ES/SPX failed to reach their 10-DMAs on Friday. Given the long holiday weekend, those moving averages are now 5-6 points higher — leaving the twin targets even further apart.
Interesting, isn’t it, that futures are off several points even in the face of huge overnight ramp jobs in oil and gas? And, on that topic…it has now been 47 weeks since WTI dropped down to tag its 200-DMA (29 weeks for RBOB.)
The last time each went this long was in 2011, following the first major post-crash peaks when rising oil and gas prices produced 3%+ CPI and 3.5%+ 10Y yields. It also marked a collapse in the yield curve, from 2.72 in Jul to 1.52 in Sep.
At least a few of you also remember the 22% collapse in SPX between May and October — with most of it occurring the first week of August when the curve flattened the fastest.
Of course, it marked major bottoms for USDJPY and DXY, ushering in outstanding trading environments for currency pairs. Today, with the 2Y and 10Y a scant 22 bps apart and DXY’s recent rally sparking crises in EM currencies, we have to wonder whether a repeat is possible.
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