It’s a big week for economic data, with earnings and outlook announcements already setting a bearish tone.  First up this morning is April new home sales, which came in at 591k units – a 16.6% drop from March and a 32.9% plunge from April 2021. It barely beat the 2020 pandemic lows.

As everyone now knows, this is a direct result of the sharp rise in mortgage rates which is a direct result of the sharp rise in inflation resulting from the Fed’s policy mistake: driving rates much too low for much too long as discussed last July [see: Time to Sell Your Home?]

Over the past month, it has seemed that the old “bad news is good news” meme which played such an important role during ZIRP had been sidelined. Based on recent Fedspeak, however, it’s probably better characterized as being in cold storage. The Fed’s determination to reduce inflation will be sorely tested in the days ahead.

continued for members…

Futures are off about 1% this morning, but they’ve been all over the map. Given the failure to maintain any momentum off of yesterday’s gains, I’m having serious doubts regarding the market’s ability to rally here.

I’ve adjusted the June 3 rally point to ES 4170 and SPX 4165 to reflect a 9.3% rally off the recent lows. The days count remains the same. These lower targets look better from a chart pattern standpoint, landing as they do at the midline of the falling channels and likely in the vicinity of where the SMA50s will be around June 3.

The EURUSD is up sharply again today, working to prop up stocks. But, USDJPY is still slumping toward its backtest target. DXY is also nearing good backtest support. So, the suggestion is that USDJPY is about to bust a move.FWIW, gold continues to outperform SI. But, both have come back from the dead. Nothing new for BTC.CL is flat, but RB continues to slump… …providing the 10Y with the impetus it needed to finally break down.