pebblewriter

Tag: FOMC

  • The Rally That VIX Built

    As discussed yesterday, stocks spent the night building a cushion based on VIX (currently off 5.4%) in preparation for tomorrow’s FOMC announcement.  It started just before the close, yesterday, and has built to a 6-pt gain in the futures.Actually, it’s been less of a rally, lately, and more of an effort to maintain ES at levels above its IH&S Pattern target reached back on Jun1.  Remember the mantra “stay fully invested, because you never know when a sudden rally will appear out of nowhere and you can’t afford to miss it”?  These days, it’s the corrections that pass in a flash, like Friday’s 31-pt plunge which was reversed so quickly that it won’t even register on daily charts.

    But, I digress.  Today’s action is all about putting more distance in between SPX and the Support Below Which it Must Not Go in the wake of the FOMC meeting.

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  • Fed Minutes: How Hawkish Are They?

    Markets tend to moves higher on Fed minutes days, even if the news isn’t all that positive.  It’s all about convincing investors that the FOMC has their best interests at heart — that all they’re worried about is making sure that stocks continue to rally.

    Today’s session is slightly complicated, then, by ADP employment which came in much higher than expected: 263K versus 175K.  Theoretically, this puts pressure on the FOMC to raise rates and/or trim their balance sheet faster than anticipated.  But, central banks have many tools at their disposal to ensure that the complication doesn’t become a problem.

    S&P 500 futures are up 6.5 points, but right to Fib resistance.  

    Can the Fed spin a hawkish set of minutes into something positive for stocks?

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  • Whistling Past the Graveyard

    Only a couple of years ago, central bankers became adept at repairing the damage done to stocks after big shocks.  That changed with Brexit, when the strategy shifted to pushing stocks as high as possible before the damage was done… and, still doing all the requisite ramping after the fact.

    They perfected the technique after the US election, turning a 5% overnight dump in the futures to a breakout above important resistance — where stocks remain, today.

    It made a bold statement — that the market was resilient enough to weather a sea change in the political landscape.  This week should be all about proving how resilient it is in a rising interest rate environment.  Judging from the mild drop over the past week, investors are quite unconcerned.

    Does this make sense, or are investors whistling past the graveyard?

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  • But, When It Was Bad…

    In my younger days I played Rubgy, a drinking party with a little sport thrown in to make it legit.  I don’t know if it’s still so, but back in those days, when the parties (always with the opposing side, much more civilized than American football) reached a certain level of inebriation, someone would start up with some limericks.   Who knows why…

    They were always off color, often hilarious, and sometimes even made sense in spite of the fact that the guy delivering it was, by then, completely arseholed.  There were no less than a dozen variations on the Longfellow poem There Was a Little Girl.

    There was a little girl,
        Who had a little curl,
    Right in the middle of her forehead.
        When she was good,
        She was very good indeed,
    But when she was bad she was horrid.

    One of the cleaner variations finished with “and when she was bad she was incredible.”

    As I watched the news roll in over the past 12 hours, I couldn’t get that poem out of my head.  Got an economic boo-boo?  Not to worry, the Fed will kiss it and make it all better.   We’re all so conditioned to that idea that no one bats an eye when it’s reported like as did CNBC:

    Frankly, I’m surprised they even threw in the word “possibly.” It’s probably only because, as Cramer assures us, this enormous GDP contraction from the previous quarter was a “one-off” event.

    More details on the report — the first negative quarter since 2009 — shortly.  But, the chart from Briefing.com clearly illustrates a lower low to go with the Q3 lower high.  Sorry, folks, but that’s a trend that points downward — especially when you layer in a sequestration and tax increase coming up next quarter.

    Of course, this horrid economic news pales in comparison to the importance of the Blackberry 10 launch.  Which, of course, will hopefully distract our attention from the craptastic AMZN earnings report — which, almost got the stock back to where it was two days ago…imagine if they’d had two positive footnotes in there! — and Boeing, the future of which is sitting on tarmacs in the form of fifty 110,000 kg paperweights (with another 800 on order.)

    The market’s reaction to all this?  Off a whopping 3 points on SPX and 20 on the Dow.  Oh, well, I suppose it could be up 10.  I’m taking on odds on how many minutes it takes for the BB-10 launch to replace the GDP headlines on CNBC.com…

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