pebblewriter

Tag: Channel

  • Charts I’m Watching: Oct 16, 2023

    Futures are up moderately, running into their own channel top following VIX’s recent retreat from resistance,

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  • Charts I’m Watching: Oct 13, 2023

    Futures are up modestly following establishment of a new rising channel.

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  • PPI Hotter Than Expected

    September PPI came in at 0.5% versus 0.3% expectations, briefly driving down futures prices…until VIX was hammered back down. Its 200-day moving average continues to be the critical threshold for algos.

    It remains to be seen whether tomorrow’s CPI print can also be ignored.

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  • Oh, So Close

    Futures came within 7 points of our 200-day moving average target overnight, begging the question: was that close enough for a legitimate backtest?  SPX itself is still 15 points away, close enough by Aug-Oct 2019 standards but nowhere near the overshoot experienced this past March.

    The more important question is whether the factors driving stocks lower haven’t yet finished? As we discussed yesterday, the bearish fundamental case has been building momentum lately. What if investors started to care?

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  • PCE Softer Than Expected

    Futures added to their overnight gains following release of softer than expected August PCE (+0.4% versus 0.5%.)

    It remains to be seen whether the cash market can continue to whistle past the government shutdown graveyard.

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  • Food for Thought

    There’s some good research on marketwatch.com this morning that illustrates the fact that no interest rate inversion (10s1s) in the past 70 years occurred without a subsequent recession. The average lag was about 14 months, meaning that we’re now officially overdue.

    Furthermore, none of the post-inversion equity rallies lasted. Every single one was completely reversed, resulting in a bear market.  Food for thought.

    It’s another quiet morning so far, with futures flat for the most part after testing our 20-day moving average target yesterday.

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  • Powell Back in the Spotlight

    It’s been lonely maintaining that rates would continue to rise over the past 10 months. As we noted in Decision Time:

    “TNX…looks likely to test 47.55 after it digests recent gains.”

    After the 10Y topped its Oct 21 highs, folks started coming around. Now it’s looking fairly obvious.The only question is whether Powell will fess up to the coming rise in CPI and, therefore interest rates, in his speech at Jackson Hole (1005 ET.)

    As we discussed a few days ago [see: Interesting Goings On in Currencies] the cross currents in rates and currencies are problematic for the market. We saw ample evidence yesterday when futures gave up a strong opening  – breaking out of a well-formed channel only to close deep in the red.

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  • VIX: Decision Time

    VIX’s constant slide has been one of the best indicators of the runaway bullishness over the past 10 months. Over the past week, however, it has soared to new highs, reaching our 200-day moving average target well ahead of schedule. What does it portend for equities?

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  • Forcing Their Hand

    The recent breakout in oil/gas prices has now inspired a breakout in the 10Y.

    It’s an important headwind for the Fed, which had relied on falling energy prices to keep inflation and interest rates at an acceptable level.

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  • Inflation Not Done

    We might be done with inflation, but judging by the oil/gas markets, it’s not done with us. Both CL and RB have now broken out of channels dating back to early 2022 – with CL pushing above its 200-day moving average this morning.

    The Fed has its work cut out for it this week – and for the next several months.

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