Futures are slightly higher as ES approaches our 1.272 Fib extension target.

Just a reminder…I will be out all next week – though if markets go crazy and a special notice is warranted, I’ll try to do a late night post or two.

Stay tuned.

Futures are up slightly on a PPI print, a modest dip in WTI futures and the continuing VIX smackdown that all satisfied the algos.

July CPI came in on target again, aided by the administration’s efforts to suppress oil and gas prices. Headline CPI was 3.4%, down slightly from June’s 3.5%. As always, take these data with a huge grain of salt. It means next to nothing when Trump/Bessent dictate what the number should be. But, at least it provides some insight into their thinking.

The key continues to be oil and (especially) gas prices, which our charts indicate are heading higher over the next month.

But, the algos are happy, and the campaign to protect the early June highs is succeeding…so far. Timing for a potential down leg has moved out to Sep 11 (ominous, to say the least…might be a good day to decline that ride on Air Force One.)

Of course, much credit goes to VIX, which is threatening new lows.

And, the DXY remains subdued.

I continue to expect Iran to do what it can to ensure that Trump has a very bad day on November 3. Contrary to Trump’s assertion that the US has “total control over the Hormuz Strait” the ships that try to navigate the strait are being fired upon and are thus not even risking it. Eight crossings were reported last week, down from 130/wk prior to Trump’s bombing campaign which began Feb 28.

 

Futures are up slightly in advance of this morning’s existing home sales, tomorrow’s CPI and Thursday’s PPI.

BTW, posts next week will be few and far between due to a heavy travel schedule.

Futures are flat on slightly higher oil prices with a twist on the Iran war: any deal is likely to be between Iran and Oman, and Israel is unlikely to approve.

The bond market is not impressed. Last week’s breakdown in yields has been “fixed.”

 

The jobs print came in at a stunning 23K drop (versus a consensus +86K gain.)

It was stunning because it potentially represents a change in strategy by the White House. Are they finally willing to admit a less than stellar job market in order to force interest rates lower and stock prices higher?

It helped to force VIX to the lowest value since early January.  From the 18.43 backtest of the SMA200 two sessions ago to new lows? Yeah, okay. Why not?

Even though the 10Y cratered on the print, it didn’t break down below the TL from mid-June.  Remember, the cycle high was 4.75% at the end of July. So, 4.60 is a nice move. But, even if the trend line fails, we still have the SMA200 support just below at 4.58%.

This being Friday, it wouldn’t be surprising to see some truth about the lack of a deal in Iran sneak out…followed, of course, by a social media post before the market opens on Monday that we are ever so close to a great deal.

Futures are flat again in advance of tomorrow’s jobs report.

SPX broke out yesterday, driven by a sharp decline in oil prices and in VIX. It landed just shy of the 2.24 Fib extension while exhibiting pretty striking negative divergence. As a result, any disappointment re the supposed “deal” with Iran could result in a sharp pullback.

ES, on the other hand, has a ways to go before reaching obvious resistance. Though it is also showing strong negative divergence.

CL appears to be hung up on its SMA200, though this is a tool that the administration has not hesitated to use in the past. The flag pattern is quite clear, suggesting an upside breakout. Again, will the Iranians acquiesce or will they continue to politically punish the Donald? I suspect the latter, though it’s a losing bet at the moment.

Then there’s VIX and the usual games being played with breakdowns of trendlines and the SMA200.  FWIW, it’s up over 4% this morning even though ES is up 0.50%.

In watching the financial news this morning, it’s almost impossible to find anyone who’s bearish. This alone is reason to be cautious.

Stay tuned.

Futures are in a position to put SPX at new highs, even as ES itself is still a a little over 1% shy.

We have new lows on VIX – no surprise.

But, the potential trap for equity traders is that CL’s significant drop — thanks entirely to Trump’s and Bessent’s jawboning — is running into a channel midline AND SMA200. It is fairly likely to bounce here, which would put those new equity highs at risk.

And, DXY is only slightly above strong support.

All of these issues could be allayed by more of the same kind of manipulation that got stocks to where they are. But, the risk is real, and will remain so until we get a bullish 10/20 cross.

Stay tuned.

Moment of truth, thanks to another unsupported social media declaration…

…that sent CL tumbling by over 6%.

Perhaps the bigger development is the extraordinary intervention in the Japanese yen. Reuters captured this snapshot of Scott Bessent’s To-Do list at Camp David the other day:

 

There is some confusion as to how the purchase was financed – with dollars or euros. And, there’s plenty of doubt as to whether the yen strength will last given Japan’s negative real interest rates. But, the USDJPY’s breakdown…

…was mirrored by a breakdown in the DXY. Such declines have been beneficial to stocks of late.