Key Economic Data Ahead

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This is an important week for economic data, leading off with Durable Goods this morning at 10am. Following later in the week, we’ll get CPI, PPI, import/export prices, continuing claims and consumer sentiment — not to mention FOMC minutes.

This morning, we’ll take a look at durable goods new orders – a pretty good indicator at times for what to expect from the stock market. The chart below shows YoY percentage change on a monthly basis.

Note that the last time orders broke trend we saw a one-month bounce followed by a much bigger drop which, in turn, corresponded with an interim top and the 2015-2016 correction. Since it has recently broken trend again, it could have much to say about the state of the economy.

continued for members…

The equity markets are in that nether region between the .886 and previous highs — always a difficult place to prognosticate. ES is currently off about 5 points after breaking down from the latest rising channel.This leaves ES with a potential backtest of the triangle it recently broke out of — the apex is right at the .886 — obviously an important test.RB is testing its channel top all over again. While CL has pushed above its SMA200 to test its .618. A sustained move beyond 63.71 is cause to ditch our short position, though recognize that it might well be a temporary head fake. The headlines out of Libya indicate the possibility of a full-scale civil war, which is amplifying fears over a disruption in supply.

Note that CL is departing from both the scale and duration of the 2015 rally (the shaded area) which resulted in a sharp plunge. A small divergence isn’t a big deal. But, if the .618 breaks, it could result in more short covering than we saw with the SMA200 breach. The more interesting action is in the currencies, where USDJPY has had second thoughts about a breakout and EURUSD is again hinting at a SMA200 tag. The impact on DXY is another fail to reach its .618 and another threat to tag the white channel bottom.

VIX is back above the white channel bottom and approaching initial resistance at its SMA10 and SMA20.UPDATE: 11:00 AM

SPX bounced on its SMA5 200, while ES used that bounce to backtest its SMA5 200. So far, the bounce has been largely fed by VIX, USDJPY and CL — all of which are acting quite bullishly. USDJPY has bounced back above its SMA200. And, CL has pushed above its .618.And, let’s not forget AAPL — which just pushed through its .618. Anything north of here suggests a long position, while a reversal suggests a short. Of course, there is plenty of reason to suspect a head fake.COMP has not made new highs, so we’ll see if AAPL’s push lasts. While COMP briefly broke below its .886 and a recent TL this morning, it bounced back above both. Remember, a reversal through 7911.78 is bearish and should be shorted with a target of the SMA200, currently at 7491.99.UPDATE: 1:40 PM