pebblewriter

Posts

  • Undone?

    ES tagged our next downside target this morning……tagging the 4319 target we posted back on Jan 3 [see: De Facto Shutdown.]

    The only question now is whether stocks will get the big bounce they usually do after a 10% correction or whether they’ve come undone. In other words, I have this 1969 Guess Who classic on a loop this morning. The lyrics seemed especially apt for today’s equities market.

    She’s come undone
    She found a mountain that was far too high
    And when she found out she couldn’t fly
    It was too late

    From the ain’t it cool department…Burton Cummings rocks a pretty convincing Seattle grunge look 50 years ahead of the crowd, plays a mean jazz flute (inspiring the future Ron Burgundy?) and scats in a frickin’ rock song.

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  • Update on Bitcoin: Jan 24, 2022

    Quick note: BTC has reached our next downside target, the red .886 Fib at 33,205. As we detailed in our last update [see: Jan 18 Update]:

    BTC will have two opportunities to rebound at the red .786 Fib (37,245) and the .886 (33,205.)  Should these fail, then only one last level of support remains in the way of a complete breakdown.

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  • Then and Now

    A substantial correction seemed a little farfetched two weeks ago.

    Now, not so much…

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  • Update on Nikkei: Jan 20, 2022

    In our last update on NKD [see: Nov 30 Update], I somewhat snarkily disparaged the index’s legitimacy.

    The Nikkei 225 is less a securities index than it is a measure of how much intervention the Bank of Japan feels like throwing its way. It’s what the Dow aspires to be when it grows up.

    At the time, NKD was approaching a trend line connecting five recent lows, none of which had quite backtested the obvious Fibonacci support at 26,463. It was also backtesting a TL connecting recent highs.

    As the chart above shows, NKD is backtesting a TL off the Feb 16, 2021 highs. This could be all we get, as the BoJ dislikes anything smelling like a correction.

    As it turned out, the low that day was all we got. NKD rallied into year end, putting in a respectable +5.1% return for 2021 versus the 1.2% losses which would otherwise have occurred. Japanese “investment” managers no doubt cheered the rally, just in time for bonus calculations.

    The rally left a bad taste, though, and I left the 27,156 target where it was – partly for spite and partly because the BoJ’s pathetic manipulation has become laughably predictable. Guess where NKD just tagged?

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  • Charts I’m Watching: Jan 20, 2022

    Another overnight bounce, another head fake…

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  • Update on Bitcoin: Jan 19, 2022

    In our last update on BTC [see: Dec 5 Update] we noted that BTC had briefly dipped below our 46,000 target and was due for a backtest.

    I would expect a bounce up to backtest at least the black dashed line (51,766ish) or even the cloud bottom (54,850.) If those (now) resistance levels hold, then the next targets remain to the downside…

    As it turned out, BTC’s bounce took it to 51,991, whereupon it obliged us with a backtest of the black line and began sliding to new lows. It is now off over 40% since our short call on Nov 8 [see: Out of Sync.]

    While bitcoin bulls are as buoyant as ever, our charts now suggest even more downside than before.

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  • COMP Signals More Pain Ahead

    A little over a week ago, COMP made a hard bounce off its 200-DMA, gapping much higher the following day. Yesterday, it plunged below its 200-DMA and closed there – not a good sign for the bulls.

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  • Push Comes to Shove

    With the 10Y completing an IH&S Pattern and gapping up to 1.845%, focus on the price of oil and gas. Bottom line, rates won’t decline until oil and gas do. And, if oil and gas decline sharply, the equity selloff will only accelerate. Decision time for the Fed.

    Futures are down sharply. Our price targets remain unchanged.

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  • Stagflation Case Strengthens

    December retail sales disappointed, slumping 1.9% MoM and capping off a week of economic data which provided growing evidence of stagflation. The data were before nominal, meaning inflation-adjusted data were even worse. This is hardly surprising given that ever greater portions of Americans’ incomes are being consumed by rapidly rising prices.

    Futures, which were already off sharply, legged down further on the news.

    Our equity targets remain unchanged.

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  • PPI at All-Time Highs

    If PPI is growing at 9.8% annually (a record high) while CPI is growing at 7% annually (a 39-year high), who’s eating the difference between what producers bring in and what they must pay out? Just a hypothetical, of course, as profits – like inflation – apparently aren’t that important. Futures are higher on the news.

    Meanwhile, DXY is breaking down – which will add fuel to the inflationary fires.continued for members… (more…)