This Time It's Different

The analog we’ve been following since Feb 6 [see: Analog Watch] has proven pretty accurate in terms of prices, but has been off by a day or two a few times.

then…

…now

Yesterday was another potentially important deviation. SPX opened higher, but fell steadily throughout the day — retreating, as expected, to the channel midline where it remains.

VIX had a golden opportunity to reverse lower after tagging its SMA10, as it has countless times before. But, it didn’t — at least not yet.USDJPY even broke down, dropping through the bottom of the rising channel that suggested a return to the bullish side of a trend line from Jan 7. Perhaps the most troubling development for the bulls, however, was the yield curve breaking down. It wasn’t a lot, at least not yet. But, it’s a breakdown. And, as we’ve discussed several times [see: Does the Yield Curve Matter? A Closer Look], this doesn’t bode well for stocks.The big question, then, is whether the algos can be brought to heel. Perhaps the VIX can still be crushed by 20%, yields can correct, and USDJPY will regain its uptrend. But, if not, the higher highs suggested by our analog could be very, very difficult to achieve.