It was a mixed morning for banks. JPM beat on the top and bottom line due primarily to fixed income, currencies and commodities. But, Jamie Dimon sounded downbeat, referring to “weakening business sentiment and capital expenditures mostly driven by increasingly complex geopolitical risks, including tensions in global trade.”
GS and WFC both missed on the top and bottom line, though WFC managed to beat on a non-GAAP basis due to having retired 9% of its common. Again, the commentary was subdued as both suffered from lower interest rates, an absence of tax breaks and a difficult trading environment.
Futures are actually 10 points higher. The algos are much more interested in the fact that VIX continues to be hammered lower, now off 35% from its Oct 2 highs and testing the top of its red Flag Pattern yet again. Of course, the previous two times this occurred, it bounced nicely and ES tumbled 90 and 150 points. In other words, it’s a good day for a pop-and-drop.
continued for members…
Our analog continues to point lower, though the bulls are clearly making an effort to keep stocks on the rise.
VIX faces another trend line breakdown — off nearly 5% this morning after the usual after-hours ramp. The algos don’t seem to mind that the same trick is played over and over: ramp it higher overnight while the low-volume futures are easily propped up and then hammer it as the cash market is about to open.
And, USDJPY is getting another timely bump…
…which has sent NKD up a whopping 1.2%.
CL and RB were off nicely an hour or two ago, but as the open approaches they are both bouncing off their SMA10s.
I’m still looking for 10Y yields to decline and for ZN to test its recent highs in the next week and make new highs in early Nov.
UPDATE: 9:54 AM
We got the pop. ES is at resistance. Now for the drop?
More later…
UPDATE: 11:05 AM
SPX is closing in on its .886. At this level, its C=A target would be 2836, which is closer to our Oct 22 analog target of 2843.09.
UPDATE: 2:35 PM
SPX just tagged its .886 and reacted violently, plunging almost 2 points (sarc). FYI, ES is still 3 points shy of its .886, so don’t be shocked if we get an overshoot.
