Up small, yet holding yesterday's breakout gains.
News:
NIKKEI grabs the news, breeching 20,000 for the first time in 15 years, however JPY flies below the radar...
FX:
While charts of USDJPY and USD look quite similar, USDJPY indicates a steadily declining relative strength -- meaning JPY is quietly getting stronger even in the face of the booming USD. In my opinion, this is the most important macro indicator out there. And it's a bearish one.
Watching 99.80 on the US dollar index. Getting above that level would virtually assure new rally highs, regardless of corrective moves in between.
With negative rates among so many European countries and higher rates in the USA, it appears EUR is a new carry trade funding currency and USD may be the beneficiary. This will simply put increasing stress on dollar-denominated debt service until something breaks.
Most of the world's debt is in dollars, making this a very big problem when it happens with few places to hide.
Treasuries:
128'80 in 10s and 162'08 in 30s are important levels to me near term and should not be broken.
Energy:
WTI crude trying to hold 50. 47.05 remains key.
NG printed new lows as expected, yet the pattern is not yet enticing.
Metals:
Gold is back above 1200, but seems to have a volume problem. Friday's are notoriously light volume in the gold market, and if so, could be a red flag for bulls. Weekly volume looks short.
S&P Outlook:
Yesterday's late day breakout looked great -- until you checked under the hood. A/Ds closed slightly negative, when a valid breakout should've dragged along far more participation. Volume was tepid as well.
Regardless, there is still an opportunity to hit the 2111 volume shelf and possibly even the 2117.39 gap. This has been a market that has cared little for internals as it has ridden the world's largest central bank liquidity wave ever.
Waves always peak, however. And if you're not ready for it, the resulting fluid dynamics can hurt.
2073.30 is the closest stop for now. And keep an eye on 18980 on the NIKKEI continuous contract and add it to the list of wedges.
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