pebblewriter

Tag: USDJPY

  • Unspinnable

    An extremely disappointing payrolls report put February new hires at 20K.  I had to look twice, certain that a digit had been left out.To make matters worse, hourly earnings spiked 3.4% YoY, far in excess of what all the Goldilocks models suggested. It should be entertaining to see how Kudlow et al. spin this one.

    Meanwhile, our targets are being hit left and right.  ES came within 1.21 (so far) of our next downside target.On the currency front, EURUSD nailed our next downside target……USDJPY plunged right through its nearest support and is closing in on our secondary target……and DXY is again approaching our upside target.CL and RBOB’s selloffs are accelerating after tagging our upside targets.

    S&P futures are currently off about 20 points.  But, our models suggest SPX should tumble a minimum of 35 points before all is said and done.  If that support doesn’t hold, there are potentially very large declines ahead.

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  • Buy, Machines, Buy!

    I was on the road yesterday, so I listened to CNBC on XM while tooling around town. I lost count of how many pundits sounded downright angry about how the market was melting up. “It makes no sense!” they cried, citing countless statistics from plunging retail sales to plunging earnings expectations. Not one of them brought up VIX.In a market where most of the trading is by computers which are merely responding to preprogrammed signals (aka algorithms) it has become quite simple to nudge the market one way or another.

    Given that COMP has really struggled to get and stay above its SMA200, VIX is telling the computers to buy. It already got the ball rolling by plunging below its SMA200 and is now reiterating the signal by simply breaking down below the red channel bottom.This is a well-worn trick, illustrated best by the period 2015-2016. Every time SPX needed to get back above its SMA200 (in order to delay the 1823 tag until the channel bottom arrived in Feb 2016)……VIX was there with an assist, dropping below its own SMA200 (the red moving average.) When things got really dicey and a big push was needed, VIX broke down below the well-established trend lines (below in red.)Now that it’s doing the same thing again, and oil and gas, interest rates and currencies are all following suit, the message is unmistakable: buy, machines, buy!

    Will the few remaining carbon-based investors also comply?

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  • If at First You Don’t Succeed…

    Yesterday’s setup for the e-minis looked pretty straightforward: a drop through the 200-day moving average and backtest of the 2.24 Fibonacci extension at 2729. Futures had already dropped through the 200-DMA and were heading south when the dismal retail sales data dropped.

    I hedged my bet, redrawing our daily downside target to include the 10-DMA — just a few points below the Fib extension.Fifteen minutes into the session, as ES reached 2730.25, the headlines started dribbling in.  Fed Governor Lael Brainard publicly commented that QT should end this year, ahead of schedule. Larry Kudlow commented that there was a glitch in the retail sales data.  Mnuchin felt all warm and fuzzy about the trade talks.

    Faster than you could say “Plunge Protection Team” ES reversed course and SPX closed the day with a gain.  But, the move didn’t feel finished. As I wrote at the end of the day:

    ES looks likely to test its SMA200 all over again. But, will it make it on down to the 2.24? Its SMA10 will probably be up to 2728 by tomorrow morning, adding additional support.

    I guess the market fairies were listening, because that’s exactly what happened overnight. ES dipped to 2729 right as the SMA10 was arriving on the scene, then spurted 27 points higher — breaking out of the falling white channel in the process.The algos are in full support mode at present, though a few charts suggest a pop and drop is in the cards if VIX doesn’t pull off a game changing plunge.

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  • Goal-Line Stand

    SUBSCRIBERS:  Just updated our forecast page, including RB, CL, DXY, USDJPY, EURUSD, SPX/ES, Gold, VIX, COMP, DJIA, AAPL and bonds.  Check it out HERE.

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    Rumbling toward the end zone, the bears ran into the bulls’ best defender: VIX.  As ES tagged our channel-line target a day ahead of schedule (and, therefore at a lower price)… …VIX took the opportunity to plunge back below its 200-DMA. Fortunately, we saw it coming a mile away courtesy of DJIA, which signaled the end of the decline with a precisely executed (random walk, my ass) tag of its 200-DMA.  As usual, the refs pretend not to notice when the bulls are caught cheating…This sent SPX back above its 2.24 Fib at 2703 just in time for the close.  All things considered, it was a successful goal-line stand.

    Unfortunately for the bulls, however, VIX couldn’t hold its stance overnight and is back above the 200-DMA as ES tests yesterday’s lows. And, rates are itching to tag our next downside target — a headwind for stocks.

    The algos will have their work cut out for them today.

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  • Trick Play

    With the overconfident bulls emboldened by the 200-day moving average looming just above, the bears have run a trick play and have the goal line in sight.To be sure, there are half a dozen defenders in between here and a score – starting with 380-lb All-Pro VIX.  Its 200-DMA at 16.54 is now resistance, and it has a reputation for cheap shots.Thanks to exhaustive scouting, though, our yield curve model suggests there’s a weakness in the defense that offers bears a clear path to the end zone — if they don’t fumble the ball.

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  • Delay of Game

    Nothing much has changed since yesterday.  SPX bounced around in our target zone, coming within a few points of its SMA200 as VIX went nowhere.

    The one notable exception was AAPL, which after tagging our downside target on Jan 3 $from last November [see: AAPL Discovers Gravity] reached our upside target yesterday. We originally charted this upside target on Jan 3 [see: Update on AAPL, Jan 3] and the IH&S pattern reinforced it three weeks later.  Had AAPL not reversed, the additional downside potential was substantial.

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  • Manipulation is Nothing New

    Yesterday, former SEC attorney Teresa Goody joined those calling for an investigation into the market action on December 24.

    It was hardly the biggest move we’ve seen over the past year. But, it resulted in new lows that ruffled a few feathers.

    Click the image to watch the interview, or just keep reading.

    Goody: …when you have these wide swings in the market, 400, 500, 600 points, 2 to 3 percent, I think that’s a clear indication that there is some sort of a market structure issue, so the SEC will have to investigate, I think, and also FSOC look into why there’s this volatility because it’s not fair to everyday investors, it’s not fair to all investors, really. And it really goes to the fair and efficient markets that we have.

    Melissa Lee and Kelly Evans of CNBC could have left it there. But, to my surprise and to their great credit, they challenged Goody’s statement — eliciting a nonsensical stream-of-consciousness response that rivaled one of the best deer-in-headlights word salads ever.

    Lee: Would, [by] the same token, the SEC investigate big up days?

    Goody: [long pause] I think that big up days are a little different from down days…

    Lee: Why? Doesn’t that speak to market structure as well? If you have the same circumstances that lead to a rise in the Dow of 3% on thin volume, why wouldn’t you investigate that?  If it’s really on the basis of market structural issues, why wouldn’t you investigate that?

    Goody: Well, for one thing, it’s about market loss and investor loss.  And, so, while I think that that’s important to look at too, it’s more important to look at the loss because you have things like the high frequency traders, for example, and, so, once there’s a massive sell off, you have the ability for people in the market like high frequency traders to get out early. And, then, once the market starts coming around, to come up and buy in low, so they sell high buy low.  And, then, the average investor is going to act less quickly than the high frequency trader for example, and they’re going to lose money. And, then, with this volatility everyday investors are very confused by that. They hear “oh Apple’s doing very poorly, or Apple’s doing very well and so maybe I should buy or sell.”  And, the average investor is going to act more quickly to, uh, minimize loss than they are to get a gain.

    Evans: Teresa, I don’t quite follow that.  If they’re front running, they’re front running. Whether they’re shorting or they’re on the long side, either way if you’re front running the public, and that’s a market structure issue, we talked about this a couple of years ago…it’s one thing for investors to…lose money, as you said, but if you also can’t buy something because it’s artificially moved up 10%, you’ve also lost out. So, it’s gotta go both ways or it doesn’t hold water, right?

    Goody: I agree with you.  And, I think that the bigger concern is when investors are losing a lot of money. But, I completely agree that there’s also an issue when investors can’t get in because it’s artificially high.  And, this goes to your point, too, is that what we’re trying to find is the real valuation.  So, anything that negates the integrity of the real valuation of a stock is something that has an impact on the market integrity and the market structure. And, so I agree, it’s big ups and big downs.

    But the SEC and, I think regulators, is more concerned with everyday investors losing a lot of money rather than not being able to get money and the gains because there’s more of an impact there, especially when its 500 or 600 points decrease.  But, I think they need to look into both and this way, also, when you’re looking at a decline, whether there’s front running, whether you know, some traders are able to sell high and start a sell off, and anticipate a big sell or a big purchase, and then they can get in front of that too, so those are issues where you can get more of the manipulation and the fraud.

    On that holiday-shortened trading day, the S&P 500 opened down 16 points and closed down 49 points. It’s highlighted in blue in the chart below.I couldn’t agree more that an investigation is warranted.  In fact, it’s high time the SEC investigate the rampant market manipulation that occurs on a regular basis.  Let’s start, though, with the much more frequent instances where the manipulation results in huge gains in the markets.

    On the 24th, members will remember, Mnuchin called in the Plunge Protection Team — which aptly manipulated markets into a sharp recovery by crushing VIX to the tune of 50%.This is a common occurrence as we saw again last night.  After five sessions of declines, ES broke out overnight and is currently showing a 25-pt gain.The primary reason?  Again, VIX — which was slammed by over 5% overnight and 23% since Wednesday.By all means, let’s investigate market manipulation.  But, if we really care about market integrity, let’s investigate those manipulating it in both directions.

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  • Backtest Accomplished

    Members, remember to request access to @pebbletrades if you’d like intraday notices of important updates.  Only about 20% of you are currently signed up, and I’d like to use it more often to signal when important target tags or changes to a forecast occur. If your identity isn’t discernible from your Twitter handle, drop us a line so we’ll know to approve you.

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    SPX/ES backtested their necklines in dramatic fashion yesterday.  As we discussed, they had their choice of a gentle sloping path (which stretched to Wednesday or Thursday) or a sharp plunge.

    SPX opend off 13 points and never looked back.  The losses accelerated until it reached our downside target and VIX reached our 21 target — also a backtest.

    The swift recovery in the closing hour and the overnight ramp job send the message that the worst is over for now.  But, of course, we’ll want to see some follow through for confirmation.

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  • Update on Gold: Dec 26, 2018

    Back on August 15, we noted that gold was nearing an important downside target.  From Charts I’m Watching: Aug 15, 2018:

    [Gold] has reached triple support –the .618, yellow TL off the 2011 highs, and the red TL from 2010.  We’ve targeted 1173.60 since the yellow TL broke down in May and gray channel broke down in June.  I strongly suspect it will bounce here.

    GC dipped slightly lower, bottoming out at 1167.10 the following day, then began an arduous climb that reached our 1268.30 target last week.

    As it threatens a breakout, we’ll take a fresh look at the road ahead.

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  • Charts I’m Watching: Nov 5, 2018

    Futures are back to flat, having bounced a bit on the Iran sanction news as it provided a modest (so far) bounce for oil and gas prices.The market has a wait and see feel to it this morning, with AAPL breaking down further……but, the algos all but ignoring it, focusing instead on dollar strength (TNX is higher again) and oil’s potential recovery.  AAPL is now off almost 14% and is nearing our channel target [see: All Eyes on AAPL] with the gap close target of 195.96 and SMA200 target (currently 192.44) looking better all the time.

    Members might wish to revisit last week’s post on VIX [see: VIX’s Warning] in which we discussed the bearish implications of the impending 50/200 cross.  This morning, it’s alive and well.continued for members…

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