pebblewriter

Tag: harmonics

  • Charts I’m Watching: Sep 30, 2024

    Futures are slightly lower on the last day of a pretty impressive Q3 at +8.7%.Can the rally keep going in October?

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  • Charts I’m Watching: Aug 27, 2024

    Futures are off moderately following yesterday’s reversal, the 6th session in a row that ES failed to surpass its .886 Fib retracement.

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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.

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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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  • 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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  • Is the Meltup Over?

    We’ve waited a very long time for SPX’s 50-DMA to reach a great spot for a small pullback. It’s finally here.

    Will the market cooperate?

    NOTE: I will be out of the office between March 4-6, returning on March 7.

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  • Back on Track

    Stocks rode NVDA’s coattails back into their rising channels yesterday, right back to the top of already overstretched chart patterns.

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  • NFP Soars

    Nonfarm payrolls soared by 353,000, more than twice the 175,000 expected. Average hourly wages also beat at +0.6% (+4.5% YoY) versus +0.3% expected. Unemployment remained at 3.7%. Forget about a March rate cut. Bulls will be lucky to get one in May.

    The overnight ramp job has completely disappeared, with futures struggling to remain positive.  AAPL‘s meltdown hasn’t helped.

    Factory orders and Michigan consumer sentiment are due out at 10ET.

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  • FOMC Day: Jan 31, 2024

    It has been a long time coming, with expectations of a rate cut ranging from “certainly” to “not a chance in hell.”

    Futures are taking their cues more from GOOGL and MSFT than the FOMC at the moment.

    Will we finally get a real backtest? Our potential downside targets are getting very lonely.

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  • A Look Ahead at 2024

    To quote the great Yogi Berra, “it’s tough to make predictions, especially about the future.”

    But, there are a number of important themes that should drive markets in 2024. The elephants in the forecasting room are the so-called Magnificent Seven (AAPL, GOOGL, MSFT, AMZN, META, TSLA and NVDA) which soared 105% in 2023 versus the S&P 500’s 24%.

    These seven stocks make up roughly 30% of the S&P 500, so even that index’s returns are suspect. Without the Mag 7, SPX gained only 9.94%. So, don’t chastise your investment manager if they returned only 10% last year by exercising prudent diversification.

    Will the rest of the market catch up to the Mag 7 or will the Mag 7 “catch down” to the rest of the market? Investors tempted to join the party and pile into the Mag 7 should remember that, in 2022, these same stocks plunged 40% compared to the rest of the market’s 12% losses.

    From a fundamental standpoint, their price to earnings multiples are historically quite high, meaning that any disappointments will be dealt with harshly. We saw this last week with AAPL.  While SPX fell as much as 2.2% from its highs, AAPL was off a whopping 9.7%.

    We’ll spend the next several days examining the equity charts for clues as to what to expect in the year ahead. We’ll also zero in on the currencies, commodities and interest rates which greatly influence equity values.

    As always, our goal is to get most them right most of the time, as we did in 2023 [see: The Year in Review – 2023.] Chart patterns and technical analysis are great tools for doing so. We’ll start with a very obvious chart pattern for SPX which should make all the difference between a stellar year or a slump. It ties in with another chart pattern dating back to the Great Depression.

    The most important chart pattern for SPX is the large Inverted H&S Pattern which completed on Dec 11.

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