Uncoiling

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With OPEX finally in the rear view mirror, we should see key factors let loose today. CL, RBOB, USDJPY and VIX have been coiling for the past week and the unwind could be a shock for stocks.

This morning’s ramp job notwithstanding, the next few days should be fairly volatile.

It’s a great setup for a pop-and-drop.

continued for members…CL and RB are seriously overdue for a breakdown, with RB already getting started.

We’ll need to see a sharp retrace from USDJPY……and for NKD to come down off its ledge. It looks very bullish on the daily chart… …but it hasn’t really gone anywhere except holding on to the 22505 new highs.

And, of course, we’ll need to see VIX finally take off. ES had a nice falling channel going, but has busted out in the last 30 minutes. I don’t expect it to hold.

But, it leaves SPX with a distinct lack of follow through on the opening. Our analog suggests it’s very susceptible to a collapse once the factors uncoil.

A reminder of how things stack up versus 2015.

On the bond front, we should finally see the beginning of the next leg down for 10Y yields. The 2s10s continues to widen… …primarily on the basis of the 2Y dropping. This is the classic setup for falling equity prices, especially if 2s10s really spikes higher.

More later.

UPDATE: 1:00 PM

The initial unwind has mostly reversed and taken ES/SPX back up to the daily highs where they are threatening an IH&S completion. Make or break it time for bears.

UPDATE: 3:55 PM