This morning saw the Bank of England surprising the financial markets by not lowering interest rates as had been expected. This move is shocking because it goes in the face of all other global central banks and their easy money policy. After Brexit, the Bank of England was in a perfect position to lower rates but chose to stand firm. Could this be a new wave of central bank thought? Is easy money policy not the answer to energizing growth?

For the United States, perhaps the bigger news came in the form of economic news. The Producer Price Index, which measures inflation came in at 0.5%. This was the largest increase since May 2015. The sharp increase in inflation is likely to cause the Federal Reserve to worry. Over the last year, the decent economy and super strong stock market has not caused the Federal Reserve to hike rates since December 2015. Their reasoning has been that inflation is still non existant.

The VIX is slightly higher today even with the big stock market bounce. This is a warning sign that the markets may not hold their gains or we could see some selling in the next few days. Basically, it tells us big money/smart money is buying protection here. This morning the BOE (Bank of England) surprised by not raising interest rates, JPMorgan Chase beat earnings and inflation data showed more inflation than expected. Regardless of the initial bullish move in the markets, be on alert based on the VIX being higher. A high VIX is often a warning signal.

JP Morgan Chase & Co. (NYSE: JPM) reports earnings July 14th, 2016 at 6:45 AM EST. Looking at the daily chart below, you can see price has been hanging out above the 20, 50, and 200 moving averages the past couple days, a strong technical position. Because of this, If I had to pick a direction for $JPM to move upon earnings, I would give a slight bias to the upside. If $JPM does get a boost from earnings, I've isolated an area where I will be looking to short the equity. On the chart, I've drawn in three different trend lines of resistance. Based on these, I'd look to short $JPM anywhere from $64.75 to $66.00. Since it is Options X week, I would favor closer to $66.00 to enter a trade. Larger swings in price than normal are prevalent during the Options X week meaning price often overshoots support and resistance levels.

Skechers (NYSE: SKX), an American footwear company, has had an amazing rally over the past 10 trading days gaining over 20%! Scheduled to report earnings in two weeks, this rally is likely pricing in expectations of an exceptional report, but buyers beware, the chart is telling a different story. If you look at the weekly chart (below), or even the monthly, you'll see what is called a bearish flag pattern. The name is obvious as it looks like an upside down flag. If the pattern does not fail, there is significant downside in the cards for SKX. See my note on the chart for trade entry and targets.