In Friday’s post VIX: Back From the Dead we noted that VIX had recovered from the breakdown below trend dating back to Nov 27. This morning, it’s testing overhead resistance from Jan 4 and, if it’s able to break through, will likely take on resistance from Dec 21 or even Oct 29. Bears might want to hold off on the champagne just a bit longer, though. One of VIX’s favorite tricks is to race up to resistance in the pre-market so it has someplace to reverse lower from.

The FOMC will issue its latest pearls of wisdom on Wednesday. And, as ES’s chart aptly illustrates, they are loathe to allow a significant decline in the lead-up to these exercises in obfuscation.

Here’s the chart we posted Friday evening. continued for members…

I should have left it alone, but thought nah…they’ll never let it crater that far in one day. Here’s the one I posted instead this morning after reining in my bearish leanings.The algo signals are starting to show some weakness.  But, SPX shows its initial support is a mere 21 points below Friday’s close.

CL and RB still seem to be rolling over. While USDJPY is still not breaking out – though it’s ready if need be… …as EURUSD prepares for its next slide……and DXY eyes a breakout. The most significant bearish chart in our universe is the 10Y yield. Its veneer finally cracked just a bit – enough to illustrate the implications. ZN is adding to last week’s bounce (which should be helpful for gold – but hasn’t been.) The other tell – but one that few even watch – is the breakdown in the 2s10s TL from last Feb. The 2s10s broke above it earlier in the month, but is slipping back below it – likely on its way to a backtest.The aforementioned inflation hedges have to yet to make a move. more later…

UPDATE:  4:00 PM

It would be funny if it wasn’t so sad. Another day of very heavily manipulated markets, with VIX and CL/RB leading the way today.  Clearly, I should have left Friday evening’s forecast alone.

ES had no trouble backtesting the red TL and the white channel top – then racing all the way back to the verge of a breakout.

VIX’s collapse was no surprise. But, the breakdown of the purple TL was a nice touch.It could slice through the 10, 20 and 50-day moving averages with a very modest decline overnight.