pebblewriter

Tag: FOMC

  • 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.

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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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  • Charts I’m Watching: Apr 22, 2024

    Futures have regained about 30 points after last week’s drubbing.

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  • Update on Gold & Silver: Apr 17, 2024

    Gold and silver both came within 1% of our upside targets for them earlier this week. With inflationary pressures once again top of mind, have they exhausted their upside potential?  We’ll update our long-term forecasts this morning.

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  • Inflation Heads Higher: Apr 10, 2024

    March CPI came in at 0.4% MoM for both headline and core (versus 0.3% expectations for both), hotter than expected for the second month in a row.  YoY headline registered at 3.5% versus expectations of 3.4% and 3.2% in February and core came in at 3.8% (unchanged from February) versus expectations of 3.7%.

    As we expected, inflation continues to be buttressed by strong YoY energy, shelter and services prices. Our gas vs inflation model remains on track.

    Futures came within a few points of our next downside target on the print.

    And, algos are finally recognizing that a string of 0.4% monthly prints can turn into an annual print much closer to 5% than 2%.

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  • Charts I’m Watching: Apr 8, 2024

    Futures are up modestly as traders look ahead to this week’s important data dumps: FOMC minutes and CPI on Wednesday, initial claims and PPI on Thursday, and Friday’s U of Michigan consumer sentiment.

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  • Another Blowout Jobs Report

    NFP came in at 303K vs 200K estimates, a huge beat which, combined with a decline in the unemployment rate, argues against any near term rate cuts.

    ES is all over the map this morning, but has given up much of its overnight ramp and is approaching our next downside target. With CPI coming out next week and a likely military escalation in the Middle East, ES will do well to hold its 50-day moving average.

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  • Update on Currencies: Apr 2, 2024

    We’ve seen this movie before. For years, the yen carry trade has been a critical element of the equity price support toolbox. But, all good things must come to an end. When the yen gets too cheap, Japanese inflation becomes problematic as the cost of importing food and energy soars.

    Aside from exposing the ludicrousness of its monetary policy, Japan’s recently unveiled 0.0-0.1% interest rate regime speaks volumes to the pressures of trying to balance economic reality with the desire for ever higher stock prices.

    Slamming the yen’s value works fine – to a point. But, as rising food and energy costs pressure the real economy, something has to give.

    Enter the euro.

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