The collision of global markets and social mood

Wednesday, March 29, 2017

Wednesday -- Article 50, BuzzFeed, Apple, ABC

S&P E-mini Futures:
Hovering around the flat line.

Markets:
Britain triggered Article 50.

Asia and Europe mixed.

Base metal prices bounced on more upbeat economic news from China after a solid red day yesterday. Seems hope is still in the air.

Three more Fed speakers today.

Mood:
Even better than the Snap IPO: BuzzFeed plans to go public in 2018.

Maybe they should study this chart. Are people abandoning the darling of tech?

Apple is close to completing some multi-year patterns and volume is drying up as it reaches its 11th record this year.


FX:
AUD & CAD stronger, possibly on China news, even as USD rallies. Scandie weakness. JPY & MXN strength. EUR & GBP weaker.

Treasuries:
Prices trying to rally some more, yet the structure from the lows is looking more and more like another ABC. If true, perhaps continued choppy rallies before at least a retest of the lows and possibly even lower (higher yields).

Energy:
WTI crude higher along with NG, which is up 1%.

Metals:
Copper had a nice reversal yesterday but is giving back some. Gold, silver, platinum, and palladium red as well.

S&P Outlook:
Yesterday went a long way to negating the potential for a developing impulse decline in the markets. The NQ rallied all the way back above its 78.6% Fib retracement (but closed just beneath it). The Dow and S&P have a bit more work to do.

Still thinking some sort of ABC.


Potential catalyst one of these days. Not looking forward to it.

Source: USGS



Tuesday, March 28, 2017

Tuesday -- More Fedspeak, More Surprising Disappointment, VIX Rich Kid Complacence

S&P E-mini Futures:
Giving back some overnight gains.

Markets:
Mostly green in Asia and Europe with notable exceptions being China and France.

More Fedspeak today:
George, Yellen, Kaplan, and Powell speak today.

Mood:
Bloomberg's Richard Breslow has captured the current fourth wave "surprising disappointment" quite well: "When stocks go down, everyone still goes into 'The sky is falling' mode."

Seeing a lot of Elliott wave counts leaning toward "the top is in." I'm not there. It would be the most perfectly telegraphed top in history.

Bitcoin up another 2%, holding above 1000.

FX:
USD firming. CHF & JPY stronger as well.

Treasuries:
The way volume is disappearing suggests the recent rally is a bounce, possibly another ABC variety, before lower prices to follow. Patience required.

Energy:
WTI crude rallied when and where it needed to, up over 1% currently. NG down.

Metals:
Gold and silver higher. Platinum, palladium, and copper down. Thinking the latter, with their heavy industrial usage, are sending the most consistent macro signals that the "synchronized global rebound" is a mirage.

S&P Outlook:
VIX may have spiked yesterday, but quickly gave it all back, and is still demonstrating as much complacence as the richkidsofinstagram.

Source: richkidsofinstagram
Yesterday's grim mood gave way to an epic bounce. NQ gave the tell by not confirming the new low in the E-minis.

Thinking we've either made, or are close to making, an "A" low of a larger ABC, or possibly the fourth wave (iv) low itself (lower odds). So far it's looking like the A-wave.


Monday, March 27, 2017

Monday -- "Surprising Disappointment"

S&P E-mini Futures:
Under pressure, but choppy decline yet again.

Markets:
Red in Asia and Europe. Precious metals higher but base metals and other commodities falling.

Bitcoin up 4%, back above 1000.

"Bonds Surge in India as Rupee Rally Spurs Bets of More Inflows" -- of course rupees rallied, Modi wiped out 86% of the supply.

Fed's Evans and Kaplan will be speaking today.

Mood:
The expected fourth-wave "surprising disappointment" is here.

"‘Trump disappointment trade is now in full swing’ — analysts on global stock selloff" (Marketwatch)

Want to be on the other side of this soon.

FX:
Big story is USD breaking its 99.23 swing point, clearing the way to a possible 97.67 target.

GBP ripping even with a possible Article 50 trigger coming. MXN notably weaker amid a larger commodity currency rally. CHF & JPY stronger, confirming safe haven flows.

Treasuries:
Prices higher yet seem to be losing momentum as buyers fade (lower volume).

Energy:
WTI crude down 1% but as long as 42.20 holds could be setting up for a continuation of its larger wedge pattern higher.

NG up over 1%.

Metals:
Gold, silver, and platinum green while copper and palladium red.

S&P Outlook:
Mood is grim, yet NQ futures did not confirm the ES in making a new overnight low.

On the lookout still for buy areas, as this decline remains choppy and emotional.

Friday's promising late-day bounce got wiped out overnight. The next Fib support is the 2318.31 61.8% level, while the 2300 area remains a larger target if things really get rough. 78.6% Fib support is 2295.84, and there is a gap at 2280.85.


Friday, March 24, 2017

Friday -- Calm Targets Amid Maximum Confusion

S&P E-mini Futures:
Choppy overnight bounce.

Markets:
Asia was green but Europe is solid red, even with stronger than expected PMIs for both Germany and France.

Mood:
As if the healthcare turbulence isn't enough, Fed’s Evans, Bullard, and Williams are speaking today for maximum confusion.

FX:
GBP relative strength laggard thus far.

Bitcoin back below 1000, down over 4%.

Treasuries:
Prices down with volume across the curve yesterday, though not by much. Tepid recovery thus far.

Energy:
WTI crude choppy bounce while NG continues to consolidate after recent gains.

Metals:
Gold and copper red, platinum flat, while silver and especially palladium shine.

S&P Outlook:
Not only is there still a huge positive divergence on the daily A/D line, but the NYMO (NYSE McClellan Oscillator) has one too.

Source: Stockcharts
S&P got above 2352.89, possibly negating a developing impulse down, but the close was weak.

The 2365 level still has a good looking volume shelf, and Fib confluence remains at the 2378 area.

Below, the 2300 area is a great target if things get rough, along with 78.6% Fib support at 2295.84, and a gap at 2280.85.

Thursday, March 23, 2017

Thursday -- Planning The Longest Building In The World

S&P E-mini Futures:
Modest bounce higher.

Markets:
Greeeen. Bit of weakness in FTSE 100.

Fed's Yellen, Kashkari, and Kaplan speak today, plus GOP Healthcare vote. Turbulence possible.

Mood:
Mood can get weird as a top approaches.


Granted, it's only a concept at this stage, but the sentiment is clear.

FX:
AUD taking the biggest hit thus. USD firmer. JPY stronger yet again.

Treasuries:
Prices buoyed by volume yet again. A low may have been put in.

Energy:
WTI crude still in a wedge formation. NG higher.

Metals:
Greeeen like equities.

S&P Outlook:
Thinking S&P needs above 2352.89 to negate a possible impulse down from forming.

Choppy structure thus far keeps pressure on lower prices.

Above, the 2365 level has a good looking volume shelf, and there is Fib confluence at the 2378 area.

Below, 2300 is one of those nice round number targets.

Wednesday, March 22, 2017

Wednesday -- "Surprising Disappointment"

S&P E-mini Futures:
Choppy up and down movement since yesterday's close, slightly lower at the moment.

Markets:
Red equities and green treasuries around the world.

Mood:
Expect more "surprising disappointment" to come from an Elliott fourth wave. Like these (but maybe worse):

Marketwatch: Selloff in U.S. stocks looks set to pick up again

Bloomberg: The Global Market Selloff Continues

Bloomberg: The Oil Rally Is Stumbling at the Worst Possible Time

Drudge Report: STOCKS SOUR: WORST DAY SINCE ELECTION...
Drudge Report: Ending longest streak of calm since 1995...
Drudge Report: TAX CUT DOUBTS ROIL MARKETS...

Bitcoin down 5%. It's rally yesterday was not an accurate indication of mood by any means.

FX:
Slight bounce day for USD. CHF & JPY strength warning though.

Treasuries:
Volume rushed in when and where it was needed to take prices higher. Pattern still unclear.

Energy:
WTI crude down over 1% but overall pattern still a rising wedge. NG down over 1% as well, but still at the top of its week-long range.

Metals:
Mixed. Gold and palladium up. Silver, platinum, and copper lower.

S&P Outlook:
Finally a shot across the bow by the S&P as it closed below the 38% level. It did close above the 1:1 Fib extension target at 2343.57 however.

An interesting juncture on the daily.


And bears have a problem developing on the daily A/D line. Like, where are they? No new low.

Source: Stockcharts.com
The next few days will likely confirm or deny the veracity of this scenario from the 13th, as well as the degree of trend, whether it's a (iv) of (iii) or a 4 of 3:


Scenario updated here and below:



It took 14 trading days to get here. The correction from April 2016 into the June Brexit lows was 48 trading days, so depending on the degree of trend, we might expect a more complicated pattern that could easily run into April.

Unfortunate timing for those puts Monday, nor will it be the last time mistakes are made. That's the business.

Tuesday, March 21, 2017

Tuesday -- Fearless Girl, Six Sigma VIX

S&P E-mini Futures:
Prices held the afternoon rally through the night and tacked on modest gains.

Markets:
Mixed in Asia, green in Europe where the mood has brightened following the French presidential debate where centrist Emmanuel Macron was viewed as the winner over far-right Le Pen.

Not too fast.

Hilary "won" all her debates, too.

And the latest OpinionWay poll shows Le Pen in the lead. Another poll shows nearly 40% of French youth back Le Pen.

Chicago Fed's Charles Evans shook up the markets a bit yesterday:

*EVANS SEES MORE UPSIDE POSSIBILITY IN UNCERTAINTY FACING FED,
THIS IS A CHALLENGING TIME TO GET BIG U.S. FISCAL BOOST
*EVANS: LOWER CAPITAL EXPANSION MAY REFLECT LOWER TREND GROWTH
*EVANS SAYS MARKETS CAN HANDLE FED BALANCE SHEET NORMALIZATION

There it was, again, "balance sheet normalization"-- what the market probably fears more than rising rates.

Mood:
Bitcoin up over 4%. Still testing this as an indicator. Spirits rising perhaps.

30 years after a world-famous sculptor spent $350,000 of his own money to cast the iconic "Charging Bull" in solid bronze after the 1987 crash, State Street Global Advisors has felt the need to taunt the bull for International Women's Day with a publicity stunt known as "fearless girl."

They should be careful what they wish for.

Source: State Street Global Advisors
Echoing the FANTASTIC FEARLESS FALL of September Vogue 2016, this is probably another complex sociometer befitting of the large-scale transition from bull to bear at Grand Supercycle degree.

The charging bull was perfect timing in 1987. No one taunted bulls then; there were very few bulls to taunt. Yet the market charged higher and never looked back.

Today's taunted bull will likely gore many more bears. That is, until everyone else becomes as fearless as the Fearless Girl.

Then the opposite of fearless will happen.

Thus the socionomic message of Fearless Girl is fearlessness itself.

Investors become fearless at highs because they are certain that markets only go up.

There is probably still some additional convincing to do beforehand.

FX:
USD smackdown. CAD, EUR, GBP sharply higher.

Treasuries:
Price rallied, yes, but didn't make it very far. And volume is drying up.

Energy:
WTI crude and NG higher. NG currently the relative strength leading.

Metals:
Gold, silver, platinum, and palladium green. Copper down over 1%.

S&P Outlook:
Dumped those 237 puts on yesterday afternoon's late rally. Got to thinking that this market may be making a correction in time and not price.

Once again the retracement is shallow thus far. The 38% level has not even been challenged.

But there's this:


This is a "six-sigma" VIX chart using Keltner bands at a Fibonacci 6.1 away from price (610 is a Fib number). Keltners are calculated using average true range, whereas Bollingers are calculated using standard deviation. So this is basically a Keltner version of price containment at six standard deviations.

I use this to plot where to cash in when a volatility event occurs. Too often it's tempting to cash in when Bollingers get pierced to the upside. This chart helps me keep some in the trade until true extremes are met.

The chart shows that vol has shrunk back to levels not seen since 2014. This means I'm a buyer of the next VIX set up on the daily chart.

2008 required settings at 9.87.

Until the daily VIX sets up, however, am remaining in dip buying mode until proven wrong.