There was a time when VIX tagging 9.30 was momentous.  VIX’s all-time low of 9.31 was reached on Dec 22, 1993 and it subsequently soared as high as 89.53 (Oct 2008.)  This past December, however, marked a progression of lower and lower marks that culminated in a new all-time low of 8.84 in July.

Want to know whether stocks have topped out?  First, you’d have to ascertain when VIX will stop melting down.  We’ve seen 17 straight sessions below the bottom of our long-term yellow channel.  The only signs of life were the backtest of a rising channel that broke down in order to get SPX up over 2500.With important resistance coming up today for SPX/ES, might VIX be ready for another (easily-contained) pop?

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Years that end in “7” and Octobers are often full of fireworks.  Since we’re in October of 2017, might we finally get a respite from the melt-up?

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There’s not much to be get excited about in these past 24 hours as we ease into the last session of the quarter.  RBOB dropped to our initial target but seems to be hung up there for reasons we discussed yesterday.  Stocks are levitating nicely, but one gets the sense the other shoe might be about to drop.

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It starts out with a bright, buoyant red balloon, but goes downhill awfully fast.  (spoiler alert: a sewer-dwelling, child-devouring clown that somehow isn’t all that funny.)

So it is with this market.  The S&P 500 has been floating along for over two weeks, close enough to 2500 to reach out and snatch it any time it likes.   Yesterday, it finally tagged our 2510.87 upside target and managed to close above 2500, with only two days to go before quarter-end.

Is this the start of the next leg up, or should we be alarmed by those sinister sounds gurgling up from the sewer?  [And, no, it’s not just RBOB, which hit our next downside target overnight.]

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In what were generally viewed as hawkish comments, Janet Yellen reinforced the widely held expectation of a rate hike in December.  USDJPY is rallying strongly in response.

After struggling for the past week at the SMA200 and, more recently, at a TL off its recent highs, it is making a show of breaking out.  Needless to say, equity futures are responding in kind.continued for members… (more…)

Futures are slightly positive this morning even though RB and CL are slumping — primarily on an overnight VIX dump — off 9.9% from yesterday’s highs. Note the SMA10 at 10.08.Traders will remain focused on Fedspeak and North Korea, either of which has the potential to upset the month-end run for the barn.

SPX and ES both reached our initial, minimal backtest targets yesterday.  As I posted last night, the next steps are a bit muddled.

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Futures are currently off about 5 points as VIX, again, pokes its head up over 10.  This has been going on for the last 7 sessions or so.  Again, the question is whether it’ll last this time.  Overhead resistance awaits at 10.75.continued for members... (more…)

When you live by the algo, you have to be prepared to die by the algo.  With only 10% of daily equity volume being driven by fundamental, discretionary, carbon-based investors, 90% of the volume is subject to the whims of the silicon-based traders.

This morning, we have the S&P 500 trying very hard to hold 2500, but VIX and the JPY are both creeping higher due to geopolitical risks (a hydrogen bomb, now?)  There’s only one tool left in the algo shed: CL.  And, unless it settles back down tout de suite we’ll see September CPI pop above 2% — not exactly on the central planners’ play list.

So, what’s more important — holding 2500 or averting inflationary headlines?

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When the Fed, which employs hundreds of economists and PhD’s says they don’t understand inflation, is there any hope left for humanity?

Come on, guys.  It’s pretty straightforward…wouldn’t you say?  On the one hand, there’s the fairly significant $14 trillion in financial assets you’ve bought up over the past few years.

Then, there’s basic commodities like oil and gas which are bid up to support stocks (but, have nasty side effects.)

Bottom line, there are plenty of charts that could help explain inflation if the Fed is really stumped. Or, maybe it’s just that Central Bankers, chock full of ex-Goldmanites, are more worried about charts like this one.continued for members… (more…)

I consider gold a good indicator of the inflation fever out there.  Note that it recently broke down from its latest rising channel (white.)  So, it would be easy to say it’s done, that there’s little chance of it reaching 1380.  Readers will recall I suggested bowing out at 1348.60 [the yellow arrow, see: Sep 6 Update on Gold.]

Personally, I’d close or trim back my long position here, or at least set some stops at this level. Every tick higher from here brings with it the risk of a sudden dump — one that need not be precipitated by news or events.

GC punched above 1348.60 for all of two days before succumbing.  Its slide, since then, has correlated with that of the US Dollar — which understandably has gold traders’ knickers in a bunch.  With the Fed’s inflation outlook due out shortly, does it still have potential to go higher?

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