pebblewriter

Tag: CL

  • A Turning Point

    Per our analog, today is the next significant turning point – important in terms of confirming the direction and distance of the market’s next move. It has done an excellent job of forecasting the reversals, rallies and drops since we first posted it on May 13 [see: Analog Watch.] The first time I came across one of these, it worked out spectacularly. I started noticing in May 2011 that the turning points and rallies/declines which had been occurring at that time very closely matched those of the 2007 top.

    Just after Day 32 in late June [see: Deja Vu All Over Again] I began laying the entire roadmap which would presumably end with a very sharp drop of around 20% by Day 70. As it turned out, the S&P 500 plunged 19.6% by Day 69. Details are available HERE.

    The current analog is different in terms of how quickly things will play out. If it plays out, however, the market is in for much greater losses in the months ahead.

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  • Productivity: Worst Since 1947

    The first quarter decline in non-farm productivity was the largest since 1947. The chart below from briefing.com shows the 7.5% plunge, contrasted with an 11.6% increase in unit labor costs. If the country had locked down during this time, you might be able to make an argument that a recession isn’t necessarily coming. But, this slowdown came courtesy of a 2.4% output decrease. In other words, it’s another reason to believe a recession is here and a soft landing ain’t in the cards.

    Futures have been all over the map overnight, but are currently hanging on to the channel bottom from May 20. Note that we finally got that 10/20 cross and are nearing a backtest of the 50-day moving average – just in time to set up a nice trap.

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  • Charts I’m Watching: Jun 1, 2022

    Futures are moderately higher this morning as algos respond enthusiastically to Salesforce’s earnings and ignore the ongoing meltdown in mortgage applications and uptick in COVID cases.  Here’s a snapshot of testing results at my daughter’s college, which finally reinstated a mask mandate after the positivity rate reached 10%.

    I think they could use a primer on chart reading…

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  • Economic Data Deluge Begins

    It’s a big week for economic data, with earnings and outlook announcements already setting a bearish tone.  First up this morning is April new home sales, which came in at 591k units – a 16.6% drop from March and a 32.9% plunge from April 2021. It barely beat the 2020 pandemic lows.

    As everyone now knows, this is a direct result of the sharp rise in mortgage rates which is a direct result of the sharp rise in inflation resulting from the Fed’s policy mistake: driving rates much too low for much too long as discussed last July [see: Time to Sell Your Home?]

    Over the past month, it has seemed that the old “bad news is good news” meme which played such an important role during ZIRP had been sidelined. Based on recent Fedspeak, however, it’s probably better characterized as being in cold storage. The Fed’s determination to reduce inflation will be sorely tested in the days ahead.

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  • Charts I’m Watching: May 23, 2022

    Futures are up sharply following Friday’s 140-point reversal which finally saw SPX/ES reach the -20% mark. As we discussed last week, the market should surprise many this week.

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  • Sure OPEX, But Then What?

    Futures are up about 1% this morning – par for the course for an options expiration Friday. The Chinese prime rate cut is no doubt helping.

    But, what happens next week as new and pending home sales, durable goods, FOMC minutes, GDP, PCE and Michigan Sentiment come rolling in? This will be a serious test of the market’s ability to hold its lows, let alone continue to bounce.

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  • Charts I’m Watching: May 18, 2022

    We’re seeing more backtesting this morning, consolidation after yesterday’s strong surge.

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  • Analog in Play

    Futures are all over the map this morning, with the overnight losses largely erased at one point.

    The key, though, is that SPX bounced back above a key Fib level after tagging its 20% target last week. Although it’s still early stages, our analog is in play.

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  • The Big Picture: May 12, 2022

    SPX closed below important support yesterday, suggesting that the current leg down isn’t yet over. Indeed, things could get worse.continued for members… (more…)

  • Bitcoin’s Meltdown

    BTC reached our next downside target at 28,600 last night, then dropped as low as 25,401 before bouncing back to current levels.

    It’s not unusual for BTC to overshoot important support. And, this .618 Fib level is theoretically important support. But, it’s also important to remember that a bounce is sometimes just a backtest of newly formed resistance before another leg down.

    We’ve been bearish on BTC since 66,432 in October 2021. We were a little early, but maintained our posture ever since with with the exception of the Dec 2021 and Jan 2022 bounces – a stance which has produced exceptional gains.

    We’ll take a fresh look at BTC and whether it’s worth trying to catch this falling knife.

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