When Push Comes to Shove

The big story yesterday was oil and gas, which have now fallen about 29% since our short call on Oct 23 [see: VIX Takes the Plunge.] Importantly, the decline has occurred without decimating stocks. And, the impact on November’s CPI – due out on Dec 12 – will be significant.

Will it matter to the FOMC, which is widely expected to hike rates on Dec 19? PCE is due out on Dec 22. I can only imagine the onslaught of tweets from the White House if CPI comes in at 2.1% and the Fed hiked anyway…

In any case, SPX is at a very interesting place right now. A continuation of the drop would complete a H&S Pattern that targets 2250. A reversal and new highs from here would complete an IH&S that targets 3035.

So far, oil and gas have been a drag on stocks. USDJPY and VIX have been conspicuously non-committal. What say you, BoJ? Are you ready to sacrifice a few thousand points on the NKD for the sake of market integrity?

continued for members…