Breakouts from well-established falling channels are usually followed by backtests of that channel. This is how bulls put all that nasty bearishness behind them, freeing stocks for another leg up. 
Except, it doesn’t always turn out that way. Sure, ES nailed our backtest target. But will it follow through with a respectable bounce?
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Futures are off about 0.5% this morning as the economic data was somewhat better than expected.
It’s an important juncture for the market, as USDJPY has reached our 139.43 target at the same time that ES is approaching our 3902 backtest target.
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You would never think from looking at the WTI and RBOB charts that there’s an energy crisis of any kind.
CL has now spent a month below its 200-day moving average, failing for the 8th time to retake the important resistance.
And, RB has broken below its October highs and isn’t far from its May 2018 highs – as in when a gallon of gas ran $2.80.
These drops will obviously play into CPI data for August. But, it won’t be enough to satisfy the Fed’s inflation goals.
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ES bounced off its 50-day yesterday, though the bounce is losing steam as we approach the open.
Circumstances are very different from 2021, when you could set your watch by 50-day bounces.
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Markets finally got the message. Or, maybe Powell finally put it plainly enough: there will be more pain before the Fed eases.
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Powell threw cold water on the market’s optimistic outlook this morning, suggesting that aggressive tightening will continue.
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Futures are up modestly on very light volume in advance of the insights expected from the Fed’s Jackson Hole meeting.
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Futures are flat after enjoying a modest overnight ramp.
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Yesterday marked the second day in a row of sharp declines in the equity markets following the 200-day moving average backtest and the passing of OPEX.
There’s more where that came from.
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Futures are off sharply this morning, reflecting the lack of support behind the runup to the last two options expirations.
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