The collision of global markets and social mood

Wednesday, September 21, 2016

Wednesday -- BOJ Underwhelmed

S&P E-mini Futures:
Up but off best levels.

BOJ tweaked when they were expected to turbocharge.

Bloomberg compiled a long list of quotes from unhappy traders around the world, and yet Marketwatch -- which seems to have had a recent editorial change -- is somewhere in la-la-land:

"Gonna be a bright, sunshiny day?

"The Bank of Japan has fired up traders around the world in the early going, and that’s getting some people even more hot and bothered about the Fed.

"Haruhiko Kuroda & Co. took the unexpected step of committing to keep 10-year interest rates at zilch. The BOJ also held off from going more negative with its deposit rate and pledged more allegiance to aggressive easing."

The unexpected step of doing not much.

Banks and insurance companies loved the news because the BOJ chose not to force rates even more negative since they're not working.

I like seeing the euphoric take by equities thus far, however. The final wave higher that I'm looking for must suck in all the bulls so that larger players can unload to them.

Here's the sentiment snapshot from Bloomberg:

"Recipe for disaster"

"...simple act of illusion"

"BOJ is not so serious about achieving 2% inflation rate so soon"

"BOJ didn’t add to easing, but delivers framework for further easing"

"Flexible monetary base target may spur speculation of reduced QE"

"...a bit underwhelming as there are no aggressive moves"

"...could be read as sign that it is reaching a limit with easing and isn’t as confident about monetary policy"

"BOJ’s policies are a 'pass'”

"Disappointing and underwhelming given all the pronouncements and rhetoric"

. . . . .

The thing about continual central banking shock & awe is that markets become desensitized.

Personally I'm with the limits of central banking theme. It's all about the bluff at this point.

JPY says it all thus far -- surging in strength. CHF stronger too. Not a good mix at the moment.

Prices reacted negatively overnight yet stabilized and bounced.

So much for 43. WTI crude ripped on API numbers, but has a long way to go if it wants to get out of its current bad neighborhood.

NG thrust as expected to new rally highs. 3.098.

Precious metals like the BOJ news thus far, but copper doesn't. Another macro tell.

S&P Outlook:
Boring action last several days. Today should cure that. Leaning toward being a buyer lower and a seller higher -- unless whatever rally that did occur was so dramatic that it could signal the third wave of a developing impulse to record highs (overall expectation).

As previously mentioned however, a stall around the 2173.16 78.6% Fib retracement or the gap and volume shelf at 2181.30 above would have me try some puts.

A false break lower, around the cluster of Fib targets in the 2103.25-2094.55 zone below would have me trying longs.

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