VIX compression continues into its 17th hour of this declining fractal. Whether this compression is artificial or not, there is a natural limit to how long it may last. This may be it, since the pattern also appears complete. We know that the New York Fed is buying ES and SPY and selling VIX. However, as you will soon see, it may be running out of bullets and is making one last desparate stand against asset deflation.

SPX is also in its 17th hour of rally. You may recall that I had mentioned yesterday that the EW relationships suggested a top near 1466.00. This may be it, although I must confess the turn hasn’t been made yet.

UUP/USD is in rally mode today and has crossed above hourly mid-Cycle resistance. It now has the 50-day moving average and Intermediate-term resistance overhead. You may also recall that I made the statement that the Master Cycle low was in on December 18. It will be harder for equities to rally now that the dollar is gaining strength.

Bernanke has met his Waterloo in TLT/USB. TLT has now crossed its Head & Shoulders neckline and Cup with Handle Lip with dire results for ZIRP and the rest of Bernanke’s plans. $TYX has hit a high of 30.79 today nad is challenging the September 13 high of 31.08.

Regards,

Tony

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