pebblewriter

Year: 2022

  • Charts I’m Watching: Oct 17, 2022

    Pretty standard fare for an OPEX week…futures have ramped 1.6% higher on a bounce in USDJPY and CL and a trounce in VIX.

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  • It Wasn’t Oversold

    It was amusing, yesterday, listening to various on-air personalities try to explain why the market made such a “historic” reversal. The one I heard more than any other is that it was deeply oversold – which is just not true. It was somewhat oversold on Sep 27, but RSI made a higher low yesterday as stocks reversed and shot higher.

    No, the historical rebound was all about COMP reaching support and VIX collapsing on cue – same as countless other times – with a healthy dose of short covering. Unless I miss my guess, it was only a historical headfake.

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  • Update on COMP: Oct 13, 2022

    In our last update on COMP [see: Apr 25, 2022 Update] I noted that after reversing within 0.3% of our 16,158 upside target in November 2021……COMP had dropped to our 12,813 downside target three separate times. I wondered what it would take for COMP to reach our next lower target at 10,122.

    [Last November] we identified two downside targets: 12,813 and 10,122.  COMP topped out at 16,212 the very next session and reached 12,813 on Feb 24.  And, again on Mar 14. And, again today. What the heck is going on? After three separate attempts, is 10,122 still on the table?

    As we found out earlier this morning, 10,122 was definitely on the table.  In fact, tagging it has touched off one of the biggest single-day bounces we’ve seen in ages.

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  • CPI’s Big Miss

    Core CPI increased 6.6% from a year ago, the highest level since 1982, and 0.6% MoM. Consensus was for 0.4%.

    Headline increased 8.2% YoY and 0.4% MoM versus consensus of 0.2%.

    Bottom line, there’s no reason to believe the Fed will pause their rate hikes any time soon.

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  • PPI Tops Consensus Again

    For those looking for inflation to top out, today’s PPI report of 0.4% versus 0.2% consensus was a disappointment.

    After ramping sharply overnight, futures are now trying to hold on to meager gains.Meanwhile, the yen has plunged to levels not seen since 1998. If USDJPY tops 147.65, the previous high was back in 1990.  The BoJ’s commitment to the yen carry trade is astounding. Talk about “all in…”Don’t wander too far from your computer. Fed minutes are due out at 2pm ET today and CPI comes out tomorrow morning.

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  • Our Analog: Then and Now

    Futures have been all over the map this weekend following the breakdown of the small white flag pattern on Friday.  But, the key factor is that VIX is higher and should experience a golden cross as we approach PPI tomorrow and CPI on Thursday.

    Our downside targets remain unchanged with SPX now within a few percent of our analog’s target from this past May [see: Analog Watch.]

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  • A Jobs Report That Matters

    The thinking goes like this: a strong jobs report is bearish for stocks because it might delay the Fed’s eventual pivot; while, a weak report would be bullish because it might accelerate the Fed’s pivot.

    The futures are on the fence, but not for long.

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  • OPEC’s Party Was a Bust

    OPEC+ threw the party they said they would. Everyone was talking about it. But, nobody came.

    CL and RB had already celebrated in the days leading up to the meeting and we were left with a non-event with CL stuck at a channel top and RB slamming into its 50-day MA.  Might there be an after party?

    It matters because the 10Y is in a dicey position – bouncing off its TL, but without a clear engine for more upside.continued for members… (more…)

  • All Eyes on OPEC+

    If the enemy of my enemy is my friend, is the friend of my enemy my enemy? The relationship between the US and the Saudis has been through plenty of ups and downs, but it’s been years since it was as fraught as it is now.

    The West is trying to put the screws to Russia, which in turn is trying to put the screws to the eurozone by enlisting the help of the Saudis, who are arguably US allies… Around and around it goes, with a decision due out later today that might spell a 2MM bpd (about 2%) cut in production.

    Will it be enough to revive the correlation between oil/gas prices and interest rates? ES is positioned to at least backtest its SMA10.Stay tuned.

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  • VIX: Not a Coincidence

    When COMP bounced at 10,572.33 on Friday, a mere 7.19 above its June 16 lows, it might have struck some as a coincidence.  It wasn’t.

    It was a well-coordinated effort to ensure that new lows were avoided – at least for the time being.The usual culprit: VIX.  For the 6th session in a row and the 12th time since Jan 24, 2022, VIX tested and retreated from the same trend line – an occurrence the algos have been well trained to respond to with a bounce.  The June 13 test went further, producing a huge bounce because it also broke below two significant trend lines of support as well as producing a bearish (bullish for stocks) alignment in moving averages.

    Yesterday’s huge plunge in VIX similarly wreaked havoc with moving averages – postponing (at least) an imminent 50/200 cross.  Will this short squeeze rally follow the same playbook?

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