The collision of global markets and social mood

Friday, October 21, 2016

Friday -- Continued Macro Deterioration

S&P E-mini Futures:
Weaker overnight.

Something dark about the latest M&A news potentially creating the world's largest publicly traded tobacco company. Feels like another example of mixed mood: positive mood as seen by the coming together of two powerful brands, BAT and Reynolds, and the negative mood of marketing a known carcinogen.

Equally dark is this line from The sharing economy is creating a Dickensian world:

"The sharing economy has developed in response to weak economic growth and a depressed labor market. Workers unable to find work or needing supplemental income use these platforms to earn additional income."

Uber is valued in the multi-billions (positive mood) as it provides supplemental income to independent contractors squeezed by a depressed economy (negative mood).

Forgot to comment on the Philippines yesterday: a massive foreign policy blunder to let them run into the arms of Russia and China, a huge strategic loss for the Pacific region during a time of rising tensions, and a result of sheer stupidity, arrogance, and ineptitude.

We need more friends not enemies.

It's all about the USD . . . rallying . . . and freaking out the central planners that would rather see it roll over to keep the Keynesian party going.

It's also about JPY. Even with USD strength, JPY is getting stronger too. That takes a lot of muscle. And it likely means something is deeply wrong under the hood.

Looking a bit indecisive, but prices trying to rally.

WTI crude may have formed am impulsive 5-wave decline from its recent 52.22 high. If so, a trend change may be in the works and should be watched. Applies to NG as well from 3.366.

USD having its expected effect here: mostly red. Palladium especially, which may be signaling auto weakness (used in catalytic converters and hybrid batteries). Gold trying to rally.

S&P Outlook:
Another failure to take out 2149.19 along with the 2148.64 61.8% resistance yesterday.

The break of 2143.63 did complicate things as seen by the wild trading range, yet the market still has its choice of the 2163.66 gap and the larger gap at 2126.50.

Will say it again, however: from a macro sense, it still feels like a Big Fish is somewhere below the surface, stalking the boat. The geo-political situation is deteriorating quickly. The USD is putting pressure on a deteriorating monetary situation. And the levels of the S&P 500 could put pressure on a deteriorating technical situation.

Until 5-waves have formed from the 2016 lows, the potential is for the existing 3-way rally to be entirely taken back.

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