July PCE was in line with expectations: 0.2% MoM for headline and core, 2.5% YoY (2.6% excluding food and energy.) Personal income beat at 0.3% versus 0.2% and personal spending beat at 0.5% versus 0.3%.
The print does nothing to disturb expectations of a 25 bps rate cut in September. Futures are up modestly, leaving ES at our targeted price even though a 50-DMA backtest never quite materialized.
continued for members… (more…)
NVDA fell as much as 7% following earnings and guidance which failed to excite, but has rebounded to a 4.2% loss as we approach the open. If it can’t hold 122.62 after the open, our 110 target is the next significant support.
The broader market was already having a tough day before the NVDA print. As has happened frequently this past week, the algos got busy and ES rebounded strongly overnight.
continued for members… (more…)
Looks like yet another day of treading water, waiting for this afternoon’s NVDA earnings and Friday’s PCE print. Futures are off modestly following seven sessions during which ES was unable to top its .886 Fib retracement.
But, attention should also be paid to our yield curve model which is sending a strong warning to equity investors.
continued for members… (more…)
Futures are off moderately following yesterday’s reversal, the 6th session in a row that ES failed to surpass its .886 Fib retracement.
continued for members… (more…)
In a speech that was essentially a mashup of all his other recent speeches, Powell reiterated at Jackson Hole on Friday that the pandemic – not historically dovish monetary policy – caused the recent huge spike in inflation. In fact, the Fed should be congratulated for putting out the inflationary fire that they started.
He did mention by way of a little joke that the Fed’s assessment of inflation being transitory was wrong, but that the Fed had plenty of company. Essentially, no harm, no foul.
Now, the Fed is apparently ready to lower interest rates. This view will ideally be underscored by Friday’s core PCE print. The market expects it and, in fact, needs it. But, anything more than 50 bps could be seen as the Fed panicking and could unravel the current rally as it stumbles merrily along.
continued for members… (more…)
For anyone expecting Powell & Co. to spill this morning on the extent and pace of future rate cuts, don’t hold your breath. Since assuming the chair four years ago, Powell has become increasingly adept at avoiding any substantive revelations.
Of course, sometimes investors draw their own conclusions, which can make for interesting trading sessions. Yesterday, for instance, SPX tumbled nearly 1% as algos consolidated recent gains. This morning, those same algos have recovered 2/3 of those losses as they position for any Jackson Hole surprises.
No one know exactly what Powell will say or what the Fed will do over the next several months. Though, we know what they should do given the inflation surprises ahead. 
continued for members…
Futures are up moderately, tagging our .886 Fib target well ahead of schedule in anticipation of Jackson Hole Fedspeak which confirms the market’s rate cut expectations.
continued for members… (more…)
Futures are up moderately ahead of FOMC minutes and mortgage applications.
continued for members… (more…)
In our last dedicated Update on Gold and Silver in April, we noted that gold had reached our Fibonacci target of 2466.50 but could have further to go.
GC is fairly straightforward. There’s a large IH&S pattern which completed around Mar 7 targeting 2557, a short distance above the white 1.618 at 2466.50.
GC reached 2557 this morning.
It’s interesting that it’s reaching overhead resistance at the same time as SPX and at the same time that DXY has reached our next downside target.
continued for members… (more…)
The Fed’s annual symposium in Jackson Hole, Wyoming is historically an excellent opportunity to suss out the Fed’s thinking on next steps. While investors agree that a cut is coming in September, there is some divergence on how big a cut and what to expect over the balance of the year.
Futures are generally flat as we approach a week full of potentially important Fedspeak.
continued for members… (more…)
