Second quarter GDP was revised downward from 2.4% to 2.1%, providing a much needed boost to bulls hoping for another Fed pause. Of course, it also provides bears with some evidence of an economic slowdown.
Futures have been hovering around flat all morning.
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Futures are off slightly in advance of consumer confidence data due out at 10 ET.
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Futures are up sharply this morning following the Jackson Hole rally, breaking back out of the falling red channel again.
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It’s been lonely maintaining that rates would continue to rise over the past 10 months. As we noted in Decision Time:
“TNX…looks likely to test 47.55 after it digests recent gains.”
After the 10Y topped its Oct 21 highs, folks started coming around. Now it’s looking fairly obvious.
The only question is whether Powell will fess up to the coming rise in CPI and, therefore interest rates, in his speech at Jackson Hole (1005 ET.)
As we discussed a few days ago [see: Interesting Goings On in Currencies] the cross currents in rates and currencies are problematic for the market. We saw ample evidence yesterday when futures gave up a strong opening – breaking out of a well-formed channel only to close deep in the red.
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In our last major analysis of COMP [see: Oct 13, 2022 Update] we noted that COMP hadd reversed within 1% of our upside target in 2021 and had subsequently dropped to within 0.3% of our 10,122 target.
Since then, it’s been a battle. COMP finally rebounded to our 13,873 target at the yellow .618 Fibonacci retracement…only to reverse at the .707 Fib at 14,418. Since then, it has been on a wild ride, giving up 2.7% yesterday after failing to break back above its 50-day moving average.
Its rebound at its Aug 2022 highs was so convincing, we had our doubts as to our 12,828 downside target. It’s now looking like a distinct possibility again.
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Futures have broken out on a new VIX “breakdown” and the runup in NVDA shares – now the 4th largest component of the S&P500.
This seems off to us, as Powell is likely to come out more hawkish than expected in his Jackson Hole comments.
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EURUSD tagged our 200-day moving average target, putting DXY slightly above its 200-day – a move that usually has important implications for equities.
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Futures are up 0.40% largely on bullish algo positioning…
…with VIX now down 13.4% since Friday’s 200-day moving average tag.
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Futures are up modestly in advance of the Jackson Hole symposium. 
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VIX’s constant slide has been one of the best indicators of the runaway bullishness over the past 10 months. Over the past week, however, it has soared to new highs, reaching our 200-day moving average target well ahead of schedule. 
What does it portend for equities?
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