Wednesday -- Slipping, Suspect, Dependent

ES Futures:
Slipping, but choppy.

News:
Very tired. Last night was Noche de San Juan or Saint John's Night, a celebration of the patron Saint of Puerto Rico. The tradition is to wade into the ocean backwards precisely at midnight and dip yourself into the water for good luck for the ocean is said to be "blessed." The tradition says to do this three times, but many people do it several times, I'm told.

Did I do it? No, but I might as well have. Since I live near the beach, I was up all night listening to it. It's an enormous party and very loud.

Elsewhere, the Greek deal may be slipping. No deal will ever be a good deal. The math simply doesn't add up.

Watching the VIX which finally closed below its 2 standard deviation band yesterday. A close back inside it is a sell signal. The last one was right before the 2012 highs in March and April (there was another one later in 2012, but it was during a rally).

FX:
Quiet thus far, which is good.

Treasuries:
Only 10s have failed to break a swing point. All remain suspect.

Energy:
WTI crude remains above 60 but is suspect as well. Ditto NG.

Metals:
Have switched back to a weekly chart of gold. Probably won't be bullish on gold or silver until gold gets below 1100.

S&P Outlook:
As if to add to yesterday's take on a potential pullback, the VIX has finally given at least a set up for a classic sell signal. The signal occurs when the VIX closes outside its 2 standard deviation band and then closes back inside it.

The VIX can merrily slide along the lower band all it wants, however. Especially if the market shoots for the upper targets.

Still seeing 2110, 2100, and 2085 as potential areas of near-term support. Still seeing potential for new highs, too. But the point is that the market is closing in on the culmination of a large pattern that just so happens to be about as bearish as they get, and when sell signals start occurring, it pays to take note.

And I don't mean like this:

Maintaining a bullish stance because your methodology tells you so is one thing. Being bullish for the sake of being bullish is dangerous.

Maybe another perspective would help these people see both sides.

Source: Compustat, Goldman Sachs Investment Research

Yet again, as if no one learned anything in 2007, buybacks (fueled by multi-year interest rate compression) have fueled another multi-year rally.

Being bullish for bullishness sake without comprehending the hidden hand at work is simply being completely dependent on buybacks and low rates to continue.