Yesterday marked the second day in a row of sharp declines in the equity markets following the 200-day moving average backtest and the passing of OPEX.
There’s more where that came from.
continued for members… (more…)
Tag: gas
-
More Where That Came From
-
Charts I’m Watching: Aug 22, 2022
Futures are off sharply this morning, reflecting the lack of support behind the runup to the last two options expirations.
continued for members… (more…) -
Maintaining an Even Strain
Looking at the bounce since Jun 16, I can’t help but think of Chuck Yeager’s ill-fated journey into space.
Futures are up very slightly this morning, fixated on maintaining prices through tomorrow’s massive option expiration.
VIX: an excellent example of maintaining an even strain.
continued for members… (more…) -
Retail Sales (Sort of) Flat
July retail sales came in at 0.0%, a goose egg, versus expectations that were generally around 0.1-0.2%. These data aren’t adjusted for inflation, however, so the “real” change was another drop.
Markets seem to care at the moment, with ES off nearly 1%. But, our charts had already called for a reversal yesterday after reaching upside targets across the board.With Fed minutes coming out at 2pm ET and VIX still unable to push past the considerable suppression that has been applied at the 10-day moving average (20.51), bears should continue to exercise caution.
From a fundamental standpoint, this retail sales report is horrible. It’s disappointing because it’s flat rather than up, of course. But, it’s much worse because it’s not bad enough to sway the Fed from inflation fighting. We’ll get a peek at their minutes in a few hours, but suffice it to say this bad news is just plain ol’ bad.continued for members… (more…)
-
Empire Fed: 2nd Biggest Plunge Ever
On the heels of a slowdown in China which was serious enough to cut interest rates, the Empire Fed numbers which came out this morning represent the second largest decline ever. It was expected to slip from 11.1 to 5.0. Instead, it plunged to -31.3, among the worst readings on record. Aside from the COVID crash, only Nov-Dec 2008 were worse.
Then, there’s Henry Kissinger – who knows a thing or two about global relations – who says we’re edging toward war with China and Russia.
Given all that, futures are off only slightly more than 1/2%. After all, Friday is OPEX.
continued for members… (more…) -
Charts I’m Watching: Aug 12, 2022
After a noteworthy reversal yesterday, we’re getting more of the same overnight gimmickry: “breakdowns” in VIX to facilitate “breakouts” in ES, even at the 5-min level.
continued for members… (more…) -
PPI: Rolling Over?
Annual headline PPI eased slightly in July, rising 9.8% versus June’s 11.1% increase. Monthly headline actually fell 0.5%, due largely to drops in oil prices. Core PPI remained elevated at 5.8% annually and 0.2% monthly.
As with CPI, the question remains whether inflation is rolling over or merely pausing.
With OPEX approaching, algos can’t be bothered such matters. Futures were off to the races again, perhaps catching the scent of the 200-day moving average just above…
…and enticed by an ever-decreasing VIX.
continued for members… (more…) -
CPI Edges Lower
Futures ripped higher on the news that July CPI came in 0.2% lower than expected on both the monthly and annual headline figures: 0.0% and 8.5%. Core rose 0.3% and 5.9% – still well above the Fed’s so-called 2% target.
Much has been made of the price drop seen in oil and gas since mid-June. But, it’s important to note that we’ve seen this happen several times before. The July YoY increase of 44.1% has been about the average low ever since Apr 2021, with several highs in the 60% range.
Prices would need to continue to decline in order for the YoY change in August to come in below 40%. And, our charts aren’t that all that convincing that oil/gas prices will continue to decline. Maybe if we had another COVID lockdown or a nice little recession…continued for members… (more…)
-
2019 Redux?
In late 2019, many were mystified by a market that continued to rise even in the face of worsening fundamentals. VIX – the supposed fear gauge – inexplicably plumbed new lows and, eventually, broke down below a channel (in red below) dating back to late 2017….
…even as news of a deadly pandemic became more and more concerning. For chartists, the breakdown in VIX was frustrating but telling. Algos and all the portfolios which key off them were keying off VIX. And, the breakdown was all the algos cared about – to a point.
Eventually, the breakdown was no more. VIX soared and the market plunged. But, for over 3 months (including, of course, the usual YE run to the barn), the market made new highs based almost solely on the vanquishing of fear.It’s hard not to think of 2019 when observing the current market. With the Fed’s own forecasts and the bond market screaming “recession,” stocks are ignoring rising interest rates and inexplicably bouncing. Inexplicable, that is, except for VIX.
I have no secret insider source on the Fed’s trading desk. But, if you were trying to raise interest rates without trashing the stock market, wouldn’t you be shorting VIX every time the market dipped? It’s safe to say that the latest ongoing assault on VIX is the tail that’s wagging the market’s dog…just like in 2019.continued for members… (more…)
-
Good News is Bad News
We’ve been used to the bad news is good news meme for such a long time, it feels weird to even type that. That’s the reality, however, when investors are already counting the days till the Fed’s easing cycle and we get 528,000 new jobs instead of the 258,000 expected.
The tightening might just have to last a little longer than the bulls have suggested. Though, the efforts being made to lower oil prices are bound to start paying dividends in the longer run. CL reached our next downside target. 
Could this slide turn into something real? Could ES do something so drastic as drop below its 10-day moving average? Can VIX survive the usual 9:30 smackdown?continued for members… (more…)
