VIX has been playing cat and mouse with traders for months, now.  We’ve seen numerous head-fakes — breakouts which might have signaled sell-offs, that were quickly slammed back down below overhead resistance.

As I wrote last month [VIX: Just Another Tool], this has become the norm for this once reliable indicator of risk in the markets.  So, traders could be forgiven for believing this latest breakout is just another ruse.

Today marks the 11th session in a row where ES has opened and/or closed within 2 points of where its SMA10 now resides (2266.70.)  Aside from a brief dip that was quickly corrected by the last VIX smackdown (Dec 30 – Jan 6), it has gone essentially nowhere.  Perhaps it’s time for a little excitement. 

continued for members…

The fact that VIX’s SMA200 has fallen to the white .886 suggests we might see a pop up to that level in the next day or so.

SPX ended yesterday with a backtest of the broken SMA10.  But, of course, that also leaves it with an easy breakout opportunity if TPTB so choose.  All it would take is a dip by VIX back inside the falling white channel instead of a breakout.

Remember, it was the breakdown from the rising purple channel that broke SPX out of its falling purple channel seen below. Now, we’re left with the red channel, which is falling at a much slower rate.

Admittedly, our 2212-2220 target is looking more and more remote.  By keeping SPX going sideways, they’ll flesh out the channel just as they would have if they’d let SPX fall a few percent.  Today should be telling.

CL also had a lot to do with SPX’s reversal, when it broke out of its falling red and then white channels in order to establish a less steeply falling purple channel.

Today is EIA day, at 11 instead of the usual 10:30 ET due to the holiday.  The latest talk, from both EIA and the Saudis, has been bearish.  So, maybe CL is finally ready to let loose.

And, last, note that USDJPY has bounced back from its falling white channel breakdown all the way to the top of the channel.  No surprise, there.

UPDATE:  2:16 PM

Finally getting some motion on SPX, with a plunge below the SMA20.

UPDATE:  2:23 PM

Might get a bounce here to backtest the SMA5 10 and/or yellow midline around 2261.80, as VIX has retraced 61.8% of its last drop.

UPDATE:  3:55 PM

Finishing up with a backtest of the SMA20.