July retail sales fell 1.1% versus -0.3% consensus, reflecting the impact of stimulus payments, Amazon’s Prime Day change, and the general apprehension surrounding the delta variant.
Yesterday’s bad news faded under heavy algo action, with VIX going into meltdown mode…
…the instant SPX reached its SMA10. 
The bears will get another shot today.
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Futures are off this morning on concerns regarding a potential taper, the delta variant, and the disastrous pullout from Afghanistan.
Our targets remain the same across the board.
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The VIX meltdown / ES meltup continues.
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Annual CPI remained at 5.4%, the highest in 30 years. And, that alarming number masks plenty of data which the BLS methodology simply ignores. Shelter, for instance, registered a 2.8% YoY increase per BLS’ survey-based calculation. Yet observed apartment rents increased at 9.2% in just the first six months of 2021. And, housing prices have been rising at the fastest rate in over 30 years.
Aside from the games played by the government, some non-transitory trends remain concerning: energy, vehicles and commodities all remain quite elevated. Combined with swiftly rising wages, it will be difficult to put this genie back in the bottle.
The algos are more concerned, however, with another overnight smackdown in VIX which sent S&P futures to new highs – for now. Pay attention to where that leaves some important Fib retracement levels.
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Markets are quiet as we approach the opening, with deck chairs being positioned for tomorrow’s CPI release.
Here we go again…
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The Fed detests gold and silver because, like higher interest rates, they are a stark reminder of the soaring inflation the Fed hopes we’ll ignore. Interest rates can be manipulated lower by buying up every bond in sight. The Fed has been doing this to the tune of $120 billion per month.
Gold and silver, on the other hand, can simply be shorted, which is exactly what has happened – once again breaking a significant long-term uptrend and dashing gold bugs’ hopes for a breakout.
Silver, having reached our next downside target, faces a particularly important test.
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Still on the road for a few more days… Delighted to see that all our charts are playing out as expected – with a critical few days finally having arrived.
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