If you were keeping score from a charting standpoint, you’d find a lot more bullish indicators than bullish. Moving averages, RSI, etc – many of them signal that the worst is over. But, that pesky 50/200 cross is still hanging out there. And, it would take a lot more than a week-long bounce to negate it.
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This is day #3 with ES pushing up against its 200-DMA, and it might have just hit a snag here at the top of its rising wedge.
USDJPY just reached our IH&S target. I’m not convinced it’s ready for a breakout just yet – not with the many additional requirements for its assistance which lie ahead.
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On March 11 we questioned whether the Death Cross was a valid signal of more downside to come [see: Is the Death Cross Really Deadly?]
…it’s possible that it will add to the bearish pressures on stocks. It’s also possible that it will mark a bottom.
Since then, the war in Ukraine has intensified, the Fed has raised interest rates, and inflation has worsened. Why then, did the market bottom on that day, rallying 7.3% since then? 
As we pointed out then…
It would be easier to be afraid of a death cross if the Fed and other central banks weren’t so involved in propping up markets – something they’ve greatly perfected since 2008.
The fact is that, despite the recent fed decision to raise rates a “whopping” 0.25%, central banks still largely control markets. They still suppress interest rates and volatility and still send wildly bullish signals to the algorithms responsible for 90% of the trading activity in equities.
The most recent campaign not only discredited the death cross signal, but has put ES/SPX within pennies of their 200-day moving averages and a bullish 10/20 moving average cross. The market will regain its integrity only when central banks walk away and leave it up to investors. Don’t hold your breath.
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Futures are under pressure as we limp into OPEX with a bevy of concerns that call the recent bounce into question.
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Judging from the market’s reaction yesterday, the Fed should raise rates more often.
Obviously, it wasn’t the market’s reaction. It was algos responding to the “bullish” signals thrown at them, all at the same time, and all before Powell had moved past his opening remarks to say anything of substance that wasn’t already known.
It’s a common ploy in the lead up to major economic news, options expiration (tomorrow) and, especially, FOMC decisions. The purpose is to convey the notion that whatever is being announced is actually bullish.
Remember, the Fed is simply catching up with what the bond market has already done. And, they won’t actually start shrinking the balance sheet for another two months. In the meantime, they will go on propping up stocks as best they can. They’re obviously better at that than they are at forecasting inflation or ensuring price stability.
USDJPY had already broken out and was thus already cheerleading the rebound before it even started. The BoJ prefers to take no chances.
NKD came within 220 of its pre-COVID highs on Mar 10 – much too close for comfort.
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Last June, WTI tested the top of a huge channel dating back to the year 1999. 
At the time, CPI was 5.4% and the 10Y was around 1.5%. A pullback here would have allowed inflation to top out and for rates to stabilize. Indeed, WTI pulled back almost 20%, whereupon the stock market noticed and began one of those “terrifying” 3.5% declines.
By the time SPX reached its 50-DMA, WTI was gearing up for another test of the channel top (the white arrow below.) 
Many observers, including yours truly, expected the folks running this casino to take heed of the bond market’s warning and allow oil and gas prices to decline.But, on September 20, SPX did something it hadn’t done in six months. It plunged below its 50-DMA (the white arrow.)
This was clearly an emergency calling for drastic action. The end of the quarter was coming up, and after that, the end of the year. A decline to the bottom of the red channel, where the SMA200 patiently waited, would mean a mere 10% gain for the year.
They got greedy. Or stupid. Or both. They crashed VIX to new lows…
…had USDJPY break out of a 5-year falling channel…
…and, just to be absolutely certain of new highs in the stock market, made sure that WTI broke out for good.
SPX responded, of course, soaring to a 2021 gain of 26.9% and closing out the year at all-time highs.
The Fed still had a chance to get things under control. Sure, CPI was now 7%. But, the 10Y was still well below 2%. All they had to do was get oil and gas prices to stabilize.They might have pulled it off if not for those pesky Russians.
When WTI spiked up above all resistance, the game was over. It was time for the Fed to own up to their past misdeeds (not mistakes) and admit that the laws of economics were still intact and required that they start thinking about thinking about raising rates.
Never mind that the market had already done it for them. Today, we should learn what they’ve already told us: very cautiously, in a data-dependent manner, yada, yada, yada… The futures are up 1.5% at the opening bell just in case investors aren’t too happy with what they hear.
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Headline PPI reached record highs in February, coming in at 10.0% YoY. Under the hood, prices for unfinished goods registered 14.6%, the highest since January 2001. Prices for processed goods jumped 23.3%. Prices increased across the board, with the largest gains in energy.
Futures were flat going into the early morning VIX plunge, but gained steam once VIX dropped back below its 10-day moving average at 32.28. Look for a backtest of the broken white channel at around 4205.
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USDJPY reached our 118 target overnight.
We charted this target over a year ago [see: USDJPY’s Turn] following USDJPY’s breakout from the falling purple channel [see: The Usual Suspects], reasoning that the Bank of Japan would ramp up the yen carry trade in order to support the Nikkei’s breakout.
The BoJ rarely disappoints, and they didn’t in this case. The question, now, is how far they’re willing to go.
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There has been a lot of talk, lately, about an impending death crosses – where the 50-day moving average drops below the 200-day moving average. It’s supposed to be a harbinger of severe bear markets. Yes, the S&P 500 is about to do this (the white arrow below.)
And, it’s possible that it will add to the bearish pressures on stocks. It’s also possible that it will mark a bottom.
Sure, in 2008 a death cross was followed by a long, protracted bear market.
But, in 2020, the damage had already been done and SPX was well off its lows and on its way to new highs.
It would be easier to be afraid of a death cross if the Fed and other central banks weren’t so involved in propping up markets – something they’ve greatly perfected since 2008. We’ll look at the case for/against it making a difference.
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Headline CPI reached 7.9% in February, a new 40-yr high (but still well below actual inflation which exceeds 15%.)
All categories are all well over the Fed’s 2% annual target with little hope of a pullback any time soon.
Energy prices continue to soar, with gasoline prices near new all-time highs.
Even at these levels, however, they continue to diverge from headline inflation on a YoY basis.
As expected, futures have given up much of yesterday’s nonsensical gains.
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