pebblewriter

Month: May 2020

  • The Hits Keep Coming

    It’s the last day of a short week packed with more important economic data — which the market has managed to ignore so far. Today might be a little different, as the spike in the savings rate and the collapse in consumption confirm a troubled road ahead for the strong consumer narrative.  Gee, could 25% unemployment actually begin to matter?

    Ignore the spike in personal income, as it reflects the massive government stimulus checks sent out last month.

    The PCE deflator also surprised, plunging almost to 2009 levels. So far, the futures have managed a muted reaction, with a likely falling wedge setting up following yesterday’s reversal at our channel midline target.But, with China trouble, riots in Minneapolis, and Trump taking a swing at social media darlings, maybe the data will matter for a change.

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  • Update on Bitcoin: May 28, 2020

    I’ve only posted about BTC once before, back on Mar 23 in response to a member request [see: FOMC Embraces MMT.]  The Dow was about to test its 2016 election day lows and, not coincidentally, the Fed had just unleashed QEinfinity.

    The post went as follows:

    Two major chart patterns jump out at me: first, the obvious triangle pattern on the weekly arithmetic chart (it isn’t there on the log chart) suggests BTC should bounce from here and return to the top trend line (which failed, BTW, to hold a recent tiny breakout.) It currently stands around 9,925.Second, the daily log chart shows a TL was broken last week but BTC has since rebounded back above it. For those wondering, the retracement of the rise from the Dec 2018 lows to the Jun 2019 highs reached about 81%. Had the TL held, we’d be looking at a Fibonacci 78%.

    If you believe that BTC will necessarily rise (as gold will) as QE explodes, the charts support a continuing bounce. If you believe the FOMC will do whatever it takes to support the USD and crush surrogates such as BTC and GC, then keep an eye on that TL (5,000ish) as a fairly clear stop level.

    Having spent a few hours studying Bitcoin, I promptly forgot about it.  I don’t really follow it, and believe it’s at least as heavily manipulated as everything else. Probably more. But, thanks to member John K., I was encouraged to take another look.

    As it turned out, BTC did continue its bounce and went on to test the top trend line, reaching 9917.25 on May 8.  It was an impressive 100% move from the March lows.

    Of course, now it’s back at overhead resistance – the same trend line from December 2017 which halted the 2017 and 2019 rallies.We’ll take a look at the potential for a reversal or a breakout.

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  • Betwixt and Between

    Q1 GDP was revised down to a negative 5% from 4.8% as Durable Goods came in at -19.4%, the worst since the financial crisis.

    Naturally, futures are up sharply……about equidistant between the important 200-DMA and the equally important 2.618 Fib extension at 3076.93.

    It’s decision time for the men behind the curtain. Credibility has already been stretched extremely thin. Does it still matter?

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  • Charts I’m Watching: May 27, 2020

    If you liked yesterday’s market action, you’re loving today so far. Like yesterday, the latest overnight ramp job has put ES well above its 200-DMA. Like yesterday, now we get to find out whether it will hold.

    It didn’t yesterday. The white acceleration channel broke down at the close, taking ES and SPX back below critical support. But, today’s a new day. VIX tanked 9.3% overnight – but right to strong support. The algos aren’t quite sure where to go from here…

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  • Visualizing 100,000

    Royal Memorial Stadium. Capacity: 100,119

    Having attended a few football games there over the years, I can attest to how big and how loud UT’s Royal Memorial Stadium can be, especially if the Aggies or Red Raiders are in town.

    As official COVID-19 deaths in the US reach 100,000 today, I think about how that many souls would look if all gathered together at one time. Bryant-Denny in Tuscaloosa holds 101,821.  Tiger Stadium in Baton Rouge, 102,321.

    The biggest in the country is Michigan Stadium in Ann Arbor with 107, 601. Deaths will reach that level by the end of the week.  Still, unless it happens to a family member, friend, or neighbor, I guess it doesn’t seem real to most people – certainly not to these sons and daughters of future COVID-19 patients.

    Apparently, news of another pharmaceutical company or two starting clinical trials is all the market needs to remain optimistic that maybe the coronavirus will just vanish, like a miracle. Or, maybe it’s just the algos up to their usual high jinks.

    VIX made new cycle lows at 11:36 last night… …which just so happened to be the exact moment that S&P 500 futures broke through their 200-day moving average. It’s also when WTI futures broke Monday’s highs.As we’ve been discussing all week, this was destined to happen on a holiday weekend. It was nice of the market algos not to disappoint – especially those seeking a positive headline:

    Market Shrugs Off 100,000 Deaths, Soars Through Critical Resistance

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  • Charts I’m Watching: May 22, 2020

    Futures are up 40 points off their overnight lows as VIX was hammered after pushing briefly above its 10-DMA.  It’s not unusual for charts to take on a bearish tone going into a holiday weekend. In a low volume environment such as this, however, it’s all too common for trends to reverse, currencies to pop, VIX to plummet.

    Will this one be any different?

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  • Happy Holidays?

    Futures are off slightly this morning as most every chart we watch are within striking distance of their 200-DMA. It’s no surprise that this is happening just ahead of a market holiday.

    Even DB – a stock many have left for dead and one of my favorite canaries in the coal mine — gapped higher and has nearly reached its 200-DMA.Could we see actual resistance come in at this important moving average or will we see the typical holiday ramp to higher highs?

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  • Fed’s Kaplan: Will Need More

    Dallas Fed president just gave a nice preview of the Fed’s April minutes due out later today. The highlight: we’ll need to do more. It’s the same message we’re hearing from all the FOMC members, and the same message the market is taking to heart as the Fed’s balance sheet explodes higher on its way to $10 trillion.

    Stocks broke down at the close yesterday. And then, to no one’s surprise, they piled on another 50 points overnight.

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  • Housing Starts Plunge by Most on Record

    April housing starts fell by 30.2%, the biggest single-month drop since records were first kept in 1959. Single-family fell 25.4% while multifamily fell by a stunning 40.5%.

    Futures, which are holding their breakout status after backtesting the SMA100 overnight, ignored the results.

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  • The All-Clear?

    Futures were already up sharply this morning when news hit that Moderna’s vaccine trials were going very well. This sent VIX crashing even lower and futures even higher with ES currently showing an 80+ point gain.If the vaccine is on the path to ultimate success, has the effect already been fully priced into stocks?  Is this the all-clear the market has been waiting for?

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