Yesterday marked the second day in a row of sharp declines in the equity markets following the 200-day moving average backtest and the passing of OPEX.
There’s more where that came from.
continued for members…We’re still looking for a backtest of the purple channel top, ideally in the range of 3900 – 3950, though the SMA100 at 4086 and the 3.618 Fib at 3997 might present support.
VIX is likely heading for the red TL at 32.40ish in the next few days – provided it can punch through its SMA200 at 24.69.
Currencies are mixed, with USDJPY supporting stocks and EURUSD finishing off the plunge to potential support at our .786/1.272 target at 0.99.
This leaves DXY a little shy of our 110.25 target.
If EURUSD remains in the narrow red channel, it would bounce here. Note that it’s also the midline of the falling white channel. If the channel (and .99) breaks down, then it’s a swift trip to .9117.
DXY has now clearly left the rising white channel and should concentrate on testing the top of the rising purple channel.
While higher interest rates are the traditional tool for bringing down inflation, I continue to believe the Fed would rather get there to the extent they can through buying power – i.e. a higher DXY. It might not work on all categories such as labor, shelter, food, etc. But, falling oil/gas prices would help on the headline number.
The energy picture in Europe remains precarious. So it’s not hard to imagine the euro continuing to slide – especially as we enter the winter heating season.
Elsewhere, GC and SI are contemplating lower lows while BTC is getting a little bounce off the flag pattern bottom.
CL and RB are both slightly higher on the day…
…which is more in keeping with TNX’s pop up to 30.78, which should serve as a ceiling for now – especially in light of the disappointing housing numbers due out at 10.
Housing numbers just came out, and it was ugly. Sales and applications both plummeted…
…even as prices rebounded somewhat.
The most troubling data was inventory, which is up to the highest level since 2009.
It again raises the question: at what point will the Fed slow the pace of rate hikes?