bottom of the yellow channel at 11.65.  For those who shorted back on the 15th, this is a good place to take profits and go long.  It seems ES and SPX might take another crack at their SMA10s — which would put VIX up at about the SMA200 (currently 14.59.)  Tight stops as always.