SPX S&P 500, VIX Volatility and USD US Dollar Daily Charts; Something is Rotten in the State of Denmark

Keystone has a simple mind so he must view things simply. Using a purple crayon, purple was always his favorite since it tasted better than the others, the big picture shows an interesting market juncture at hand. The three successive peaks on the SPX are higher highs. The euphoric bulls keep tripping over each other buying stocks at the ask, humorously, as they become sick and stricken with covid.

The VIX verifies the stock market happiness through August, however, as stocks pop joyously higher on vaccine euphoria and promises of unlimited monetary and fiscal stimulus sugar plums, volatility is not moving lower. Hmmm, something smells there, or as Billy would write, 'something is rotten in the state of Denmark'. The VIX should be sub 22 and perhaps sub 21. VIX trades now at 22.10 and has dipped sub 22 this morning but still does not take out the August lows, as it should to prove that more stock market joy is on the way.

Ditto the US dollar. USD, or DXY, dixie, is at 92.30 right now battling at the 92 support deciding to bounce or die. A weaker dollar pumps commodity stocks and small caps higher the Russell 2000 Index printing a new record high. However, as stocks continue traveling to the moon, and S&P futures are up +26 at this writing on news of Janet Yellen set for Treasury Secretary, the dollar is flat. Yellen is the Queen of the Doves so she will be pushing for boatloads of fiscal stimulus in her new job. She printed mountains of monetary stimulus at the Fed pumping stocks higher. The elite class, that own large stock portfolios, kneel at her altar each day, and are performing jigs of joy overnight.

The orange circles show key inflection points. The circles on the right-hand side for the VIX and USD charts should be lower than the middle circle but they are not. Thus, either the SPX is wrong and it must come back down now, or volatility and the dollar are wrong and the VIX will drop below 22 today and 21 and 20 tomorrow and the US dollar will fall through the key 92 support today both verifying the up move in stocks. Which do you think will happen?

Note how the stock market peaks occur directly to the dollar to the day. Thus, as the dollar goes, so goes the stock market in the opposite direction. Watch the dixie like a hawk especially that key 92.00 line in the sand. The VIX is turning before the stock market and actually giving a little heads-up that a trend change is afoot. This week the VIX would be called flat so keep an eye on it, a move substantially below 22 is going to send stocks higher while the VIX moving higher and taking out the 24 resistance would pave the way for the bears to create market carnage.

The bears have been patient the last couple weeks. The uber low put/calls and uber high NYHL verify the ongoing market euphoria and complacency so the comeuppance is at hand. It is a holiday-shortened week but these are historic stock market days ahead. If the republocrat and demopublican deep state prefer Sleepy Joey wouldn't they want to tank the stock market before he enters the job so his numbers will look excellent in the future? Equities may be bloodied beyond recognition by the time the 1/20/21 inauguration rolls around. USD prints 92.40. VIX 21.98. S&P futures +27. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 9:15 AM EST: Dollar pops like yesterday morning now up to 92.50. Euro 1.1854. S&P +27. VIX 22.13. The 92 support for the dollar is holding. Beads of sweat are forming on the dollar shorts foreheads as they begin looking around at each other wondering if anyone is going to flinch and jump ranks. Bingo. Dollar pops to 92.56 the HOD. Look, there's a dollar short that is covering deciding he does not want to play this game.

Note Added 8:20 PM EST: The dollar drops to 92.10. The VIX falls to 21.64 with a LOD at 20.80 which is a key number for the remainder of the week. The SPX catapults 58 points higher, +1.6%, to 3635 a new closing high. On the joyous high price print today, the SPX 2-hour, daily and weekly charts all negatively diverge across all chart indicators (signaling a top is about to occur). The bulls are trying to push the dollar sub 92 and the VIX sub 20.80 which would verify bullish glory ahead, otherwise, stock market disaster is at the doorstep.