ES reached our next downside target a few hours ago. This is important support. The size of ES’ bounce and VIX’s reaction upon reaching its 200-DMA (26.09 – don’t worry, it will) should determine next steps.

Assuming that Powell will not be able to satisfy the market’s concerns in his interview later today (tools to deal with inflation? what tools? how, without raising interest rates?) we’ll look for a bounce there and a drop to the red .786 where it intersects with the rising white TL at 3721.25 – ideally on Monday.I’ll be working on the recent Update on Currencies for the remainder of the day but will check back in if anything unexpected happens.

I recommend this Bloomberg article for anyone trying to get a handle on what’s going on in the bond market. I continue to believe the inflation/interest rate dynamic will be the most important variable going forward.  If you’d like to know what time it is rather than how the watch works, check out the recent Oil/Gas Update.

GLTA.

UPDATE: 2:00 PM

ES just reached our next downside target two days ahead of schedule. This is interesting support.continued for members… (more…)

Sorry, Mr. Powell. No can do. There is no way to prop up stocks if interest rates continue to rise as rapidly as they have. And, there is no way to prevent interest rates from rising rapidly unless you are willing to put a lid on inflation.

And, there is no way to put a lid on inflation (at least in the short run) unless you’re willing to crash oil/gas prices over the next six weeks. And, sorry, but we all know what that would do to stock prices. Just the thought of it has done plenty.

The guys behind the curtain have prevented a breakdown so far, but the short-term indicators have slowly turned negative over the past couple of weeks. What’s it going to be, Mr. Powell? Pick your poison.

continued for members… (more…)

Last week, VIX shot up above its 200-DMA and experienced a bullish 10/20-DMA cross (bearish for stocks.) It even backtested its 200-DMA on Friday – leaving bears a rare bit of encouragement for the coming week.

Naturally, VIX was slammed back below its 200-DMA and is showing a 12% decline on absolutely no news (JNJ’s vaccine approval was already a done deal) as we approach the open. The algos are delighted.

continued for members… (more…)