Update on Oil and Gas: Jan 13, 2021

The last time we were this bearish on oil and gas was on October 3, 2018 [see: VIX Takes the Plunge.]  Our reasoning at the time: CL and RB [have] not only reached overhead resistance by our measure, but must deal with inflation that’s too high, bearish API data, another round of Trump tweeting, and … continue reading →

Moment of Truth for Bonds

ZN broke down from its rising red channel back on the 6th. Since then, it has found support in a falling channel – from which it is now threatening to break down.This is a moment of truth for bonds and the many correlated assets such as GC, shown above.  Stocks might not be amused. continued … continue reading →

Update on XLF: Nov 17, 2020

After being stuck in a textbook triangle pattern for almost six months, XLF finally broke out last week. We noted its having reached overhead resistance a few weeks ago [see: Yield Curve Model – Correction Imminent.] At the time, the 2s10s was threatening a breakout which, per our model, suggested a downturn for equities in … continue reading →

The Latest Cringeworthy Rally

Sometimes I cringe when I place a target on a chart. Such was the case yesterday when ES reached our IH&S target at 3425. If it kept going, it was sure to backtest the intersection of the broken rising white channel at the falling channel top. Was that likely in the midst of election and … continue reading →

Election Aftermath

Futures were all over the map last night, with ES’ 113-pt range dictated almost entirely by factors as opposed to election results – which, contrary to Trump’s declaration, are still AWOL. Note that ES tagged our IH&S neckline (also the former H&S neckline) target where it is currently running out of gas. As expected, the … continue reading →

Rally Faces Another Test

Futures have given up all of Friday’s rebound gains and then some, again testing the IH&S neckline and the bottom of the rising white channel from last March. At the risk of sounding dramatic, a failure of the channel would mark the end of the current rally and usher in the correction suggested by our … continue reading →

CPI: Putting the Brakes On

CPI rose 0.2% MoM in September, half the August rate. It rose 1.4% YoY, slightly higher than September’s 1.3%. Without the outsized gains in used cars and the minor gains in energy (conflicting with the official EIA data), MoM CPI would likely have been negative. This is hardly supportive of the reflation narrative driving equity … continue reading →

More Gimmicks, Higher Highs

More gimmicks, higher highs. It’s getting to be an old story. But, as long as voters and algos don’t know or care, it will continue. Futures were in danger of giving up Tuesday’s 3421.75 highs when VIX suddenly collapsed by 7% in a matter of seconds.When that didn’t immediately result in a sufficient boost, it … continue reading →

Trade Troubles

The trade deal: the gift that keeps on giving. The August trade deficit came in at $67.1 billion, the largest since 2006 – partly a reflection of the pandemic but exacerbated by a 9.3% collapse in the value of the DXY since its March highs. At the same time, oil and gas prices have spiked … continue reading →