pebblewriter

Tag: SPX

  • Core PPI Tops Estimates

    Maybe the Fed had it right, leaving the door open to higher inflation. Though August headline PPI came in slightly higher than expected at 0.3% vs 0.2%, core PPI rose 0.4% versus 0.2% expected.

    S&P futures sold off 8 points on the news, but the algos had other ideas. As is often the case, “someone” hammered VIX and it tumbled back below its 200-DMA at 8:39. The algos were only too happy to oblige, breaking ES out of its latest falling channel.

    Honestly, who needs economic data? Why not just have the Fed trading desk announce the day’s high, low and close every morning?

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  • Was That All?

    S&P 500 futures have bounced 77 points off their 50-DMA overnight lows, a substantial sum but not yet enough to break out of ES’ falling wedge which would be tested at 3380-3385.

    It raises the question: is this a garden variety pause or is the excitement over?

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  • Having Fun Yet?

    Stocks nailed our second downside target from last Friday [see: Correction Warning.] Judging from the financial press, it was a shock to the average investor.  It’s sad that a 4.5% correction would warrant such concern. But, as I often say, that’s the world in which we’re living.

    Bulls need February’s highs to hold, while bears are rooting for the algos to follow the direction offered by currencies and bonds.

    Many Robin Hood traders and newbie option “investors” are no doubt wondering why they didn’t pick up a good book instead of plunging into the market. These are indeed difficult times.

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  • Dire Straits

    After a couple of days of VIX rising while stocks spiked higher, it only makes sense that VIX is falling while stocks are tumbling. This is the bizzaro world in which we’re living.

    Unless it bounces sharply on our channel bottom target today, add CL to the list of algo drivers which have experienced a bearish (for stocks) 10/20 cross. It has been in a bullish alignment since May 11.

    Recall that RB crossed on Tuesday and USDJPY crossed on Aug 27. Despite the administration’s insistence that everything is peachy, the evidence is building that the market will finally take notice of the economy’s dire straits.

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  • DXY Breaks Trend

    VIX’s 10/20 cross held yesterday, meaning we almost got a lower low on the day. The overnight ramp job was good for 32 points before DXY started attracting attention. It has dropped below the falling trend line it was patiently following, meaning our forecasts in the currency space are accelerating – especially EURUSD and silver.

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  • Just Another Thursday…

    Another Thursday, another million filing for unemployment.

    Hopefully news of Jeff Bezos’ net worth topping $200 billion will take some of the sting out of being unemployed.

    As usual, the futures couldn’t care less, preferring to focus instead on whether or not the Fed will keep refilling the punch bowl following its virtual Jackson Hole shindig.It’s not as though jobs don’t matter, but…VIX.All indications are that the Fed will revise its inflation policy to “average inflation targeting,” meaning that it will allow inflation to run above its 2% target following periods where it has run below 2%.  This is somewhat analogous to my new policy of dating supermodels only after going more than a month without.

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  • Update on AUDUSD: Aug 26, 2020

    After a long, dry spell, I’ve had several requests this week for charts for AUDUSD.  Given the USD’s weakness of late, this seems like a good time to dust off some very old charts.

    In April 2017, we noted that the pair was at important support – its SMA200. If it held, it was in a position to break out of a falling channel. If not…

    …should it drop through the SMA200 at .7546, I would not want to be long at all.  There’s plenty of downside potential, starting with .6584 – the .886 Fib retracement of the rise from .6006 in Oct 2008 to 1.1079 in July 2011.  Should .6584 fail, the October 2008 lows are all that stand in the way of a test of .5493 – the .886 Fib retracement of the rise from .4775 in Apr 2001 to 1.1079.

    Then, I pretty much forgot about AUDUSD…until this week.  Funny how things turned out.  The pair spent over a year bouncing back and forth across the SMA200 until finally breaking down for the last time in April 2018.

    From there, it was all downhill until Mar 19, 2020 where it came within .0015 (0.3%) of the .5493 target.

    Should we care that it has bounced back to potential overhead resistance?

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  • Why Argue?

    Futures tagged our white channel midline target again overnight… …before bouncing when VIX reversed for the third time at trend line resistance.Note that ES’ white channel midline was first topped back on March 25. Since then, it has been tested 12 times. Clearly, someone thinks it’s pretty important. Who am I to argue?

    All I know is that with interest rates and inflation suddenly on everyone’s radar, oil and gas are out of the equity-propping game. The dollar is bouncing today, but has broken down below some very long-term trends. So, USDJPY should be of little help.

    Even the Fed has watered down its enthusiasm for driving the market higher now that it’s back to February’s highs. The unspoken message to the politicians: we got it back to previous highs, it’s your turn now.

    So, aside from the usual VIX games, there’s not a whole lot to propel stocks higher. So, will the midline continue to hold?

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  • Changes in Attitudes

    It’s those changes in latitudes,
    changes in attitudes nothing remains quite the same.
    With all of our running and all of our cunning,
    If we couldn’t laugh, we would all go insane.
    ~Jimmy Buffett

    As expected, yesterday’s Fed minutes disappointed and the market was none too pleased. Turns out the Fed isn’t quite as optimistic as the market; or, maybe they just feel like they’ve done enough in driving stocks back to their February highs.

    ES came within a few points of our initial downside target before beginning its obligatory bounce.

    With initial and continuing jobless claims coming in higher than expected and Philadelphia Fed coming in below expectations, the futures are under additional pressure and should test important support.

    Should that support fail, our six-month forecast becomes more ominous.

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  • Breakout or Headfake?

    Today’s post could be an extension of yesterdays, with more beneficiaries of the shutdown such as Target and Lowes reporting big beats.  Winners and losers.

    Curiously, ES failed to make a new high yesterday even thoughy SPX briefly rose above its February highs.

    You’ve always had to worry about predatory traders and specialists trying to catch momentum traders offsides, pushing above resistance in order to stop out shorts and draw in fresh meat.  These days, the players have expanded to include predatory HFTs, algos, central banks, the US Treasury, politicians, etc. The list of “interested parties” is long and distinguished, and most of them have access to plenty of free capital.

    So, as we always ask when SPX reaches new highs: breakout or headfake?

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