pebblewriter

Author: pebblewriter

  • Then and Now

    Technical analysis and chart patterns don’t always pan out. But, when they do, the results can be pretty amazing.

     *  *  *

    COMP chart from Nov 23, 2021…

    This morning…

    DJIA chart from Jan 4, 2022…

    This morning…

    S&P 500 futures chart from Jan 6, 2021…

    This morning…

    The Nikkei futures chart from November 3, 2021…

    This morning…

    The EURUSD chart from May 28, 2021…

    This morning…

    The dollar index from June 7, 2021…

    This morning…

    The Bitcoin chart from Dec 9, 2021…

    This morning…

    There were misses, too. It was unclear back in mid-2021 whether the correction would be allowed to commence with an ugly December 2018-style downturn or the Fed would keep the party going through year-end –  knowing full well that those without large stock portfolios would bear the brunt of runaway inflation.

    I also didn’t believe that central banks would let oil and gas prices soar to current levels.  I assumed that they, like I, could anticipate how disastrous a decision that would be and what a bind it would leave them in.

    Now Russia is invading Ukraine and the Fed’s policy options are extremely limited – none of them attractive let alone effective.  In other words, things will get worse before they get better.

    And, that’s okay. As we pointed out in early January [see: One Way or Another] there are lots of ways to force interest rates lower. But, given the magnitude of the Fed’s policy mistake, only one is likely to work at this point.

    That leaves us with the interesting prospect of a market correction that’s scary enough to bring rates down off the ledge, but not so scary that real damage is done. The current taper schedule means QE will end in March. So, there’s plenty of time to to put such a plan into place before the Fed would be expected to start raising rates significantly.

    Here we are.

    continued for members…

    (more…)

  • War…What is it Good For?

    Absolutely nothing?  Well…vol came under pressure again last night despite the recent 10/20 cross and obvious escalation in risk of military action in Ukraine. Apparently the threat of war is good for stocks.

    Nevertheless, the futures heard and obeyed and continue to eye the VIX breakdown threat which works more often than not.continued for members… (more…)

  • The Ukraine Crisis Worsens

    Russian troops entered Eastern Ukraine following its formal recognition of the two separatist regions, marking an escalation in the seriousness of the Ukraine crisis.  Futures fell over 94 points from Friday’s close before the algos kicked in and are now down less than 10 as we approach the open.

    continued for members… (more…)

  • Charts I’m Watching: Feb 18, 2022

    After big losses yesterday, ES gained over 20 points overnight. It has since given up those gains and has completed a small H&S pattern targeting 4247.continued for members… (more…)

  • The Line in the Sand

    Futures continue to lurk around the 200-DMA as we approach Friday’s OPEX, with plenty of bullish and bearish headlines stacking up on either side of this important line in the sand. When it finally lets loose, the move should be pretty dramatic.

    continued for members… (more…)

  • Charts I’m Watching: Feb 16, 2022

    Futures are off about 0.50% as the algos process a big beat (inflation aided) on retail sales and a miss on mortgage applications.

    Having retaken the 200-DMA, can ES hold it until OPEX on Friday?

    continued for members… (more…)

  • PPI Nearly 10%

    PPI topped CPI again, coming in at 9.7% YoY (9.1% expected) and a whopping 1% MoM (0.5% expected.)

    Futures suddenly aren’t so sure about the overnight ramp to top the 200-DMA.

    continued for members… (more…)

  • Bullard Speaks

    In a CNBC interview this morning, Fed President Jim Bullard said “Our credibility is on the line here…”  Anyone paying any attention to the Fed knows that that ship sailed a long time ago.

    Futures have been all over the map, down as many as 55 points before VIX was hammered following a false news report regarding the situation in Ukraine.

    continued for members… (more…)

  • Charts I’m Watching: Feb 11, 2022

    This is all it took to get FOMC members to walk back Bullard’s hawkish comments. Note the tiny channel breakdown. Terrifying enough to keep QE going and to respond to the worst inflation in 40 years with a mere 25 bps rate hike a month from now? Apparently.How else can you explain this insanity?

    If it’s too hard to see the Fed Funds rate on the above chart, here’s a close up.continued for members… (more…)

  • CPI Reaches New 40-Yr High

    January headline CPI reached 7.5%, a new 40-yr high, sending the 10Y up over 2% for the first time since August 2019 when CPI registered 1.75%. As has been the trend since November, oil/gas no longer leads the way.

    Inflation has become widespread, higher than the Fed’s so-called 2% target in every category except, ironically, medical services. Energy was the only category showing a negative MoM change.

    Futures are off over 40 points so far. If not for the ramp job of the last few days, ES would be back below its 200-DMA. It’s the markets version of raising prices so you can advertise a huge sale.

    continued for members… (more…)