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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As far back as May 11, our charts called for BTC to revert to the pink channel bottom – which at the time was around 22,200 and awful darned close to the 200-day moving average.
June rolled around, and the downside forecast still made sense at 24,000ish – even after BTC whiffed during that slide.
It looked every bit as logical (though our patience was wearing thin) at the end of July at about 26,000.
But, we had to wait all the way to Aug 17 to see our forecast pay off with a winning number of 26,266.
Sometimes, charts work that way. You might get what you want, but only after exercising extreme patience. Go figure.
Futures are up modestly on stronger growth data and an approaching OPEX.
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Futures are off moderately in the premarket, with SPX and ES both trading slightly below their 50-day moving averages.
ES dropped more after economic data which was generally stronger than consensus. Housing starts beat while permits fell short. Industrial production swung from -0.8% to +1.0%. July FOMC minutes are due out this afternoon.
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We’ve stuck stubbornly to our forecast for the 10Y to reach 4.75 for nearly a year, betting that sticky inflation would force the Fed’s hand. We came within 6 bps of new highs this morning after retail sales soared 0.7% (expected 0.4%) in July.
Futures held on to their lows, though the pre-opening shenanigans haven’t yet begun (keep a close eye on DXY and VIX.) We don’t expect the bulls to give up SPX’s 50-day (4443.43) without a fight.
The challenge for bears now, as back in October 2022 when the 10Y tagged our 4.26 target [see: More OPEX Games] is that we’re up against OPEX (Friday.) Back then, it meant the 10Y’s channel collapsed and the next leg higher was postponed until after equities’ year-end run for the barn. If TPTB have their way, SPX’s 50-day backtest would be a springboard for a nice bounce.
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Futures are loitering around the 50-day SMA, leaving SPX’s tag still up in the air.
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