July Durable Goods orders came in at 11.2% versus 4.8% expected, driven largely by jumps in autos and defense spending.
YoY, orders are still down 5%.
Futures are up slightly on the news, propped up by VIX’s 15% drop from yesterday’s highs and tempered by the question of how the Fed will receive the positive economic news.
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As the leader of the band, AAPL’s ascent has been critically important to the broader markets’ performance. It has more than tripled since tagging our 144 target in Dec 2018. So, what does it mean that AAPL reached potentially important resistance yesterday?
At the very least, it should help ES backtest its February highs. 
But, what if AAPL really stumbles as consumer confidence continues to slump?
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ES is finally joining the new-highs party, zipping up past its February highs after bouncing on the white channel midline again…
…prompted by AAPL topping $500/share and splitting (don’t tell anyone, but it’s also tagging overhead Fib resistance.)
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Futures tagged our white channel midline target again overnight… 
…before bouncing when VIX reversed for the third time at trend line resistance.
Note that ES’ white channel midline was first topped back on March 25. Since then, it has been tested 12 times. Clearly, someone thinks it’s pretty important. Who am I to argue?
All I know is that with interest rates and inflation suddenly on everyone’s radar, oil and gas are out of the equity-propping game. The dollar is bouncing today, but has broken down below some very long-term trends. So, USDJPY should be of little help.
Even the Fed has watered down its enthusiasm for driving the market higher now that it’s back to February’s highs. The unspoken message to the politicians: we got it back to previous highs, it’s your turn now.
So, aside from the usual VIX games, there’s not a whole lot to propel stocks higher. So, will the midline continue to hold?
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It’s those changes in latitudes,
changes in attitudes nothing remains quite the same.
With all of our running and all of our cunning,
If we couldn’t laugh, we would all go insane.
~Jimmy Buffett
As expected, yesterday’s Fed minutes disappointed and the market was none too pleased. Turns out the Fed isn’t quite as optimistic as the market; or, maybe they just feel like they’ve done enough in driving stocks back to their February highs.
ES came within a few points of our initial downside target before beginning its obligatory bounce.
With initial and continuing jobless claims coming in higher than expected and Philadelphia Fed coming in below expectations, the futures are under additional pressure and should test important support.
Should that support fail, our six-month forecast becomes more ominous.
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Today’s post could be an extension of yesterdays, with more beneficiaries of the shutdown such as Target and Lowes reporting big beats. Winners and losers.
Curiously, ES failed to make a new high yesterday even thoughy SPX briefly rose above its February highs.
You’ve always had to worry about predatory traders and specialists trying to catch momentum traders offsides, pushing above resistance in order to stop out shorts and draw in fresh meat. These days, the players have expanded to include predatory HFTs, algos, central banks, the US Treasury, politicians, etc. The list of “interested parties” is long and distinguished, and most of them have access to plenty of free capital.
So, as we always ask when SPX reaches new highs: breakout or headfake?
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Watching WMT this morning and wondering what it all means? After surging nearly 7% on blowout earnings, the stock has given up all its gains after the company’s commentary confirmed the obvious: there are winners and losers in a pandemic.
Unlike many of its general retailer competitors…Walmart sells groceries, meaning they were allowed to remain open even during the worst of the virus’ spread. They also have a substantial online business, helping them offset the slowdown in in-store shopping. Last, customers who might otherwise have run out of money when laid off received checks from the government which allowed them to continue shopping for low-priced essentials.
The problem WMT faces, of course, is what happens now that these checks have stopped. Will the stock recouple with the economy? Moreover, will the overall market recouple with the economy?
The old adage that “the market is not the economy” has never been more true. Pundits and politicians see major indices push to new highs and declare that the worst is over. The reality is that the AMZNs and WMTs of the world are simply taking market share from the millions of small businesses that couldn’t stay alive for the past five months.
For all the major retailers which have declared bankruptcy so far this year…
…there are hundreds of thousands which have done so with no fanfare nor headlines in the WSJ. They slip quietly away into insolvency as their PPP money (if they were able to obtain it) runs out and the bank account runs dry. They’re not publicly traded, so they don’t affect the market. But, the effects will be felt sooner or later. And, more will join their ranks as the country continues to fail the coronavirus marshmallow test.
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The NY Fed’s Empire Manufacturing survey missed by a mile. The August General Business Conditions index fell to 3.7 versus 15 expected and 17.2 in July. While employment, input prices and selling prices edged slightly higher, the average workweek, unfilled orders and inventories all declined.
VIX’s nightly pump and dump, however, has futures solidly in the green. 
Can it hold?
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The retail sales rebound stumbled in July, coming in at 1.2% versus 1.8-2.0% expectations and last month’s 8.4% blowout. YoY, July saw an increase of 2.7%. Of course, July included stimulus payments to consumers which, with Congress leaving town for the rest of the month, are looking less and less likely.
And, AMZN, the retail colossus which can do no wrong, has now put in 5 lower highs since reaching our upside target on Jul 13.
Futures are off only slightly, reflecting another overnight pump and dump in VIX.
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The algos are still threatening new all-time highs, this time egged on by the “wonderful” news that only 963,000 new unemployment claims were filed last week and only 15.5 million Americans are currently drawing unemployment.
It didn’t hurt that VIX made several sudden plunges in the past hour and that the USDJPY is threatening to break out again.
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