pebblewriter

Posts

  • Update on Bitcoin: Nov 17, 2020

    Almost 8 months ago I posted our first outlook on BTC [see: FOMC Embraces MMT.]   We noted at the time that the FOMC was “officially in the short-squeeze business” after ES came within 19 points (trading was halted there) of our 2155 target and the Dow was set to test the Nov 8, 2016 (election day) lows.

    This was the perfect time to assess what unleashing massive amounts of liquidity might do to crypto.  We noted at the time that BTC should bounce from its triangle bottom (on the arithmetic chart) and return to test the top trend line at around 9,925. We also noted that BTC had rebounded back above a TL on its log chart – an encouraging sign that supported the fundamental outlook. We left off with the note:

    If you believe that BTC will necessarily rise (as gold will) as QE explodes, the charts support a continuing bounce. If you believe the FOMC will do whatever it takes to support the USD and crush surrogates such as BTC and GC, then keep an eye on that TL (5,000ish) as a fairly clear stop level.

    As it turned out, BTC did return to the triangle top where, as we noted in our May 28 Update on Bitcoin that it had an important decision to make. Having reached 10,074, it had held an important trend line on its arith chart…

    …but had failed to break out above a fan line on its log chart.Our outlook at this point was that price action should determine the next move.

    Is BTC a buy here on a potential breakout? Maybe. But, given the fact that it’s barely off its April highs, cautious types might want to wait for an actual breakout. If it occurs, there would be a small opportunity loss from not getting in here.  But better to give up a few percent than lock in a trade with a lot more downside.

    The alternative for more nimble types: go long but watch that rising TL from Mar 16 on the arith chart like a hawk. If BTC drops below it, run for the hills.

    It took over three weeks, but BTC eventually broke out and, in the process, completed an IH&S pattern we’ve been watching and, just this morning, tagged the pattern’s 17,150 target well ahead of our target date in mid-December.After exploding 2.65X since Mar 23, what’s next?

    continued for members… (more…)

  • Our Made to Order Market

    I heard two quotes in the financial news this morning that caught my attention. First: that about 30% of Americans will end up getting infected with the coronavirus.  Second: the S&P 500 is on pace for the 5th best month in the last 30 years.

    These statements are incongruous, at best. Yet, IMO, it’s more a comment on the ability of central bankers to determine stock prices through both direct and indirect means.

    Everyone knows about the indirect: flooding markets with trillions of dollars that have to go somewhere. Most observant traders know about the direct: hammering volatility and manipulating currency pairs and other drivers of algorithmic trading – the tail that wags the equity dog.

    For an example, look no further than VIX. It has tagged a deep retracememt of its last rally three times in a row.

    This, of course, follows the bearish (bullish for stocks) 10/20 cross and channel breakdown we anticipated last week.continued for members… (more…)

  • Friday the 13th, 2020

    Ever notice that things seem that much more ominous with the year “2020” thrown in?  It’s not hard to imagine a film noir set sometime in the future where a guy clamps another on the back and says “forget it, Jake, it’s 2020.”

    Futures have ramped higher on the usual VIX overnight smackdown, with multiple backtest targets hit yesterday and more due to be tagged today.

    continued for members… (more…)

  • CPI: MIA

    Futures remained slightly lower following lower than expected initial claims (709K vs 740K consensus) and CPI – which came in at 1.2% annual and 0.0% for October.  Note that it took a plug number outlier +1.2% pop in electricity to keep CPI from going negative.

    One would think if the economy were really all that healthy, especially with the flood of liquidity still being thrown at it, we’d see at least some inflation.  But, hey, we got the 10/20 crosses we were expecting in ES, SPX and VIX. So, the rally is safe…right?

    continued for members… (more…)

  • Follow the Leader?

    Almost every chart I follow is threatening a 10/20 cross, meaning we are clearly at an important threshold in the markets.  ES is out front, having already completed (no surprise) a bullish cross overnight. Will the rest follow through?

    continued for members… (more…)

  • There Will be Typos

    It’s a little known fact that if you’re trying to get over the pain of back-to-back knee replacements, you should have rotator cuff surgery. At least that’s what my horoscope said. As a result, my typing skills will be a little off this morning, which means my market insight might also be a bit off.  But, here goes.

    After tagging our IH&S target yesterday, ES tumbled back below the bottom of the channel which broke down back in late October. It’s sitting right there at this moment, meaning the bulls and bears have yet to sort things out.

    continued for members… (more…)

  • Vaccine!

    Pfizer announced the preliminary results of a study showing its Covid-19 vaccine has shown to be at least 90% effective. Simply put, this is a game changer: the first definitive signs that the pandemic which has killed 1.2 million worldwide can be controlled.

    S&P 500 futures are currently up 157 points to new all-time highs.Note that ES reached the target of the IH&S pattern established and then consigned to the dust heap in late October. The first order of business is to determine whether these prices can hold.

    continued for members… (more…)

  • In the Refrigerator

    While not official, it looks like the presidential election just might be in the refrigerator. Futures are off almost 1% after reaching our upside target (improbable as it was) yesterday.  But, the big action is on the currency front, where USDJPY has reached our next downside target and is contemplating more.continued for members… (more…)

  • The Latest Cringeworthy Rally

    Sometimes I cringe when I place a target on a chart. Such was the case yesterday when ES reached our IH&S target at 3425. If it kept going, it was sure to backtest the intersection of the broken rising white channel at the falling channel top. Was that likely in the midst of election and pandemic turmoil?

    Apparently so, because that’s exactly where ES ended up overnight.Although I tire of saying it, this is an important threshhold for the overall market – which has benefited smartly from a rescue maneuver that wasn’t even really necessary.

    continued for members… (more…)

  • Election Aftermath

    Futures were all over the map last night, with ES’ 113-pt range dictated almost entirely by factors as opposed to election results – which, contrary to Trump’s declaration, are still AWOL. Note that ES tagged our IH&S neckline (also the former H&S neckline) target where it is currently running out of gas.

    As expected, the most important factor was VIX which collapsed over 18% from its overnight highs – slicing through channel midline and the 10, 200 and 20-day moving averages.

    continued for members… (more…)