pebblewriter

Tag: stocks

  • Abe Dead, Abenomics on Life Support

    The universe has no trouble surprising us at times – things that make you stop and say “hmmm.” It is perhaps ironic that Shinzo Abe, architect of the greatest experiment in central bank monetary expansion and market manipulation in our lifetimes, has been shot dead as that experiment is being unwound. Naturally, the Nikkei futures are higher – which is what Abe would have wanted.Meanwhile, US markets are experiencing a little indigestion after learning that jobs growth is still strong, prompting Fed president Bostick to affirm his desire to raise rates another 75 bps this month.

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  • That Sinking Feeling

    As anyone on a budget could tell you, the headline of this post is hardly news. Income isn’t keeping up with expenses, and isn’t likely to any time soon.

    The Fed might prefer PCE over CPI because it ignores food and gas prices. But, it’s those very categories which are making it difficult for the average family to make ends meet.

    Futures were already off by 1.25% before the data hit the wires. Our analog, still on track, suggests the decline is going to accelerate in the coming weeks.

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  • Charts I’m Watching: Jun 28, 2022

    Futures are up modestly, backtesting the 20-day moving average for a second day. Time to buckle up.

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  • But It Looks Like a Rally…

    Following a series of intraday ramps, futures shot up above the 10-day moving average as soon as the market closed. Bogus? Of course. But, the record will reflect (and the algos have responded to) a seemingly bullish move. Chase it at your own peril.

    Today’s tricks will include trying to get past the 10am New Home Sales and Michigan Consumer Sentiment data.

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  • Charts I’m Watching: Jun 23, 2022

    Futures just backtested the 10-day moving average and our analog trendline, leaving the door open for a pullback – as long as VIX doesn’t get clobbered again.

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  • Oil: Back in the Groove

    WTI spent May 2020 through Feb 2022 in a fairly well-defined channel (below, in white) as it recovered from its pandemic lows. It broke out on Mar 1, however, topping 100 and taking only 5 sessions to reach our 130 target which wasn’t schedule to happen until December.Since then, it’s seen a series of fits and starts, holding an internal trend line and flirting with reentering the white channel. It’s flirting no more. Against the backdrop of a gas tax holiday and significant demand destruction, it has dropped through the channel top and the 100-day moving average.

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  • Update on Bitcoin: Jun 21, 2022

    My apologies for today’s post being so late. Our webhosting company just now fixed the “network connectivity problem in one of [their] clusters.”  I’d be very upset about it except for the fact that this is the very first time in over two years that they’ve ever let me down. This post will be a retrospective instead of a look ahead at today’s session.

    Bitcoin reached our next downside target over the weekend: the dual Fibonacci targets of 17,611/17,692. Like everything else over the holiday weekend, it bounced pretty strongly. And, just like everything else, it won’t last. As we detailed in our last BTC update [see: Bitcoin’s Meltdown] there is substantially more downside ahead.

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  • Don’t Forget the Dow

    I don’t usually pay much attention to the DJIA. It’s a nonsense index that’s manipulated six ways to Sunday and has little following in the investment community. Having said that, the financial press reports on it all the time and the average Joe, seeing this, seems to care.

    As a result, we often see weird things happen in the markets when the Dow reaches significant inflection points. The last great example of this was in the depths of the pandemic crash in 2020. President Trump, who frequently cited the Dow as a measure of his success, was understandably concerned as markets tanked.

    Tweets such as this took on an ever more anxious tone as the plunging Dow approached the level it was when he took office in 2016, with tweets alternating between cheerleading the markets and goading the Fed and Congress into taking action.

    When the Dow finally reached the levels at which it traded on election night 2016, the crash was miraculously over. From our March 20, 2020 post Time to Buy:

    As we all know, the market closed the following session at 18,591, a mere two points above its close on Nov 9, 2016. Some coincidence, huh?

    Why does any of this matter right now?  The Dow is closing in on another of those interesting inflection points: its 2020, pre-pandemic highs at 29,568.

    If the folks behind the curtain have decided that we can’t handle dipping below the “everything is alright” marker, then we could get a nice bounce here.

    If, on the other hand, this time really is different, that support will be breached and investors might just start panicking a little more, down to around 28,800 or lower by mid-July.

    Stay tuned.

     

  • PPI Still Running Plenty Hot

    PPI dropped just a bit from last month, registering 10.8% YoY (unadjusted) for May versus 10.9% for April and 11.5% for March.  The MoM tally was +0.8% for May versus 0.4% for April.

    The very slight drop in the YoY data is unlikely to assuage the Fed’s fears about inflation being out of control. But, it’s enough to contribute to a slight bump in futures heading into the two-day FOMC meeting and OPEX.

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  • Inflation Reaches a New 40-Year High

    CPI soared to a new 40-year high: 8.6% YoY and 1.0% MoM. Core also exceeded consensus, coming in at 6.0%.

    Futures are not amused, as this takes anything less than a 50 bps rate hike next week off the table. A 75 bps hike is suddenly a real possibility.

    Needless to say, our analog remains very much on track.

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