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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Absolutely nothing? Well…vol came under pressure again last night despite the recent 10/20 cross and obvious escalation in risk of military action in Ukraine. Apparently the threat of war is good for stocks.
Nevertheless, the futures heard and obeyed and continue to eye the VIX breakdown threat which works more often than not.
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Russian troops entered Eastern Ukraine following its formal recognition of the two separatist regions, marking an escalation in the seriousness of the Ukraine crisis. Futures fell over 94 points from Friday’s close before the algos kicked in and are now down less than 10 as we approach the open.
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In a CNBC interview this morning, Fed President Jim Bullard said “Our credibility is on the line here…” Anyone paying any attention to the Fed knows that that ship sailed a long time ago.
Futures have been all over the map, down as many as 55 points before VIX was hammered following a false news report regarding the situation in Ukraine.
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January headline CPI reached 7.5%, a new 40-yr high, sending the 10Y up over 2% for the first time since August 2019 when CPI registered 1.75%. As has been the trend since November, oil/gas no longer leads the way.
Inflation has become widespread, higher than the Fed’s so-called 2% target in every category except, ironically, medical services. Energy was the only category showing a negative MoM change.
Futures are off over 40 points so far. If not for the ramp job of the last few days, ES would be back below its 200-DMA. It’s the markets version of raising prices so you can advertise a huge sale.
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Futures are up slightly as we approach the open – an extension of the bounce off recent lows.
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Futures are off sharply overnight on Facebook’s sensational plunge.
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COMP’s breakdown caught a lot of people by surprise (though thankfully, not everybody.) Likewise, its bounce has turned more than a few heads. As it approaches a backtest of its channel line and SMA200, what can we expect? And what does it mean for the broader market?
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SPX has been threatening to break back above its 200-day moving average ever since Jan 23. Despite numerous vigorous attempts, it remains below it, signalling more downside ahead.
It’s time for the bears to put up or shut up.
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Futures have been all over the map, but ES’ flag pattern is still intact. All of our targets remain unchanged. Look out below.
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