Futures are flat as we enter the final month of a pretty solid year.
Questions remain, however, regarding the economy’s ability to withstand the coming policy changes.
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Tag: economics
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Charts I’m Watching: Dec 2, 2024
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Charts I’m Watching: Oct 21, 2024
Futures are off modestly on a slow news day as investors continue to game out how the election will affect their portfolios.
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Mind the Gap
Futures are flat this morning following unemployment data that supports the widely held expectation of a rate cut when the FOMC meets Sep 17-18.
The algos are presently concerned with the yield curve, which continues to warn of further downside, tomorrow’s jobs report, and a pesky gap which refuses to be ignored.continued for members… (more…)
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Update on Oil & Gas: Sep 4, 2024
Oil and gas futures have both tagged our next downside targets from June [see: Update on Oil & Gas, June 6, 2024.].
We’ll take a look at the road ahead and what it means for the equity and bond markets.continued for members… (more…)
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Powell Shows His Stripes
In a speech that was essentially a mashup of all his other recent speeches, Powell reiterated at Jackson Hole on Friday that the pandemic – not historically dovish monetary policy – caused the recent huge spike in inflation. In fact, the Fed should be congratulated for putting out the inflationary fire that they started.
He did mention by way of a little joke that the Fed’s assessment of inflation being transitory was wrong, but that the Fed had plenty of company. Essentially, no harm, no foul.
Now, the Fed is apparently ready to lower interest rates. This view will ideally be underscored by Friday’s core PCE print. The market expects it and, in fact, needs it. But, anything more than 50 bps could be seen as the Fed panicking and could unravel the current rally as it stumbles merrily along.
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Update on RUT: Jul 23, 2024
A lot has happened for RUT in the past week. It was only 11 days ago that we updated its chart, suggesting RUT would reach 2282 by the end of the year.
RUT’s reversal at its .618 in April set up either a Gartley or Bat pattern, meaning a move to its .786 at 2282.27 or its .886 at 2364.78. If we extend the dashed red trend line to the right, we get an intersection with the .786 at the end of the year – a very common scenario. While the .786 in December is a logical next target, an equally compelling case can be made for the .886 in September or October.
Don’t look now, but RUT pushed past the red TL we discussed, allowing RUT to tag 2282 (well, 2278) late last week.
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Fourth Time a Charm?
This is the fourth time in a row that ES has pushed back into the rising channel from which it previously broke down. This one is more important, however, as it has the 50-day moving average in its sights.
As we discussed last week, all the stars are aligned should the algos wish to pursue our upside targets.continued for members… (more…)
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On the Brink…Again
Already elevated on AAPL’s announcement of a historic buyback, futures popped on a weaker than expected jobs report.
The only problem is that this ramp puts them right back at the top of the channel which has prompted three previous tumbles. Will this one be any different?
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Stagflationary Data…Again
Futures are off sharply on a very stagflationary offering of economic data. Q1 GDP rose at only 1.6% versus expectations of 2.4%, while core PCE prices rose 3.7% against expectations of 3.4%. The PCE index itself is due out tomorrow.
Meanwhile, the Labor Department reported that unemployment claims for the week ended April 20 came in at 207,000 versus 215,000 expected and the 212,000-222,000 which have been reported in the past 6 weeks.
Weaker than expected economic data, combined with stronger than expected inflation and employment, places the FOMC in a difficult position and a market which has been counting on lower interest rates downright bearish.Despite a strong showing in March, the SPX is right back where it was the last time we wrote about stagflation in February [see: Stagflation Fears Renewed.]
About the only silver lining in our charts is the 10Y, which has reached our 4.738 target several weeks earlier than expected. The resistance at this level could make a difference for stocks.
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Tit for Tat
Futures tanked overnight on news of Israel’s rocket attack on Iran, only to recover all their losses as we go to press. The latest retaliation is being characterized as a tit for tat.
But it’s easy to imagine the Plunge Protection Team working overtime to calm markets by hammering VIX and WTI back down from their overnight highs.
Meanwhile, SPX came within 1.89 of our 5,000 target yesterday, testing support that continues to be quite important.continued for members…. (more…)
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