The collision of global markets and social mood

Friday, September 25, 2015

Friday -- Raise Those Rates

S&P E-mini Futures:
Straight up overnight.

Yellen's speech was anything but Dovish. Shanghai was down over 1% last night and appears to be the only country that agreed. But Europe is up a stunning 3% today.

Yellen basically said the economy is strong and we need to raise rates. Apparently that was enough to get markets to believe that, yes, things are good and, yes, rising rates are good medicine and that everything is OK.

Regardless, markets ultimately need no reason to do anything, ever.

When the S&P looks ready for a rally, and it rallies, that's all the reason we need. The market is a living organism that operates on its own terms which are largely psychological. Waves are merely the footprints left behind.

Our job, therefore, is to become good trackers.

Elsewhere, Japan's core consumer prices marked the first annual drop since Abenomics was started more than two years ago.

Ironically, the results came a day after Prime Minister Shinzo Abe declared that Japan was no longer in deflation. Oops.

USD soared on Yellen, above its two most recent swing points. EUR, AUD, CAD, JPY all weaker.

Not likely related, but the big action elsewhere was in the Brazilian real which rallied sharply after hitting a record low of 4.24 to the dollar.

Apparently the head of the Brazilian central bank vowed to use "all instruments in its arsenal" to curtail the real's collapse. Sounds like Draghi's "whatever it takes."

The real closed at  3.93, up 6.1% on the day. Wow.

Rocked on Yellen. Prices lower, yields higher.

WTI crude up 2%. NG down almost 1%.

Gold and silver off slightly. Copper holding above lows.

S&P Outlook:
The 1960 area looks prime for a test today. Technically, the waves since 2020.86 could be counted as five waves down, but they don't look that way at smaller times frames.

Here is one bullish way to count them. There are other far more bearish ones, especially if 2020.86 holds.

Trading this scenario means using the UVXY and TVIX as "puts" while using ES, SSO, UPRO, along with cheap SPY & OEX weekly calls as scalps against vol gains.

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