Another day, another V-shaped recovery.  This one overshot our next downside target by 3 points, reversing at a nonsensical Fib level.

The talking heads would have us believe that traders suddenly stopped caring about nuclear war and floods of biblical proportions.  But, it was just another sudden collapse in VIX leading algos down the path to the land of unicorns and butterflies.It’s worth noting that VIX stopped short of the yellow channel bottom, and has since bounced a little higher.  Could our next downside target still be in play?

DXY rebounded where we expected, but CL still has a ways to go.  And, it remains to be seen how the divergence between oil and gas prices will impact August CPI.

Note that today’s second Q2 GDP revision came in hotter than expected, even after adjusted for (non-existent) inflation. One thing we know for sure…while the Fed would like to raise rates at least enough to build some cushion for the next calamity, they don’t want to be forced into such a position.

Thus, it’ll be interesting to see how the EIA inventory data shakes out later this morning (and, how creative the folks at the BEA will need to be.)

continuing for members… Despite the sharp rebounds, ES and SPX certainly haven’t broken out yet.  If CL’s drop can overshadow DXY’s rebound, we might still see those lower prices. But, I wouldn’t get too excited about it until they’re back below their SMA10s.  At that point, shorting would make sense.  SPX can break out past, say, 2450, I’d want to be long for an initial target of 2463ish.

UPDATE:  EOD

SPX ended up breaking out of the falling channel when (what else?)……VIX broke down below its yellow channel bottom, SMA50 and SMA100.  Note, in the chart below, that SPX’s breakout past the red TL happened at exactly the same time as VIX’s breakdown. Ditto for ES.The only thing bulls have to worry about is that SPX didn’t reach (let alone top) its .618.  It stopped 2.5 points short, so tomorrow it’ll face another test.More in the morning.