Futures are up sharply following Friday’s 140-point reversal which finally saw SPX/ES reach the -20% mark. As we discussed last week, the market should surprise many this week.
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Tag: interest rates
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Sure OPEX, But Then What?
Futures are up about 1% this morning – par for the course for an options expiration Friday. The Chinese prime rate cut is no doubt helping.
But, what happens next week as new and pending home sales, durable goods, FOMC minutes, GDP, PCE and Michigan Sentiment come rolling in? This will be a serious test of the market’s ability to hold its lows, let alone continue to bounce.
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Charts I’m Watching: May 18, 2022
We’re seeing more backtesting this morning, consolidation after yesterday’s strong surge.
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Analog in Play
Futures are all over the map this morning, with the overnight losses largely erased at one point.
The key, though, is that SPX bounced back above a key Fib level after tagging its 20% target last week. Although it’s still early stages, our analog is in play.continued for members… (more…)
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Analog Watch: May 13, 2022
Friday the 13th – an inauspicious day to break a new analog! With SPX nailing our downside target and futures breaking out of the falling wedge pattern yesterday, we’re off to the races.
These things don’t always work out. But, when they do, it can be a career-making trading opportunity. The one which worked out absurdly well was back in 2011. The 22% correction played out almost exactly as forecast, with the vicious 11-day, 18% plunge starting on the very day and within 1 point of what the analog promised. You can read all about it HERE.
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The Big Picture: May 12, 2022
SPX closed below important support yesterday, suggesting that the current leg down isn’t yet over. Indeed, things could get worse.
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A Swing and a Miss
ES spent 11 hours hanging around our next downside target yesterday. While the session had many characteristics of capitulation, the fact that SPX didn’t quite reach significant support (3956) suggests that the overnight ramp is a head fake.
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Nobody Saw it Coming
The financial press usually starts to take things seriously about this point in a correction. The permabulls aren’t calling bottoms any more, while the bears are licking their chops. It never fails, someone on TV says something like “no one saw this coming.”
It’s silly, of course. What they mean is that they didn’t see it coming. Plenty of others did. Some, like us, saw it months ago. This was our Jan 3, 2022 ES chart, illustrating the downside case.
We reiterated the target, called the bounce over, and nailed down the timeline in late March.
Now, as we finally approach ES 3997, it seems that more and more mainstream bulls and trend followers are getting bearish (better late than never.)
The risk, of course, is that excessively bearish sentiment would stoke another bounce and postpone the 3997 tag. VIX has some thoughts about that.continued for members… (more…)
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The Reflation Trade
Remember how excited the bulls were about the reflation trade? Higher interest rates meant the economy was reopening at a good clip. What could be better than that?
Things look a little different from the perspective of 3%+, don’t they?
Nothing alarming here…
Remember, it’s not the inversions that bite, but the spikes higher which come after.
Futures are off again this morning following a strong jobs report, but we’ve yet to punch through Monday’s lows.
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FOMC Day: May 4, 2022
Today’s FOMC meeting is one of the most anticipated and consequential in years. It’s difficult to overstate its importance in terms of economic impact and, perhaps more importantly, Fed credibility.
Yes, we care about whether the Fed hikes 50 or 75 basis points – though either is unlikely to put a dent in inflation. The bigger question is what the Fed does with its $9 trillion balance sheet.
Futures are up modestly.
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