BTC reached our next downside target, the SMA100 and cloud bottom added just last week [see: Nov 19 Update.]
BTC reached our next downside target, a 17.2% drop from our short call on Nov 8, reiterated on Nov 9 and 10. The cloud bottom and SMA100, currently at 53,160, is the next target/support.
Bitcoin, off 22% since recent highs, is now officially in a bear market. As we discussed last week, there is substantial downside if this support doesn’t hold.
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ES sold through our next downside target in reaction to the new B.1.1.529 COVID-19 variant.
A number of factors have also hit downside targets, making this plunge on a normally quiet day a selloff of interest. Our targets in equities, currencies and commodities remain unchanged.
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Futures have spent the last two days testing the 20-DMA, buoyed by the USDJPY slowly creeping higher but under pressure from rising vol.
The economic backdrop remains mixed, with GDP coming in at a very slight miss (2.1% vs 2.2% consensus) but durable goods orders missing badly (-0.5% vs 0.2 expected.) On a positive note, initial claims hit a new low at 199K vs 270K prior.
The day is young, however, as we still have personal spending, PCE, new home sales, Michigan sentiment and EIA crude inventories to digest later this morning and FOMC minutes at 2pm. The situation in Ukraine is also of great concern.
As everyone heads out for the holidays, remember to be safe. Though COVID cases are down in many parts of the world, we are reminded that 2021 deaths have topped 2020’s and the pandemic is in full bloom in Europe. If you haven’t received your booster yet, do it now instead of after infecting grandma.
There is an excellent article in the NY Times about staying safe over Thanksgiving. Well worth a read. For members outside the US befuddled by our annual fascination with Pilgrims, devouring dry turkey and arguing with one’s brother-in-law, know that the real reason for celebrating is the arrival of Black Friday.
In a heart-warming rebound from their tryptophan-induced comas, Americans stampede to the mall where they trample over one another to get the best deal on a big-screen TV. It’s a tradition more in keeping with the Wampanoag’s experience than the Pilgrims’.
Happy holidays and safe travels everyone.
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World leaders announced the coordinated release of strategic petroleum reserves today in an effort to force oil and gas prices lower amidst rapidly rising inflation. The US, India, China, Japan, Republic of Korea and the UK are among the countries participating.
WTI’s initial reaction hasn’t exactly gone according to plan. Traders, who have seen these attempts fail before, are underwhelmed by the numbers. When attempted in June 2011, WTI fell $5/barrel on the day of the announcement but rallied $11 over the next month [see: Not Terribly Slick.]
It took a severe correction in late July to make a meaningful difference. Even then, it didn’t last.
This time, we didn’t even get the initial dip as there is a very good chance that OPEC+ will simply offset the paltry release by adjusting their own production.
The real solution will need to come, as it always does, from political pressure. Last time I checked, the US is still the principle supplier of military arms to the Saudis. Perhaps if the US were to threaten an arms embargo…
Oh, look, here’s one now.
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Futures melted up overnight with boosts from VIX and USDJPY.
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With goldbugs calling for gold to double, we got bearish again when it reached our upside target at 1870.60 on November 10 [see: CPI: Out of Control.]
Gold is getting a big boost from the inflation data, and has now reached the purple neckline at 1870.60. I would revert to short with tight stops right here.
We didn’t give silver the hook until Nov 12 [see: Gold – Still a Good Inflation Hedge?] when it tagged our 200-DMA target. Neither metal has fallen much since then. But, the fact that they haven’t broken out in the midst of an inflation scare speaks volumes.
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CL and RB are both off about 12% since our Oct 25 short call.
CL is coming up on the top of its rising white channel – a potential turning point. It’s probably close enough to be shorted here at 85.23.
I’ve been skeptical of oil’s rally for quite some time, observing almost a year ago [see: Don’t Ignore Inflation] that the YoY price rise would drive inflation well above the Fed’s target range.
Frankly, I’m surprised that it took investors this long to get nervous nervous. IMO, the Fed’s “transitory” story was cockeyed from the start.
As we approach an important inflection point — our 73.50 target — the question shifts to where oil/gas prices need to go in order to put the inflation monster back under the bed.
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BTC reached our next downside target, a 17.2% drop from our short call on Nov 8, reiterated on Nov 9 and 10.
Last, BTC is getting a very nice bounce this morning, perhaps on the notion that Elon’s $20 billion in TSLA sales might land in crypto. In any case, this is a very important juncture for BTC. I expect it to fail and revert to the cloud and dotted blue channel line at 55,700ish.
BTC has substantial downside risk if this support doesn’t hold.
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Futures came within 5 points of our upside Fibonacci target before backing off last night. This satisfies our expectation that the last leg up in this phase of the rally would occur overnight due to the pattern discrepancies between SPX and ES.
Today is OPEX. Close enough for the party to get started?
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Futures are up modestly as we approach OPEX, with yesterday’s drop recasting the rising wedge as a rising channel – a more apparently bullish pattern. 
Naturally, VIX has “broken down” all over again. 
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