pebblewriter

Tag: stocks

  • 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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  • 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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  • 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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  • Update on COMP: Aug 26, 2020

    It’s been only two weeks since our last update on COMP in which we pointed out COMP might be running out of upside. In that time, the index popped up to an even more compelling reversal point.

    Due to its age, the rising white channel that dates back to 2009 is subject to a little wiggle room. What’s not subject to error, though, is the 2.618 Fibonacci extension at 11643.40.

    Today, COMP reached the intersection of that Fib and the white channel top – a strong sell signal for an index that seems to have forgotten how to decline.The thing is…it’s not the only sell signal our charts are giving us.

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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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  • New Highs Inevitable?

    The algos are still threatening new all-time highs, this time egged on by the “wonderful” news that only 963,000 new unemployment claims were filed last week and only 15.5 million Americans are currently drawing unemployment.

    It didn’t hurt that VIX made several sudden plunges in the past hour and that the USDJPY is threatening to break out again.

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  • Update on COMP: Aug 11, 2020

    COMP: the index that thinks it’s a beanstalk. It’s heavily weighted toward stocks which have done particularly well in the face of the global pandemic: AAPL, MSFT, AMZN, FB and GOOGL. So, a reversal at current levels would be a big deal.

    Investors might wish to know, then, that it just bumped up against a chart feature that suggests a reversal.COMP did a pretty good job of paying attention to channels over the years — at least until 2018. As we noted in our March 2018 update {see: Update on COMP], it had just arrived at our 7619.21 target – the top of a long-term channel and an important Fibonacci extension level. Our comments at the time:

    …with a FOMC rate hike due out tomorrow and more on the way, the range of possible outcomes is broad — from new highs to the next lower Fib level at 6227.06.

    It reversed as forecast, but pushed back above 7619 in June. The breakout was strong enough, but it fell back below 7619 in October, tagged our 6227 target, then spent almost a year trying to break out once and for all.By February 2020, it had popped nearly 30% above 7619. Then came the pandemic. The 33% plunge caught many true believers by surprise – though there were plenty of warning signs in both the index and its major components.

    The recovery was even more spectacular, with COMP gaining 68% since March 23. Given the amount of money that’s been thrown at the market, investors could be forgiven for believing the rally has plenty of room to go.

    The charts suggest otherwise.

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  • PPI’s Big Beat

    PPI was expected to tick 0.3% (0.1% core) higher in July. Instead, headline PPI soared 0.6% and core popped a stunning 0.5% – the highest since October 2018.

    The impact on stocks has been muted so far, as the market is still giddy over the potential release of what is essentially a Phase 1 vaccine out of Russia. The impact on bonds, however, has been significant. 10Y yields have broken out of a long, slow decline.

    When you’re piling on debt (with record-setting duration) the way the US is, higher interest rates are not good news.

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  • A Failure to Capitulate

    Futures have given up all their Tesla gains and are pointing to a slightly lower open for the S&P this morning.Apparently, a threatened breakdown in VIX just isn’t as effective as it used to be.

    What we have here is a failure to capitulate (apologies to Cool Hand Luke for the cheap rip-off of a great movie.)

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