The collision of global markets and social mood

Wednesday, May 24, 2017

Wednesday -- Moody's Downgrades China, Doggie Architecture

S&P E-mini Futures:
Flat, yet a possible flat top rising wedge in play since early Tuesday. They usually resolve higher, yet can cave in quickly.

Markets:
Moody's downgraded China's credit rating for the first time since 1989. Global markets are in such as state of euphoria they could care less. Asia was mostly green, and Europe is mixed but mostly red, but not materially so.

This is on the heels of a Bloomberg report that flagged China’s deleveraging efforts have pushed the cost of borrowing beyond the rate which banks charge customers for loans for the first time in history.

Bitcoin up another 4%.

Mood:
I thought doggie day spas were crazy. Now there's doggie architecture.

Build it, and the canine will come


A doggie real estate bubble can't be far behind.

FX:
USD bounce mode. Quiet thus far elsewhere.

Treasuries:
Trying to rally.

Energy:
WTI crude and NG lower.

Metals:
Red.

S&P Outlook:
Potential for a pop 'n' drop in ES futures could either bring new record highs in the S&P cash or not. But the potential for reversal is high.

TRIN has been signaling caution for two days. A/Ds have been easing. Yet the S&P seems content to follow the NDX higher.

Would much rather act later than guess wrong at this point. Especially ahead of Fed minutes. Have to head into San Juan to replace my phone anyway, which is so hot it feels as if it's ready to explode at any time. No more iPhone ever. Buying a cheapo with a removable battery.

Tuesday, May 23, 2017

Tuesday -- Mood Outa This World, Therein Lies The Risk

S&P E-mini Futures:
Filled 2397.50 gap. Firm.

Markets:
Asia mostly red last night while Europe is all green thus far.

China's yield curve inverted several days ago. Now it's getting worse. The spread between 3s and 10s is the most negative ever. And there is inversion between 3s and 5s and 7s to 10s. Double the trouble.

This is causing considerable stress amid China's $4.2 trillion Wealth Management Product industry as China tries to reign in liquidity.

All in the name of making its markets less risky.

Therein lies the risk.

Mood:
Peak positive mood . . . outa this world.


Jeff Bezos lays out his vision for city on the moon, complete with robots

'Nuff said.

FX:
EUR six month high. Slight sell off on stellar French and German PMI figures which raise the odds of an ECB hike.

USD still acting firmer than news would suggest. CHF & JPY warning once again, stronger.

Bitcoin almost hit 2300 overnight. Ethereum up over 9%.

Treasuries:
Prices firm, digesting recent gains.

Energy:
WTI crude's three-wave pullback from 51.43 thus far suggests higher prices. NG lower.

Sell half of the Strategic Petroleum Reserve? Why?

Metals:
Gold and copper red. Silver, platinum, and palladium green.

S&P Outlook:
S&P stalled at yet another significant Fib level, the 78.6% retracement. Thus the odds of a high level triangle are much higher now.

Regardless whether a triangle or an ABC materialize, still leaning toward buying dips until new highs.

Big news day:

US Manufacturing PMI
New Home Sales
Richmond Fed Manufacturing Index

Three Fed speeches: Kashkari, Kashkari again, then Harker at 5pm.

Fed minutes tomorrow.


Monday, May 22, 2017

Monday -- Fed Damage Control?

S&P E-mini Futures:
Flat in chop.

Markets:
Mixed in Asia and Europe. Higher rates around the world thus far.

The latest Federal Reserve data noted a worsening of C&I loan growth contraction, with another 50% decline over the past two months.

Commercial and industrial loans are kind of a big deal for the economy, and we're back to the lowest growth rate since May 2011.

Each time C&I loan has peaked, a recession has followed.

A sharp rebound is needed. Perhaps that's why there are four Fed speakers today:
Harker, Kashkari, Brainard, and Evans.

Damage control?

Mood:
Someone please locate the massive pent-up demand for self-driving cars. Otherwise it's yet another symbol of mood gone mad. Seeing a lot of ink about how inevitable it is.

Speaking of mad, Bitcoin blew the top off 2000, up another 5% and closing in on 2200.

Madness in da House, too:

H.R.2366 - Discharge Student Loans in Bankruptcy Act of 2017

$1.4 trillion. Poof.

FX:
USD could be close to firming. JPY weakening. USDCAD still taking its time.

EUR ripfest higher continues.

Treasuries:
Starting the new week with declining prices, except 30s.

Energy:
WTI crude and NG higher together once again, though crude may have reversed from 51.43.

Metals:
Gold and silver higher. Platinum, palladium, and copper red.

S&P Outlook:
Thursday the S&P was repelled from its 38% retracement. Friday it recovered but was eventually repelled by the 61.8% retracement later in the day.

Thus we're at an important juncture. If the S&P can rally a bit higher, it would raise the odds of a triangle or perhaps even an impulse to new highs.

If it rolls over, the 2335 area could be an ABC target. Would be a buyer there.



Friday, May 19, 2017

Friday -- Bitcoin's World, SPX ABC

S&P E-mini Futures:
Continued bounce mode.

Markets:
Most green in Asia (Ex-OZ & Singapore). Europe green.

Mood:
Not seeing many social mood cues today other than positive mood in Europe.

Bitcoin up another 3% into the 1900s. Still unsure if it marks animal spirits or banking stress. Seems to be entering a world of its own where nothing matters other than its own momentum.

FX:
Another rough morning for USD, but possible buying opportunity.

CHF & JPY still flashing red.

Treasuries:
Prices digesting recent rips.

Energy:
WTI crude and NG continue to ride the latest boost, both up over 1%.

Metals:
Weird action as a group. Gold & palladium flat to +/-. Silver, platinum, and copper showing relative strength to the upside.

S&P Outlook:
All the tell tales of an ABC thus far.


Thursday, May 18, 2017

Thursday -- VIX & Markets Wake Up, Classic Car Prices, CAD, NQ

S&P E-mini Futures:
Slightly down, but seems to be in healing mode thus far.

Markets:
Blood red across Asia and Europe.

Perhaps that one-day 46% gain can lay to rest fears of VIX being manipulated into oblivion by AI algos and central bank trading bunkers.

Excess liquidity naturally suppresses volatility because it makes assets prices rise and no one "needs" insurance.

Until they do.

Mood:
Recall the guy who recently called for a "life changing" rally.

He commented yesterday, "Such a strange thing to see the S&P 500 make a new all-time high yesterday and break below its 50-day today."

That's what happens when markets wake up and get real. Too much complacency leads to too much fear. Too much yang leads too too much yin. Hoping for much more two-sided market action.

At this juncture, just hope it's a warning.

Like this one:

Source: Wolf Richter, Wolf Street
Using only the data shown, we could be experiencing the "surprising disappointment" of a 4th-wave correction before a manic drive to new highs. Hard to say if it's a peak or not without seeing more data.

From Marketwatch.com: “The global asset class of collector cars ... is quietly but persistently and very unenjoyably experiencing a downturn that parallels and in some aspects already exceeds the one during the financial crisis,” Wolf Street's Wolf Richter noted.

"And here’s why that’s important. Classic car prices move similarly to other assets, such as equities and real estate. The Hagerty index peaked and then plunged in April 2008, a few months before U.S. stocks suffered the biggest crash in decades, suggesting it’s an early indicator of what could be in store for other asset classes."

A cool socionometer.

FX:
CAD action not suggestive of continued USD decline last few days. USD also firmer today vs EUR, CNH, DKK, NOK, MXN, and SEK.

Treasuries:
High volume ripfest yesterday. Still not out of the woods though. Yields still in danger of increasing inconveniently.

Energy:
WTI crude down over 1% while NG rallies over 1%.

Metals:
More solid red -- gold, silver, platinum, palladium, and copper.

S&P Outlook:
Beautiful 5-wave structure in NQs. Perhaps a bounce to 5600-5650? If not, then much lower.


If correct, perhaps A of an ABC correction inside a large 4th wave. This would line up with Dow and S&P.

In other words, this chart probably wrong.

Probably not
Maybe something like this.

Trader's market





Wednesday, May 17, 2017

Wednesday -- The New New Economy: Different This Time, All Over Again

S&P E-mini Futures:
Down sharply, but off their worst levels.

Markets:
Asia and Europe red. India green. Metals and commodities up on USD breakdown, and VIX liking equity turmoil.

For the fifth time in the past few months, the Facebook has acknowledged either overstating or understating ad metrics.

According to the WSJ, the Facebook is issuing refunds to some advertisers after discovering a bug leading it to overstate clicks on the advertisers' websites which were mistakenly registered as advertiser website clicks.

Media buyers have jumped on the social media bandwagon because it's hot. At some point, that perception will change, and so will the fortunes of these companies.

Mood:
I could not believe my eyes when I read this. Then I realized the writer was serious (I think):

American Gods

Our belief in the new thing...

Our new beliefs...

A new Pantheon...

Our new Gods...

Wasn't this already written about the New Economy in 1999?

Is it really different this time, all over again?

FX:
USD index broke a key level this morning, 97.94, and has opened the door to some bad scenarios.

CHF & JPY strength continues to be a red flag.

Treasuries:
Bid.

Energy:
WTI crude and NG up in unison.

Metals:
Gold, silver, and platinum higher. Copper and palladium lower.

S&P Outlook:
Posted this chart late yesterday.


Here's a different version even though they both suggest similar things.


Got stopped on some QQQ puts yesterday. Will wait for a clearer tell.

Tuesday, May 16, 2017

Tuesday -- Darkest Before Dawn

S&P E-mini Futures:
Overnight levitation to new highs.

Markets:
NG and grains not so clever thus far while metals & heating oil perk up.

Asia and Europe slightly mixed.

Perhaps Xi's Big Belt speech calmed some nerves. Or perhaps animal spirits are fading. But Bitcoin remains an inconclusive tell around 1700.

Mood:
According to a CIO interviewed by Marketwatch.com, "use of the ’bubble’ label further degrades a term that’s already lost most of its meaning,” he says.

Daylight also loses its meaning . . . right around 4am.

FX:
Supposedly the USD is "puking its guts out" but I see a marginal new low in a falling wedge which could have bullish ramifications if it can claw back above 98.54. USDCAD still hesitant to break.

Also seeing EUR rallying into resistance and CHF & JPY stronger. Not the most narrative-supporting mix.

Treasuries:
Prices down slightly. Odd action if USD was toast.

Energy:
WTI crude rally continues. NG down again.

Metals:
Good bids here.

S&P Outlook:
Daily NYSE A/D line remains strong while the NASDAQ A/D is diverging negatively and remains in a down trend since 2015.

Many seem to be betting on a breakout from current levels. I don't see it yet. Perhaps a gap 'n' crap today from new highs.

Sentiment is high.


Whether a new rally is dawning, or a new direction, only the market truly knows. But anything below 2381.74 might be a big tell.