http://www.reuters.com/article/2013/08/26/us-economy-durables-idUSBRE97P0FL20130826

“When looking for signs that interest rate increases are too much for the economy to handle, durable goods, like housing, are a leading indicator of weakness in the broader economy,” said Chris Low, chief economist at FTN Financial in New York.

“We expect the Fed is determined to start reducing the size of asset purchases regardless, in part because the market has already begun to reverse some of the recent rate pressure without the Fed’s help.”

U.S. Treasury debt prices rose on the data, pushing yields lower, while the dollar fell against the yen. U.S. stocks were up marginally.”

In other words, the Fed is caught between a rock and a hard place.  Taper will cause stocks to fall but interest rates to also fall. However, more stimulus is not possible as it will drive interest rates higher and reduce growth further.

The taper must continue regardless of stocks falling (at this point). VIX is also rising. The melt is on!

http://stockcharts.com/h-sc/ui?s=$OEXA200R&p=W&yr=3&mn=0&dy=0&id=p98821371788