pebblewriter

Tag: BTC

  • Inflation Highest in Nearly 40 Years

    At 6.81%, headline inflation is now the highest it has been since March 1982 (6.78%.)  Originally driven by sharply rising oil and gas prices…

    …it is now broad-based and anything but transitory, with medical commodities the only category below the Fed’s original 2% target.

    Algos responded with the usual VIX smackdown which, not surprisingly, began one minute before the BLS release.

    It remains to be seen, once the market opens, whether carbon-based investors will be so enthusiastic about the prospects of a quicker Fed taper.

    For history buffs and those with fond memories of price discovery, note that the Mar 1982 CPI of 6.8% saw the 10Y yielding 14.2%, a far cry from today’s 1.5%.  It’s a testament to just how broken the bond market is.

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  • Update on Bitcoin: Dec 5, 2021

    BTC reached our next downside target at 46,000 as detailed in our Nov 26 update [see: Update on Bitcoin – Nov 26, 2021.]

    Though the dashed black line offers potential support, the more significant downside target is the SMA200 currently at 45,997. We’ll call it 46,000 since BTC seems to like round numbers lately. It represents another 15% below current levels for a total drop from Nov 10 of 33.3%.

    It actually plunged well below 46,000, reaching 41,967 before snapping back above the 200-DMA by the close. For better or worse, BTC continues to play by the rules of chart and Fibonacci patterns – our rules, at least. We have to wonder whether this will finally dampen the bullishness of those who have been calling for 500,000 and even 1,000,000.

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  • A Death Cross from VIX

    It’s only happened 4 times in the past five years. The last time it happened was on Feb 27, 2020.  SPX had reached a new all-time high of 3393.52 a week earlier and had sold off 12% so far on news of the new coronavirus reaching US shores.  We were in the minority of analysts warning of an imminent selloff.VIX, which had been loitering in the teens for months, had gapped from 17 to 25 a few days before, sending its 50-DMA above its 200-DMA. In technical analysis, this is known as a golden cross. It’s normally a bullish move. But, since a rising VIX is typically bearish for stocks, this was the equivalent of a death cross.

    We all remember what happened next.Note that only half of the prior instances resulted in a large correction. The other half turned out to be insignificant. VIX was hammered into submission within a day or two, unwinding the 50/200 cross and sending stocks scurrying higher.

    Which will it be this time? Was this morning’s dreadful jobs report the keymaster and gatekeeper’s meet cute? The “stag” to the economy’s “flation?”

    Unlike Nigerian Air Force Lance Corporal Ogah Bercy, we have at least been warned.We should know soon enough.

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  • The House That Jay Built

    You know things are getting real when ES closes below its 50-day moving average.  It has bounced at that support 9 times in the past year. When the 50-DMA fails, the 100-DMA has provided support 6 times since Jun 2020.

    With ES closing below its 50-DMA yesterday and likely to reach its 100-DMA today, is it finally time for a test of the 200-DMA?

    The stakes are high, as VIX pulled back after reaching important resistance at our 32.50 target yesterday.

    Meanwhile…inflation, the Fed policy choice that pundits are mistakenly calling a “mistake.” Sure, it delivered a body blow to the have-nots, but It provided record high stock and real estate prices to the rest of us.

    November CPI is due out next Friday, and we are still looking for it to mark a turning point in this cycle. WTI is off 23% from its highs – technically a bear market.  And agricultural commodities have backed off their breakout and are eyeing a potential breakdown.

    Our assumption remains that CPI will be back below 3% by the time the taper is complete. Sorry savers, but there probably won’t be any need to raise rates any time soon, if ever.

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  • Update on Bitcoin: Nov 26, 2021

    BTC reached our next downside target, the SMA100 and cloud bottom added just last week [see: Nov 19 Update.]

    BTC reached our next downside target, a 17.2% drop from our short call on Nov 8, reiterated on Nov 9 and 10. The cloud bottom and SMA100, currently at 53,160, is the next target/support.

    Bitcoin, off 22% since recent highs, is now officially in a bear market.  As we discussed last week, there is substantial downside if this support doesn’t hold.

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  • Charts I’m Watching: Nov 22, 2021

    Futures melted up overnight with boosts from VIX and USDJPY.

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  • Update on Bitcoin: Nov 19, 2021

    BTC reached our next downside target, a 17.2% drop from our short call on Nov 8, reiterated on Nov 9 and 10.

    Last, BTC is getting a very nice bounce this morning, perhaps on the notion that Elon’s $20 billion in TSLA sales might land in crypto. In any case, this is a very important juncture for BTC. I expect it to fail and revert to the cloud and dotted blue channel line at 55,700ish.

    BTC has substantial downside risk if this support doesn’t hold.

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  • Charts I’m Watching: Nov 15, 2021

    VIX collapsed in the nick of time yet again, busting ES’ latest falling channel.

    Has the run to the year-end barn begun already? (more…)

  • DXY: Finally Breaking Out?

    Stocks tumbled yesterday on inflation numbers that call into question the pace of the Fed’s taper and rate increases. Then they rallied overnight on an 11.4% collapse in VIX. The most significant chart on my screens at the moment, though, is the US dollar. DXY has had great difficulty breaking out of a tightly controlled consolidation pattern that dates back to July 2020. It tried this past September, but was smacked down to support stocks’ recovery from that terrifying (sarc) 5.8% slump.Now, it’s making another bid for a breakout — one we’ve been expecting for months (a very lonely stance BTW) — which wouldn’t bode well for stocks. Is this one for real?

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  • CPI: Out of Control

    CPI soared to 6.24% YoY in October, well above the 5.9% expected and the highest since Nov 1990. The MoM print of 0.9% and the Core CPI print of 4.2% also came in hotter than expected and set multiyear records. Put simply, the Fed has lost control.As we’ve discussed, inflation continues to become more broad-based than the oil/gas-driven effect initially seen earlier this year.

    The chart below shows the divergence from May-September and illustrates the importance of oil/gas prices to future inflation prints. If gas prices were to level off at today’s levels, the direct effect on CPI would cease in November. However, even if the base effect were to roll off, the other categories are now equally problematic. Futures are off 20 points on the news, with several key factors indicating more to come.

    Today marks the point at which the Fed officially stops cheering on the reflation trade.

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