Another ramp job on awful economic news which pretty much everybody recognizes understates how bad things really are…
…and a 46% spike in WTI futures in 4 days based on a Tweet referencing a deal: (1) which has yet to be confirmed by any of the parties; (2) could probably never get done; (3) which, if it were done, would simply slow down the rate at which supply vastly exceeds flatlining demand; and, (4) which, if it were done, would put the most vulnerable Americans deeper in an economic hole than they already are.
You’d never guess the economy was in dire straits – just like old times.
continued for members…As we discussed yesterday, tagging the white channel now instead of Wednesday saved the indices a lot of downside – if the channel bottom holds, that is. For SPX, it’s 2416ish. For ES, about 2411.
VIX is playing along, of course, dipping below horizontal support yet again and now exhibiting a bearish (bullish for stocks) 10/20 cross.
And, USDJPY finally got in on the action, popping back above its SMA200.
Combined with the euro’s continuing meltdown…
This is very positive for DXY – which seems destined to make new highs.
Oil and gas have ramped even higher, the primary driver overnight. I recommended taking profits on CL at 26 and RB at .75 yesterday, a position I’m still comfortable with. I have nothing against playing along with CL’s push back above the previous lows, but we’re coming up on a weekend and I wouldn’t want the gap risk in the event the “deal” doesn’t materialize. I think a lot of this is short covering. 
The bond market continues to be captured, with small fluctuations in both the 2Y and 10Y…
…resulting in the 2s10s still slipping lower…
…but, at 35 bps, not enough to matter.
Bottom line, we’ve seen this movie many times before. Really bad news, and a market that shrugs it off because the algos are following all the prompts which have been laid out for them by the White House and the Fed (and counterparts.)
ES and SPX are both a day away from a bullish cross. Unless things fall apart in the next 6 hours, SPX will string together three days in a row of higher highs and higher lows. USDJPY is cooperating again. The ECB is falling on its sword. And, VIX is doing what it always does – now off 44% from its Mar 18 highs. The scene is set for a continuation to the upside. Arguing against that, of course, is, well, reality.
COVID-19 deaths in the US will reach 10,000 tomorrow and 100,000 a week from Monday. Will the market shrug off those numbers? I kinda doubt it. Headlines can still matter. Whether they will…we’ll just have to wait and see.
UPDATE: 3:50 PM
No time like the present for a last-minute ramp job – watch VIX take a dive here. Just like old times.
