pebblewriter

Tag: bitcoin

  • The Market is (Still) Broken

    Futures came roaring back into the falling white channel yesterday, revealing what many know but few say out loud: the market is broken. When expectations of a 1% quarterly rise in GDP yield, instead, a 1.4% decline, stocks should decline. Plain and simple.

    The old “bad news is good news” argument doesn’t work any more because the Fed no longer has the ability (at least this coming meeting) to ease in response to a slowing economy. Perhaps they would have if they hadn’t squandered the opportunity to taper months ago, but that’s water under the bridge.

    Instead, we get this massive disconnect which is, at the end of the day, a means of ramping stocks in advance of the bad news we all know is coming via the Fed’s meeting next week: a 50+ bps rate hike. Beyond monetary policy, which is now a headwind instead of a tailwind, we see more and more indications of tough times ahead. As Bill Blain (a treasure) sums it up:

    The world is not what we think it should be. It is what it is…and that is getting less pretty.

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  • Stocks’ Broken Record

    Yesterday marked the fourth time in the past two months that SPX tested the same important Fib level.  The failure to maintain a trend is becoming…well, a trend. Will SPX keep playing the same old song or is it finally time for this trend to be broken?

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  • Charts I’m Watching: Apr 26, 2022

    ES closed back in its falling white channel following its midday recovery, keeping our target price and date unchanged.

    Note: The current forecast page has been updated with targets for SPX, ES, COMP, VIX, USDJPY, EURUSD, DXY, GC, SI, BTC, CL, RB and the 10Y.

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  • More of the Same

    Futures are keying off the exact same factors as yesterday. USDJPY is creeping higher and VIX is threatening a breakdown.

    Traders continue to face an array of headfakes and misdirection as ES backtests its 200-DMA yet again.

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  • Charts I’m Watching: Apr 20, 2022

    Forget the fundamentals. Between USDJPY’s breakout and VIX’s smackdown (19% over the past two sessions), the bears are getting pummeled by algos.

    As a result, ES’ falling white channel has been busted – meaning at least a delay in any additional downside.

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  • USDJPY: Off to the Races

    We published USDJPY’s next highest target months ago with the caveat that it would mean completing a large IH&S that targeted much higher levels and was, thus, far from certain. With inflation already rising sharply, would the BoJ willingly inflict even higher prices on Japanese citizens and businesses just to keep the yen carry trade going? Wonder no more. In the past month, USDJPY has completed three separate IH&S Patterns. Unlike other central banks which are acting to reduce inflation, the BoJ is guaranteeing even more. It will certainly mitigate stocks’ downside potential to some extent, but at what cost?

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  • Fed Minutes on Deck

    Futures are off sharply as we approach the open. Algos are responding to VIX’s pop back above its 200-DMA and the prospect of increasing Fed hawkishness.

    As we pointed out yesterday, the 10Y has again reached the top of a well-formed channel dating back over 30 years. Its ongoing decline has provided much of the fuel for increasing stock, bond and real estate prices, though, reversals at the channel top have marked severe downturns.If the Fed prevents the 10Y from breaking out while continuing to raise short-term rates, the 2s10s will become even more inverted, validating recession forecasts. And, as we discussed last week [see: Should We Fear a Yield Curve Inversion?] the aftermath of these inversions has never been good for stocks.

    Bottom line, the Fed is damned if they do and damned if they don’t.  The real question surrounding today’s minutes is whether members will sound as bewildered on paper as they have in person.

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  • PPI: Record Highs

    Headline PPI reached record highs in February, coming in at 10.0% YoY. Under the hood, prices for unfinished goods registered 14.6%, the highest since January 2001. Prices for processed goods jumped 23.3%. Prices increased across the board, with the largest gains in energy.

    Futures were flat going into the early morning VIX plunge, but gained steam once VIX dropped back below its 10-day moving average at 32.28. Look for a backtest of the broken white channel at around 4205.continued for members… (more…)

  • Update on USDJPY: Mar 14, 2022

    USDJPY reached our 118 target overnight.

    We charted this target over a year ago [see: USDJPY’s Turn] following USDJPY’s breakout from the falling purple channel [see: The Usual Suspects], reasoning that the Bank of Japan would ramp up the yen carry trade in order to support the Nikkei’s breakout.

    The BoJ rarely disappoints, and they didn’t in this case. The question, now, is how far they’re willing to go.

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  • Time to Crash the Oil Market

    They’ve done it before. And, it’s the only action that could truly punish Russia while helping to solve the inflation problem.

    The charts fully support it, with loads of logical downside targets just begging to be tagged.

    Yes, stocks would suffer too. But, you can’t have everything. And, if it gets underway quickly enough, there’s still plenty of support for equities at the -20% mark or higher.

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