pebblewriter

Tag: DJIA

  • 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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  • Charts I’m Watching: Aug 21, 2023

    Futures are up modestly in advance of the Jackson Hole symposium. continued for members… (more…)

  • 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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  • CPI Coming Up

    Futures are up moderately, primarily on the DXY stall and the usual overnight VIX smackdown. But, most attention will be focused on Thursday’s CPI print.

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  • Powell Doesn’t Disappoint

    He could have gone full hawk, but he didn’t. Even in the face of economic data (that the rest of us can now see) which was uniformly positive and a coming bump in inflation, Powell chose the route that best supported stocks. ES bounced at its SMA10 and is surging toward its .886 Fib retracement.

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  • FOMC Day: Jul 26, 2023

    Equities have ramped almost 12% since the last Fed meeting – ignoring the prospect of higher interest rates for a longer period of time. Given the oil market’s recent breakout and the obvious base effect on inflation, we see a good chance of Powell presenting a more hawkish stance than the overbought market is prepared for…

    …raising the prospect of spike in the 10Y to 4.76% by mid-August. One of the few developments that could prevent it: a collapse in oil/gas prices.

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  • Jawboning an OPEX Rally

    Yesterday’s 1.2% spurt higher was driven not only by the usual push in USDJPY and plunge in VIX, but a healthy dose of hopium regarding the debt ceiling crisis. Congressional and White House reps were nearly unanimous in declaring that a deal is as good as done.

    Whether they’re speaking the truth or simply trying to avoid a market meltdown a la 2011 remains to be seen. Both SPX and ES saw a bullish 10/20 cross, but it could unwind if ES closes back below the former resistance at 4166. Keep on eye on the ever proficuous VIX, which usually triggers algos to buy any significant dips by breaking below support such as the purple channel bottom below.

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  • Aftermath

    Futures are off modestly after a more hawkish Q&A with Powell than many expected. ES came within a few points of the 50-day yesterday. Based on the overnight action, it should reach our next downside target with ease.

    It didn’t help that unit labor costs shot up 6.3% for April versus the 3.3% prior and 3.6% consensus. Perhaps the three rate cuts the market has been pricing in by year end don’t constitute such a great forecast.

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  • Price Setting

    After establishing a well-formed falling channel and positioning for a bearish 10/20 cross, SPX soared last week on  – what else? – another collapse in VIX.

    In the process, the 10/20 cross was (at least) delayed and the channel busted.  It’s normal activity for the lead up to a Fed meeting. Perhaps “price discovery” should be renamed “price setting.”

    Perhaps we shouldn’t be surprised to see similar goings on in other “markets” such as silver.

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  • Charts I’m Watching: Apr 17, 2023

    VIX came within .01 of its previous lows on Friday……leaving plenty of doubt as to the algos’ next move. Today, we should see some resolution as moving averages start to roll over.

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