pebblewriter

Tag: dow

  • PPI Echoes CPI

    After closing below its 10-day SMA for the first time in a month, ES is backtesting it……on the back of PPI data that essentially echoed yesterday’s CPI print. Headline PPI crashed to 2.7% YoY and -0.5% MoM. Though stripping out food and energy, core PPI fell only 0.1% MoM and increased 3.4% YoY.

    As we discussed yesterday, 80% of the MoM decline was due to the sharp drop in gasoline prices.

    Also out this morning, credit portfolio managers agree with the Fed’s assessment that the economy is headed for recession. It’s a troubling backdrop as we enter earnings season in the midst of a credit crunch.

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  • Update on Nikkei: Jan 20, 2022

    In our last update on NKD [see: Nov 30 Update], I somewhat snarkily disparaged the index’s legitimacy.

    The Nikkei 225 is less a securities index than it is a measure of how much intervention the Bank of Japan feels like throwing its way. It’s what the Dow aspires to be when it grows up.

    At the time, NKD was approaching a trend line connecting five recent lows, none of which had quite backtested the obvious Fibonacci support at 26,463. It was also backtesting a TL connecting recent highs.

    As the chart above shows, NKD is backtesting a TL off the Feb 16, 2021 highs. This could be all we get, as the BoJ dislikes anything smelling like a correction.

    As it turned out, the low that day was all we got. NKD rallied into year end, putting in a respectable +5.1% return for 2021 versus the 1.2% losses which would otherwise have occurred. Japanese “investment” managers no doubt cheered the rally, just in time for bonus calculations.

    The rally left a bad taste, though, and I left the 27,156 target where it was – partly for spite and partly because the BoJ’s pathetic manipulation has become laughably predictable. Guess where NKD just tagged?

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  • Update on DJIA: Jul 29, 2019

    In our last dedicated post six months ago, we discussed the critical resistance DJIA faced: the neckline of a large H&S Pattern.

    …it’s important to note that like SPX and COMP, [DJIA] is backtesting a point of potentially strong resistance — the neckline of a large Head & Shoulder Pattern that never completely paid off.

    DJIA’s reversal had occurred 500 points short of the indicated target and was thus susceptible to another leg down following the backtest that, ideally, would align with a significant channel line or Fib level.

    But, the White House had other ideas. Mnuchin planted a story with the Journal that the China tariffs might be lifted.  Combined with the ongoing beatdown on VIX, DJIA sliced through the neckline like it wasn’t even there.  Of course, it was careful to observe the neckline in the midst of a backtest once it was recast as support (which involved a second busted H&S.)

    Since then, DJIA has ignored a potential triple top and pushed to new highs which just so happen to mark two significant points of overhead resistance.  I know, I know…fool me once and all that.But, this time might just be different.  We’ve been following an analog for the past two weeks which has been quite accurate so far.  If it plays out, DJIA might have already peaked and could be facing a significant decline.

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  • Update on DJIA: Dec 11, 2018

    In our last update on the Dow, we noted that it had not only fallen through an important trend line but its SMA200 as well. From All Good Things on Oct 11:

    DJIA is flirting with breaking below a long-term trend line and SMA200.  A failure here opens the door to 23781, another 6.2% lower.

    Two months after the breakdown, DJIA is indeed flirting with the 2.24 extension at 23781.  Like SPX, it has completed a Head & Shoulders Pattern as well as a Flag Pattern.Also, like SPX, it came up just shy of its .886 Fibonacci retracement yesterday (23881 vs 23781.)

    The big question, then, is whether it’s done or whether it’s simply preparing for a more dramatic plunge.

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  • Update on DJI: Jun 19, 2013

    Since breaking above the 2007 high, the Dow’s been on a tear — eager to leave 2007-2009 in the past.

    In so doing, it sliced right through the white 1.618 extension of the 2011 correction and the 1.618 and 2.24 extensions of the drops from Apr 2012 and Sept 2012.

    What’s next?

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