pebblewriter

Posts

  • CPI’s Dip: Is It Enough?

    Headline CPI dipped from 8.5% to 8.3% for April. While a very modest decline, at least it wasn’t an increase. As it was, futures immediately sold off nearly 100 points.The benefit of such a drop from a charting standpoint it that it might enable SPX to reach our 3956.64 target on the open (it came within 1.53 at yesterday’s lows.) It might even allow the 20%-off mark to come into view.

    It also enabled several other targets to be tagged.  Gold finally dropped to our 200-day moving average target…

    …and BTC is within 411 (so far) of our 28,600 target.The big question, of course, is whether the support (which almost everything we chart has reached) will hold or not.

    continued for members… (more…)

  • A Swing and a Miss

    ES spent 11 hours hanging around our next downside target yesterday.  While the session had many characteristics of capitulation, the fact that SPX didn’t quite reach significant support (3956) suggests that the overnight ramp is a head fake.continued for members… (more…)

  • Update on Bitcoin: May 9, 2022

    Bitcoin, the inflation hedge which has fallen 56% in the midst of the sharpest rise in inflation in over 40 years, is plunging again. Recall that we turned momentarily bullish after it broke out of a falling channel back on Feb 6.

    We expected a backtest of the 200-day moving average – which BTC dutifully delivered on March 28.

    Turning bearish again, we settled in and began waiting for a breakdown. Bitcoin didn’t disappoint. Today, it reached the bottom of the rising yellow channel.

    Strange behavior, indeed, for a so-called store of value.

    continued for members… (more…)

  • Update on COMP: May 9, 2022

    COMP just tagged our 11,643.40 target. Recall that it was added to our charts in January [see: Jan 10, 2022 Update] after we turned bearish on November 19.

    It was a fairly precise forecast. Then……and, now.

    continued for members… (more…)

  • Nobody Saw it Coming

    The financial press usually starts to take things seriously about this point in a correction. The permabulls aren’t calling bottoms any more, while the bears are licking their chops. It never fails, someone on TV says something like “no one saw this coming.”

    It’s silly, of course. What they mean is that they didn’t see it coming. Plenty of others did. Some, like us, saw it months ago. This was our Jan 3, 2022 ES chart, illustrating the downside case.

    We reiterated the target, called the bounce over, and nailed down the timeline in late March.

    Now, as we finally approach ES 3997, it seems that more and more mainstream bulls and trend followers are getting bearish (better late than never.)The risk, of course, is that excessively bearish sentiment would stoke another bounce and postpone the 3997 tag. VIX has some thoughts about that.

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  • The Reflation Trade

    Remember how excited the bulls were about the reflation trade? Higher interest rates meant the economy was reopening at a good clip. What could be better than that?

    Things look a little different from the perspective of 3%+, don’t they?

    Nothing alarming here… Remember, it’s not the inversions that bite, but the spikes higher which come after. Futures are off again this morning following a strong jobs report, but we’ve yet to punch through Monday’s lows.continued for members… (more…)

  • A Failure to Communicate

    Remember that scene in Cool Hand Luke where Paul Newman mouths off to the Captain after a failed escape attempt? He doesn’t initially appreciate the gravity of his situation. He is soon reminded.

    That’s what yesterday’s post-Fed presser felt like. Powell was trying to convey the sense that the Fed means business. It is going to get serious about escaping the inflationary mess it has stepped in.

    The market (well, the algos) didn’t hear that. They heard Powell say exactly what they expected and, spurred on by the huge bets lined up on the bearish side of the ledger, decided to mouth off.

    Clearly, they don’t appreciate the gravity of the situation, as we were reminded by this morning’s labor productivity report – the worst in 75 years.

    We would do well to remember that we’ve had these moments of euphoria before. The carefully curated decline which began in late March…

    …has seen more than a few deviations of late.

    But, facts are still facts. Inflation – especially very sticky labor costs – is still a problem, and the Fed waited so long that they now have no choice but to tighten into a recession. There was a time when they could have engineered a soft landing. But, that opportunity was, dare we say, transitory.

    continued for members… (more…)

  • FOMC Day: May 4, 2022

    Today’s FOMC meeting is one of the most anticipated and consequential in years. It’s difficult to overstate its importance in terms of economic impact and, perhaps more importantly, Fed credibility.

    Yes, we care about whether the Fed hikes 50 or 75 basis points – though either is unlikely to put a dent in inflation. The bigger question is what the Fed does with its $9 trillion balance sheet.

    Futures are up modestly.

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  • A Day Off

    I am currently neck deep in algo research and, given that all of our equity, currency, and commodity targets remain unchanged, I will forgo rehashing them today. If anything changes dramatically today, I’ll post later this evening. Otherwise, look for an update tomorrow morning.

    GLTA

  • A Fork in the Road

    Yankee great Yogi Berra famously advised that “when you come to a fork in the road, take it.” The S&P 500 is weighing such a decision this morning, having closed Friday at a critical level of technical support.  A rebound from here would buy the Fed a little more time for inflation and hawkishness to ebb. A failure to bounce implies at least another 8-10% downside.

    Which will it be? Fortunately for us, our chart patterns are sending a very unambiguous signal.

    continued for members… (more…)