pebblewriter

Tag: DXY

  • What Could Go Wrong?

    The week is kicking off with a 75-pt ramp job from yesterday’s lows and will feature both a Fed meeting and OPEX. Oh, and VIX gapped down last night. What could go wrong?

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  • Inflation Tops Estimates…Again

    Let’s talk about inflation. At 0.4%, both headline and core handily beat consensus of 0.3% and 0.2%. Why?

    This morning’s CPI release is a treasure trove of information regarding price action in the general economy.  On an annual basis, energy tanked and food soared. MoM, food was still strong while energy and used cars soared in value.

    So far, the market isn’t concerned. It should be.

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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?

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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?

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  • Having Fun Yet?

    Stocks nailed our second downside target from last Friday [see: Correction Warning.] Judging from the financial press, it was a shock to the average investor.  It’s sad that a 4.5% correction would warrant such concern. But, as I often say, that’s the world in which we’re living.

    Bulls need February’s highs to hold, while bears are rooting for the algos to follow the direction offered by currencies and bonds.

    Many Robin Hood traders and newbie option “investors” are no doubt wondering why they didn’t pick up a good book instead of plunging into the market. These are indeed difficult times.

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  • Dire Straits

    After a couple of days of VIX rising while stocks spiked higher, it only makes sense that VIX is falling while stocks are tumbling. This is the bizzaro world in which we’re living.

    Unless it bounces sharply on our channel bottom target today, add CL to the list of algo drivers which have experienced a bearish (for stocks) 10/20 cross. It has been in a bullish alignment since May 11.

    Recall that RB crossed on Tuesday and USDJPY crossed on Aug 27. Despite the administration’s insistence that everything is peachy, the evidence is building that the market will finally take notice of the economy’s dire straits.

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  • DXY Breaks Trend

    VIX’s 10/20 cross held yesterday, meaning we almost got a lower low on the day. The overnight ramp job was good for 32 points before DXY started attracting attention. It has dropped below the falling trend line it was patiently following, meaning our forecasts in the currency space are accelerating – especially EURUSD and silver.

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  • Just Another Thursday…

    Another Thursday, another million filing for unemployment.

    Hopefully news of Jeff Bezos’ net worth topping $200 billion will take some of the sting out of being unemployed.

    As usual, the futures couldn’t care less, preferring to focus instead on whether or not the Fed will keep refilling the punch bowl following its virtual Jackson Hole shindig.It’s not as though jobs don’t matter, but…VIX.All indications are that the Fed will revise its inflation policy to “average inflation targeting,” meaning that it will allow inflation to run above its 2% target following periods where it has run below 2%.  This is somewhat analogous to my new policy of dating supermodels only after going more than a month without.

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  • Why Argue?

    Futures tagged our white channel midline target again overnight… …before bouncing when VIX reversed for the third time at trend line resistance.Note that ES’ white channel midline was first topped back on March 25. Since then, it has been tested 12 times. Clearly, someone thinks it’s pretty important. Who am I to argue?

    All I know is that with interest rates and inflation suddenly on everyone’s radar, oil and gas are out of the equity-propping game. The dollar is bouncing today, but has broken down below some very long-term trends. So, USDJPY should be of little help.

    Even the Fed has watered down its enthusiasm for driving the market higher now that it’s back to February’s highs. The unspoken message to the politicians: we got it back to previous highs, it’s your turn now.

    So, aside from the usual VIX games, there’s not a whole lot to propel stocks higher. So, will the midline continue to hold?

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  • Breakout or Headfake?

    Today’s post could be an extension of yesterdays, with more beneficiaries of the shutdown such as Target and Lowes reporting big beats.  Winners and losers.

    Curiously, ES failed to make a new high yesterday even thoughy SPX briefly rose above its February highs.

    You’ve always had to worry about predatory traders and specialists trying to catch momentum traders offsides, pushing above resistance in order to stop out shorts and draw in fresh meat.  These days, the players have expanded to include predatory HFTs, algos, central banks, the US Treasury, politicians, etc. The list of “interested parties” is long and distinguished, and most of them have access to plenty of free capital.

    So, as we always ask when SPX reaches new highs: breakout or headfake?

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