pebblewriter

Month: February 2019

  • Fourth Time a Charm?

    SPX is back above its SMA200.  All it took was convening the Plunge Protection Team which was — purely by coincidence — followed by VIX collapsing from 36 to 15, WTI spiking from 42 to 55, and USDJPY ramping from 104.60 to 110.90.

    The algos are very well versed in how to respond to such activities.  They didn’t disappoint. The only question, now, is whether SPX can hold this important level of support.  The last three times it was here, things didn’t go well for the bulls.continued for members… (more…)

  • Bulls: Not so Fast!

    A week ago today, SPX tagged an important Fib target that would have been a perfect turning point were it not short of the 200-DMA.  As we noted at the time [see: The Red Zone] a reversal without tagging the 200-DMA would have been highly unusual.

    There have been no instances of SPX approaching but failing to tag its 200-DMA since January 2003. It would also be easy to prevent.

    First, SPX’s SMA200 is just above at 2741.55. It seems unlikely that SPX would come all this way just to whiff at such an important target.

    Second, SPX has obviously pushed back above major support at the 2.24 and the H&S neckline.

    Last, if VIX spikes higher, won’t USDJPY or CL/RB just come to the rescue?

    As things turned out, SPX backed off just enough to tease bears: a 57-pt drop over the next three sessions.  At that point, SPX had dropped enough to flesh out a sharply rising channel from its Dec 24 lows.

    More importantly, DJIA had tested and was in danger of dropping through its own 200-DMA.  Clearly, it was time to prop up equities.  And, that’s exactly what happened.USDJPY, CL and RB came to the rescue, ensuring that SPX regained its 2.24 at 2703.  And, VIX — which did initially spike higher — was hammered (-58% so far) after Mnuchin convened the Plunge Protection Team, giving stocks all the support they needed to come back and test the Feb 5 highs.Once SPX tags its 200-DMA, is it safe to assume it will be able to maintain its momentum?

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  • Everything is Awesome!

    It was a close call but, in the end, bulls prevailed.  As we are reminded by those lovable Legos (yes, they’re back) everything is awesome!

    VIX is back below support and SPX’s rising channel is intact.  The Dow, the market’s best barometer of bullish interference, is back above its SMA200.  See if you can spot the turning point.With futures currently up 10 points, will the market mind when oil and gas continue plunging this morning?  We’ll see.

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  • Goal-Line Stand

    SUBSCRIBERS:  Just updated our forecast page, including RB, CL, DXY, USDJPY, EURUSD, SPX/ES, Gold, VIX, COMP, DJIA, AAPL and bonds.  Check it out HERE.

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    Rumbling toward the end zone, the bears ran into the bulls’ best defender: VIX.  As ES tagged our channel-line target a day ahead of schedule (and, therefore at a lower price)… …VIX took the opportunity to plunge back below its 200-DMA. Fortunately, we saw it coming a mile away courtesy of DJIA, which signaled the end of the decline with a precisely executed (random walk, my ass) tag of its 200-DMA.  As usual, the refs pretend not to notice when the bulls are caught cheating…This sent SPX back above its 2.24 Fib at 2703 just in time for the close.  All things considered, it was a successful goal-line stand.

    Unfortunately for the bulls, however, VIX couldn’t hold its stance overnight and is back above the 200-DMA as ES tests yesterday’s lows. And, rates are itching to tag our next downside target — a headwind for stocks.

    The algos will have their work cut out for them today.

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  • Trick Play

    With the overconfident bulls emboldened by the 200-day moving average looming just above, the bears have run a trick play and have the goal line in sight.To be sure, there are half a dozen defenders in between here and a score – starting with 380-lb All-Pro VIX.  Its 200-DMA at 16.54 is now resistance, and it has a reputation for cheap shots.Thanks to exhaustive scouting, though, our yield curve model suggests there’s a weakness in the defense that offers bears a clear path to the end zone — if they don’t fumble the ball.

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  • Delay of Game

    Nothing much has changed since yesterday.  SPX bounced around in our target zone, coming within a few points of its SMA200 as VIX went nowhere.

    The one notable exception was AAPL, which after tagging our downside target on Jan 3 $from last November [see: AAPL Discovers Gravity] reached our upside target yesterday. We originally charted this upside target on Jan 3 [see: Update on AAPL, Jan 3] and the IH&S pattern reinforced it three weeks later.  Had AAPL not reversed, the additional downside potential was substantial.

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  • The Red Zone

    The past two weeks in the market have been a lot like the Superbowl game: not much excitement as things crept toward a seemingly inevitable conclusion.  Now that SPX has reached the red zone, are the bulls about to score?

    ES came within .54 of our primary upside target this morning……meaning that SPX is quite likely to tag our favorite upside target of 2732.47 at or near the open.VIX has cooperated, dipping below the SMA200 to tag both our targets: the yellow channel bottom yesterday and the gray channel bottom overnight.  If the bears can get a turnover, this should be an excellent entry point for vol.continued for members… (more…)

  • Pins and Needles

    The algos are still in charge this morning, on pins and needles over VIX, currently threatening to drop through its SMA200.Meanwhile, CL and RB are taking care of their backtests ahead of the open, leaving ES/SPX perfectly positioned for its next knee-jerk move.

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  • So What?

    Does it matter if market leaders, some of the biggest market cap stocks in major indices are tanking?  Does it matter if earnings and guidance are, more often than not lately, disappointing?  Do the algos even care, or are they perhaps mesmerized by the fact that VIX is back below its 200 DMA? How excited might they get if it slips below horizontal support at 16?Meanwhile, the bond market — which might ordinarily be nervous over this morning’s strong employment report — is correctly concerned about inflation that’s too low.  As we’ve discussed often over the past 4 months, the sharp slide in gasoline prices has knocked the legs out from under inflation concerns and, therefore, the rationale for interest rate hikes.

    Yes, AMZN is stumbling this morning.  But, like AAPL, it was careful to stumble only as far as the nearest support.  In other words, the bulls might not be quite done.

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