A little over a week ago, COMP made a hard bounce off its 200-DMA, gapping much higher the following day. Yesterday, it plunged below its 200-DMA and closed there – not a good sign for the bulls.
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Tag: COMP
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COMP Signals More Pain Ahead
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Update on COMP: Jan 6, 2022
In our last update on the NASDAQ Composite [see: Nov 4 Update] we called a top and forecast a drop to the 200-day moving average, then at 14,181.
If this channel holds, then the push past the 3.618 will reverse itself and the index would be susceptible to significant downside. I suspect COMP is going through the same exercise as SPX, DJIA, etc: Don’t tag the SMA200 until it represents a higher low than the last one. In this case, that would be the Oct 4 low of 14181.
As it turned out, we were two weeks and 1.5% early. During those two weeks, the 200-DMA’s rose from 14,210 to 14,661. But, it remains our next downside target – a 9.6% drop rather than the 11.2% one originally anticipated. The bulls had better hope it holds.
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Charts I’m Watching: Dec 27, 2021
Algos are eyeing new all-time highs for the third session in a row, a combination of low volume…
…and VIX’s continuing flirtation with its 200-DMA.
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Charts I’m Watching: Dec 6, 2021
VIX tagged our 34.84 target on Friday – an important breakout in risk – before tumbling back into the safe zone.
With other factors holding their ground and equities’ 100-DMAs still untagged, it’s not at all clear that the worst is over.continued for members… (more…)
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Update on COMP: Nov 4, 2021
We’ve been keeping an eye on COMP lately, as it has often been a solid indicator of froth in the markets. It recently reached our next upside target of 15,667, continuing up to today’s high of 15,966.
The gains are especially noteworthy, as just 5 weeks ago COMP completed a very bearish H&S Pattern that targeted a drop through its 200-DMA for a 11.4% selloff from its Sep 7 highs. Instead, it joined the everything rally which began on Oct 4 and began a 10.5% climb.
Does this rally have legs, or is it ready to roll over?continued for members… (more…)
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PPI Confirms Hot Inflation
It comes as no surprise that PPI confirmed yesterday’s hot CPI print, coming in at a whopping 6.2%.
We’ve been beating the inflation drum for so long, it feels a bit anticlimactic to acknowledge that it’s finally here and even slightly greater than we anticipated.As regular readers well know, I expected central bankers to preemptively head off the problem of higher inflation and higher interest rates by crashing oil/gas prices as they have many times before.
I was surprised to see them pass on this approach and roll the dice with inflation. But, it made more sense once it became apparent that they had essentially taken control of the bond market – the one market that had always “told the truth” about economic conditions. No more.
As strong as yesterday’s equity selloff was, the 10Y barely budged, rising from a high on Tuesday of 1.63% to a high on Wednesday (after CPI was announced) of 1.69%. Today, yields are actually dropping. An orderly channel like the one below is all you need to confirm that yields are being carefully managed.
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Speaking of carefully managing things…I can only imagine the panic around the Fed, the Treasury and the White House when the Colonial Pipeline fiasco popped up the other day. Higher oil/gas prices had helped get stocks to their recent highs, but it was time for the market’s caretakers to take their feet off the gas lest inflation be even more alarming.
A shutdown of the nation’s largest fuel pipeline certainly wasn’t part of the plan – though I wouldn’t be surprised if the hackers had placed some well-timed bets on oil/gas prices in advance. With markets going crazy over inflation, something had to give.
I had the following conversation on this very topic with a very good friend who happens to be both brilliant and an excellent trader. But, he’s nowhere near as cynical as I am. We chatted just after the close.
Less than ten minutes later…
RBOB futures are off nearly 6% from Friday’s highs.* * *
With futures having already dipped below the SMA50 to tag a key target earlier this morning, the bounce should continue given the algo action focused on VIX.
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The Pandemic is Still With Us
ES is now off 9.3% from its recent top (-7.8% from our Correction Warning), nailing our 3253 target overnight. The decline has broadened from the overpriced tech stocks to include banks, energy and cyclicals.
The factors we’ve been watching for the past three weeks are all bearish now, and bulls are starting to acknowledge the fundamental risks inherent in the economic and political landscape – not to mention an obvious uptick in coronavirus cases in many significant countries around the world. Contrary to politicians’ cheerleading and assurances of a successful vaccine just around the corner, the pandemic is still very much with us.continued for members… (more…)
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Core PPI Tops Estimates
Maybe the Fed had it right, leaving the door open to higher inflation. Though August headline PPI came in slightly higher than expected at 0.3% vs 0.2%, core PPI rose 0.4% versus 0.2% expected.
S&P futures sold off 8 points on the news, but the algos had other ideas.
As is often the case, “someone” hammered VIX and it tumbled back below its 200-DMA at 8:39. The algos were only too happy to oblige, breaking ES out of its latest falling channel.
Honestly, who needs economic data? Why not just have the Fed trading desk announce the day’s high, low and close every morning?continued for members… (more…)
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Was That All?
S&P 500 futures have bounced 77 points off their 50-DMA overnight lows, a substantial sum but not yet enough to break out of ES’ falling wedge which would be tested at 3380-3385.
It raises the question: is this a garden variety pause or is the excitement over?continued for members… (more…)
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Update on COMP: Aug 26, 2020
It’s been only two weeks since our last update on COMP in which we pointed out COMP might be running out of upside. In that time, the index popped up to an even more compelling reversal point.
Due to its age, the rising white channel that dates back to 2009 is subject to a little wiggle room. What’s not subject to error, though, is the 2.618 Fibonacci extension at 11643.40.
Today, COMP reached the intersection of that Fib and the white channel top – a strong sell signal for an index that seems to have forgotten how to decline.
The thing is…it’s not the only sell signal our charts are giving us.continued for members… (more…)
