Wednesday -- Bulls Calming The F*ck Down?

S&P E-mini Futures:
Up modestly, pressing recent highs.

News:
Saw some tea the other day -- Calm The F*ck Down Tea to be exact -- and didn't think much of it.

Then found this article about Starbucks and decided to dig deeper.

Starbucks Raises Prices

They've quietly raised prices for the second time this year, no less. Could Starbucks be quietly covering up for shifting or declining sales?

Hard to tell. The move comes as sales at its new focus -- its Reserve Roastery and Tasting Room -- were up 24 percent in fiscal 2016 over the previous year. "The average Roastery customer spends 4X more than at a typical Starbucks store."

No problem there except for cannibalization, perhaps.

"These Roasteries, Reserve stores and 'the premiumization of the Starbucks experience' will be CEO Howard Schultz' personal focus to set up Starbucks for long-term growth and success."

Already thought a $3 coffee was premiumized. Now he wants more?

Social mood wise, the point is this: if for some reason sales of caffeinated drinks are slowing, and thus require the added kick of premiumization to boost sales, Starbucks might be at the leading edge of an important shift.

Note that momentum in SBUX has faded since 3rd Q 2015.

The shift from a bull market mood of bigger, better, faster could yield a trend toward calming down to reflect a bear market mood retrenchment around the corner.

Keep your eye on the anti-caffeine category

FX:
Very few tea leaves to divine thus far.

Treasuries:
Rolling over after zero lift off.

Energy:
WTI crude has gone full manic this morning, rallying over 7% yet still not able to take out its 11/22 swing point.

NG not impressed either.

Metals:
Gold held 1178.20 overnight yet 1181.20 lows must hold. Silver, platinum, palladium, and copper looking better -- all green.

S&P Outlook:
Got a pullback but nowhere near the 2182 area. Internals continue to weaken, and when prices rise in the face of that, it is preferred -- by me at least -- to see them continue until they exhaust.

Up to 2222.37 looks possible. Will reassess approaching 2220.

Tuesday -- Another Day, Saturn & Sagittarius, OPEC Hell, Patience

S&P E-mini Futures:
Flatish.

News:
Another day, another Marketwatch headline:

That's the news for you -- yesterday they were so bullish.

Not looking for a crash, but check this out: today, astrologically, "Saturn is 17.4 degrees in Sagittarius, the same as it was during the crash of '87 Oct 19th (and for the first time since)" via Brad Gudgeon at BluStar Market Timer.

Meanwhile the S&P is having trouble getting back to 2182.

FX:
Still looks like Risk On in FX. USD firm. JPY back to being weak.

Treasuries:
Another weird looking chart picture thus far.

Energy:
WTI crude's wave structure is rightly a mess as it perishes in OPEC hell (Russia won't even be at the next meeting). NG new rally highs as expected.

Metals:
Gold and silver giving back gains. Stop on gold remains 1178.20. Platinum and copper lower too. Palladium higher.

Not sure how nuclear batteries will impact platinum and palladium (i.e., hybrid or non-hybrid cars -- hybrids use both metals in their catalytic converters)

‘Diamond-age’ of power generation as nuclear batteries developed

S&P Outlook:
Still not thinking crash today even if Sagittarius is in the same configuration for the first time since the crash of '87.

Still looks as if 2222.37 is the main event. Either it gets reached or not, and could be the bull-bear line for the B-wave rollover scenario vs the ending diagonal higher.

There is also the possibility of an impulse wave to much higher highs (that I personally doubt). I think we've seen the best of this rally. And I think it was mostly short covering.

Whatever it is, it's still hard to buy the first down day after an epic run. The odds just aren't there until 2182 or closer to 2222.

Time for patience once again.

Monday -- Next Bull, OPEC Cred, Price Discovery

S&P E-mini Futures:
Down in corrective decline, yet off their worst levels.

News:
One week from today we should know the results of the Italian referendum and the new odds for the EU's survival.

Things are looking pretty giddy over here -- not even a month after the crowd thought the market would implode post-Trump.

FX:
Another day of JPY strength could warn of a Risk On derailment soon.

Treasuries:
Day 2 of upward price pressure. A lot to prove.

Energy:
WTI crude broke its developing impulse pattern higher and is now trading in No Man's Land. OPEC is losing cred faster than the Fed.

NG gapping higher. New rally highs look next.

Metals:
Gold and silver rallied where they had to. New stop in gold 1178.20.

New 2016 highs for palladium. Platinum looks much weaker.

Copper declined correctively from its recent high. More highs probably on the way eventually.

S&P Outlook:
2182 still interests me as a support level. Ticks and A/Ds have contracted along with volume for much of the ride higher. As participants return this week we could see some price discovery.

New highs following price discovery lower should bring better sell opps. Then puts vs long e-minis can begin anew with better odds of winning both sides.

Friday -- FX & Happy Thanksgiving

S&P E-mini Futures:
Continuing the machine-like trend higher.

News:
Light news flow welcome. Asia was happy last night but Europe only so-so thus far.

For me the news is in FX where JPY and CHF are suddenly stronger amid the Risk On party.

Otherwise, it's my favorite holiday time of the year. It's more of an attitude than a holiday, I guess. It's a great attitude to have not just once a year but rather as much as possible.

Happy Thanksgiving.

FX:
USD pulling back but not yet looking impulsive. JPY and CHF strength could be an early warning.

At some point, one must also wonder when will China revalue the CNY once more.

Treasuries:
Bottoming tails continue, yet prices so far have failed to bounce.

Energy:
WTI crude lower, NG higher. Both look like they could still hit higher highs soon.

Metals:
Copper showing more follow through higher. Gold bounced from a major 61.8% Fib support level (1172 area -- 1170.30 new stop)

S&P Outlook:
The market opened with very low ticks and muted A/Ds -- not enough mojo for record highs, but holiday bias can keep it pinned.

FX is sending a warning though. Whether it is heard or not is the question.

Meanwhile the market remains in a Fib-rich area. It does not feel ready to give up the ghost. Probably a reaction and recovery high are needed first.

The 2182 area still interests me for support. So does all that leftover turkey.

Wednesday -- Crunch Time For The Sugar Rush

S&P E-mini Futures:
Down slightly but still hanging at highs.

News:
Tons of news due out today, from early morning until the 2pm Fed Minutes. Maybe there won't be a pre-Thanksgiving exodus. Maybe there will.

Euro Zone PMI figures came out better than expected as momentum builds.

US durable goods orders rose 4.8% in October.

Great news. Yet Marketwatch may have accidentally stumbled onto the correct interpretation:

Sugar Rush dovetails with Tom Demark's latest call for a 5-6% digger.

In Italy, it's getting real. Real fast.

Crunch Time for Monte Paschi

“Time is running out,” said Stefano Girola, who helps manage about 40 billion euros at Syz Asset Management in Lugano, Switzerland. “It’s like a huge puzzle, and one missing piece will doom the whole project."

Unclear in the Bloomberg article if the "whole project" in jeopardy is the European Project, but please allow me to speculate that it is.

Meanwhile, Italy's December 4th referendum awaits.

FX:
All about the USD today. Fresh rally highs (yet volume fading). Commodity currencies remain under pressure.

CAD, MXN still on watchlist.

EUR too -- below 1.04617.

No one seems to be talking about CNY (Chinese yuan) which is back to 2008 levels vs USD. Another revaluation could add a shock to the current joyride.

Treasuries:
Fresh correction lows. Possible signs of wedging (which could signal a reversal soon) but overall pretty nasty action that should be taken seriously.

Energy:
WTI crude and NG both down, yet looking corrective within possible developing impulse waves higher.

Metals:
Bloodbath in metals. Gold prices cracked 1200 and are close to levels where I'm a buyer (1172).

S&P Outlook:
The Sugar Rush has a nice ring to it. And I don't think it's over, but it's close.

Getting below the 2182 area would still be enough of an early warning to me that Tom Demark has nailed another one.

And a strong close above 2222.37 would still shift the odds from a B-wave scenario back to the previously-proposed ending diagonal pattern (where we'd be somewhere in wave 3).

Tuesday -- Peaking Together

S&P E-mini Futures:
Strong rally overnight yet off its best levels.

News:
The way sentiment looked at yesterday's close:

The party lasted into the night. Asia and Europe continued the giddy sentiment.

“The market is a lot more sure of itself now,” said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank AG in Bonn, Germany. “We can move on to pricing in the improving outlook.”

Deutsche Bank’s chief equity strategist David Bianco noted they are “more confident now.”

So are Chinese developers.

$100 Billion Chinese-Made City Near Singapore 'Scares the Hell Out of Everybody'

Juicy quotes galore:

“God only knows who is going to buy all these units, and when it’s completed, the bigger question is, who is going to stay in them?”

“If the developers stop building today, I think it would take 10 years for the condos to fill up the current supply. But they won’t stop.”

-- Siva Shanker, head of investments at Axis-REIT Managers Bhd. and a former president of the Malaysian Institute of Estate Agents.

The article is about just one -- the biggest -- of about 60 projects in the Iskandar Malaysia zone around Johor Bahru, known as JB, which have contributed to a drop of almost one-third in the value of residential sales in the state last year. Meanwhile:

-- Malaysian investment growth is slowing

-- Profit margins on real estate projects are falling

-- Developers are offering discounts of 20 percent or more

-- Average resale prices per square foot for high-rise flats in JB fell 10 percent last year

-- The value of residential sales in Malaysia fell almost 11 percent last year, while in Johor the drop was 32 percent, according to government data

Sound familiar?

Seems the entire globe is peaking together . . . on acid.

FX:
Quiet, mixed day thus far. GBP hit.

Treasuries:
Bottoming tails turned to dojis (indecision). Look for any follow through upside.

Energy:
WTI crude and NG off their best overnight rally levels.

Metals:
Modest rally in gold overshadowed by stronger rallies in silver, platinum, palladium, and copper.

S&P Outlook:
The 2200 area is target rich. Multiple Fib projections. A strong close above 2222.37 would shift the odds from a B-wave scenario back to the previously-proposed ending diagonal pattern (and we'd be somewhere in wave 3).

The way the current wave is subdividing it already seems that could be the case, but confirmation is key.

Those SPY 218 puts are more than fully paid for but will likely expire worthless barring an extreme event. Closing below the 2182 area would likely be the early warning.

It is up to the market to give the next signal. Bulls are on parade -- the same bulls that were bears pre-election based on the current outcome. Now they're wild-eyed bullish.

Not very stable.

Monday -- Change Afoot, The Facebook's Buyback, Sarkozy, OPEC

S&P E-mini Futures:
Sharp bounce higher off Friday's sharp end-of-day decline.

News:
A milestone occurred and it struck a cord with me. That Casey Neistat guy whom I've never watched just announced the end of his daily vlogs because they were trapping him creatively.

This followed a gentle nudge a few weeks ago from a friend of mine who hinted I was wasting time writing a blog each day rather than a social mood newsletter.

Then the NY Times weighed in Sunday with

Quit Social Media. Your Career May Depend on It.

All of this has made me realize that change is in the air and that it's good. I do feel myself getting tired of social media, and I do feel like I want to change directions after four years of daily dispatches now that I'm in the groove of doing them. So perhaps there are new things to come.

The Facebook certainly decided that new things were needed. How about a $6 billion buyback. Think it's got anything to do with recent accusations of ad fraud?

Elsewhere, another globalist bites the dust -- Nicholas Sarkozy suffered an upset in the French primary. All eyes refocus on the Italian referendum December 4th.

FX:
USD cooling off after new rally highs above 101. EUR and JPY stronger.

Treasuries:
Bottoming tails again.

Energy:
WTI crude and NG ripping ahead of a expected OPEC decision to lower production.

Metals:
Silver warning that gold, platinum, palladium, and copper may be green for no reason.

S&P Outlook:
If the market is going to break down, it looks like it will first need to get below 2175. Otherwise it could hover until Thanksgiving.

Friday's closing action was odd -- a sharp slap down. Futures have recovered, but new highs will have me looking at adding more puts soon.

Friday -- New McLaren, The Facebook, BOJ Unlimited

S&P E-mini Futures:
New rally highs earlier yet not much net price movement.

News:
The McLaren F1 was the fastest production car in the world when it was introduced during the 1992 recession.

Apparently 240 MPH wasn't enough, however, and a successor was unveiled in 2013.

Apparently 903 HP and a $1 million price tag still weren't enough, so the company has just announced an "utterly insane supercar."

It's still just a bunch of drawings and yet McLaren has already sold them all.

Yes, cars that do not yet exist . . . entirely sold out . . .  for millions each.

That's peak social mood. And an apt bookend to the 1995 tech breakout.

Speaking of tech, this could soon be another bookend:

Facebook’s ad metric problem is becoming Zuckerberg’s headache

As has been previously stated here, advertising media buyers are a fickle bunch that move in herds. If they should suddenly get spooked, by fraud, the Facebook would need a completely new business model overnight or risk being the biggest flameout ever.

FX:
More USD strength, yet EUR may be trying to turn up after a bloody 9-day rout.

JPY strength is a fresh warning however.

The BOJ offered to buy an unlimited amount of debt at fixed yields for the first time after two-year yields nearly turned positive on Wednesday, yet the operation yielded no bids.

Thus the current JPY strength is ominous because it suggests the FX market is calling the BOJ's bluff.

Regarding the BOJ operation, Souichi Takeyama, a rates strategist at SMBC Nikko Securities Inc. said something stunning:

“Markets won’t test levels above these fixed rates as these will be seen as reflecting the BOJ’s upper limit.”

Wanna bet?

Treasuries:
Price showing bottoming tails thus far.

Energy:
WTI crude got bouncy after the latest OPEC comments (more of the same Zzzzzzz) then fell back. NG up over 3% currently.

Metals:
Red.

S&P Outlook:
The market gets more and more tepid the higher it goes. The 2186.16 gap was filled, however. Now what.

Betting that somewhere between current prices and 2204.37 it rolls over. Using SPY 218 puts financed by long e-mini scalps on weak dips.

Thursday -- Relatively Soon

S&P E-mini Futures:
Slightly higher but going nowhere fast.

News:
Bloomberg was on fire this morning:

Boom -- Jobless Claims in U.S. Decline to Lowest Level in Four Decades

Boom -- Housing Starts in U.S. Surged to a Nine-Year High in October

Boom -- Yellen Says Fed Interest Rate Hike Could Come ‘Relatively Soon’

Social Mood -- This New $680 Gadget Will Save Your Paper Scribbles in Your Phone

Even Bloomberg noted it was "...a solution in search of a problem." And so aid all the good news and ebullient mood, this last blurb has extra impact:

Reality -- Wal-Mart’s Sales Come Up Short, Even as E-Commerce Accelerates

Either people are suddenly doing so well that they no longer care about lower prices, or Wal-Mart may be getting suffocated by Amazon.

Elsewhere, snow may fall in northeastern US this weekend as temperatures plunge up to 50 degrees.

Wonder if this has anything to do with this:

 Solar Cycle 24 Continues To Be Weakest In Close To 200 Years

"The entire cycle so far [SC24] has only been 56% as active as the mean cycle."

Also some amazing factoids (with emphasis added) here that could affect the markets:

 Solar Cycles 24 and 25

"Solar maximum for cycle 24 was reached in February 2014. Since this time we've seen a gradual decline in sunspot numbers as we've moved out of Solar maximum and back towards solar minimum (expected around 2019).

"During June something dramatic occurred! We had a collapse in sunspot numbers compared to the month before. Sunspot number fell to a level that we've not seen since 2010!

"The drop in sunspot numbers was so large that we're now much lower than trend. This level of activity wasn't expected until around 2017.

"In terms of past solar cycles we know that SC24 is amongst some of the weakest solar cycles ever recorded back to SC1 (1755 to 1766) and past analysis shows that we've been running very closely to SC12 (1878 to 1890).

[late 1800s was the French Revolution]

"The solar cycles we now seem to be closest to are SC5 (1798 to 1810) SC6 (1810 to 1832) and SC16 (1922 to 1933). Solar cycles 5 and 6 were part of the "Dalton Minimum" a period of very low sunspot activity that also coincided with several severely cold winters.

[1830-1860 was a period of sideways market action. 1929-1932 was the stock crash brought on by The Great Depression]

"Although we haven't yet had an official forecast for SC25, another weak solar cycle is expected meaning that SC24 and SC25 would closely resemble the "Dalton Minimum" solar cycles 5 and 6. We don't expect a level of severe cold winters such as we had during the Dalton Minimum however.

"The Dalton Minimum was close to the Maunder Minimum/Little Ice Age which was still having an affect on northern European winters.The little Ice Age officially ended around 1850 and winters have shown a warming trend since. However, with an extended period of weak solar activity we certainly think cold winters are likely in the coming years, even if they don't reach the severity of those Dalton Minimum winters."

FX:
Mixed action still. Not thinking USD run is yet over.

Treasuries:
Price action not inspiring confidence.

Energy:
WTI crude up over 1%, NG down over 2%.

Metals:
Gold, silver, and copper green. Pl and Pa red.

S&P Outlook:
As with the USD, not thinking equity prices have top ticked yet, but like Wal-Mart, they're looking more and more wobbly. Financials fell 2% from yesterday's post.

Still viewing 2135.25 as critical, and still view a break of 2151.17 as a warning shot.

2186.16 remains a significant gap likely to get filled "relatively soon."

If not, look down.

Wednesday -- Rate Madness, OPEC, VIX Term Structure

S&P E-mini Futures:
Down from yesterday's post-close high.

News:
Stop the madness. Rates have been declining for 35 years and people still think it's automatically bullish when they go up.

Trump-fueled risk rally shifts to Japanese bonds, euro -- Reuters

Japanese JGBs got whacked last night and the curve flattened, in opposition to the BOJ's stated goal. Italian and Spanish 10-year yields are 4X higher today than similar German bunds. The euro is down currently (could bounce soon however).

In debt-laden credit-based economies, rising rates indicates possible stress as borrowing costs (and debt repayment costs) shoot higher.

As a reminder, during the Greek debt crisis yields skyrocketed. It was not a good thing.

I even heard an Elliott Wave practitioner pontificate on YouTube that rising rates and the end of QE will be bullish for equities because all the extra interest income will be plowed into the stock market.

The practitioner is also a follower of Paul Krugman.

FX:
Dumped the CAD trade yesterday after it didn't act right. USD still showing strength.

Treasuries:
Prices appear to be rolling over once again.

Energy:
Hope. No hope. Day after day as OPEC can't seem to get it together. WTI crude down 1%. NG higher.

Metals:
Gold and silver have yet to corroborate the post-election inflation thesis. Copper down over 1%.

S&P Outlook:
Nothing much changed yesterday. The market levitated higher. A/Ds improved vs the big post-election rally. Volume did too. That's about it.

VIX term structure is signaling negative divergence. This chart could still be in play and can even accommodate a new record high. Not to be used for timing. And as always, not real Elliott labels, just simple as possible.

One other thing. Federal Reserve Bank of Minneapolis President Neel Kashkari just floated his plan to end Too-Big-to-Fail banks by imposing an increase of loss-absorbing capital to 23.5 percent of risk-weighted assets, up from 10.5% (still way too low in my opinion).

In addition to the end of QE and rising rates, his plan would further drain liquidity from the financial system. Banks may be a bit ahead of themselves.

High-yield credit, junk bonds, and real estate at the bottom,
SPY in the middle,
banks straight up in the air

Tuesday -- BIS Chimes In On USD

S&P E-mini Futures:
5th day of narrow range-bound trading.

News:
Been railing about the risk of US dollar supply and demand dynamics since 2010.

Finally the BIS, the Bank for International Settlements (the central bank for central banks) has chimed in with some vindication, and perhaps a ring of the bell.

Some BIS highlights from Bloomberg:

-- A stronger dollar can depress demand for credit while reflecting reduced investor appetite for the riskiest assets

-- The mantle of the barometer of risk appetite and leverage has slipped from the VIX and has passed to the dollar

-- Given the global increase in dollar-denominated liabilities, a stronger currency may lead to lower appetite for investment risk and reduced demand for dollar-lending to acquire relatively volatile assets

-- Dollar hedging (short dollars) has created a dollar “shortage” that has made the financial sector more vulnerable to the strength in U.S. currency, BIS researchers said.

-- The risk-taking channel of exchange rates turns on the impact of dollar appreciation in a world where many balance sheets have dollar liabilities

-- When so many borrowers have borrowed so much in dollars, whether for hedging or speculative purposes, dollar appreciation exposes borrowers and lenders to valuation changes and, in turn, impacts their balance sheets

Where does the bell come in? Well, for one thing, the VIX is not over. It's probably just about to begin again.

And, right now or very soon. I am starting to hedge other's people's hedges by buying Canadian dollars...

FX:
...but USD rally may not be quite over yet. Also sniffing at Mexican pesos. Mexico could replace China as a low-cost manufacturer in a heartbeat, ending a ridiculously long trade route (as well as China's new international swagger) overnight.

Treasuries:
Yesterday looked like a possible turn in the bond market, yet doesn't look like much follow though.

Energy:
WTI crude and NG rallying nicely. Looking like bounces though.

Metals:
Copper down hard after its recent feverish rally as gold, silver, platinum, and palladium are higher.

S&P Outlook:
The action gets weirder and weirder as the days pass. New highs in Dow Jones Industrials and Russell 2000, unconfirmed by any other major index.

TRIN still pinned in the sell zone.

13-week moving average of NYSE advancers remains at the lows of 2016. Epic non-confirmation.

All the best targets remain.

Still viewing 2135.25 as critical, and still view a break of 2151.17 as a warning shot.

Gap at 2186.16 remains.

Monday -- Peak Moon, Peak Selfie

S&P E-mini Futures:
Flat to higher.

News:
Peak Moon:

Per The Old Farmer's Almanac, today's full moon at 8:52am ET will appear as the largest and brightest Moon in the sky since 1948 and comes with some other cool facts:

"First, it’s a “Perigee” Moon—when the Moon reaches the point in its orbit that is nearest to Earth. Even better, this Moon will be nearer to Earth than it’s been in 70 years. While the Moon won’t technically be getting any bigger, it will appear up to 14% larger than when it is at its furthest point.

"Further, the full Moon of November 14 is not only the closest full Moon of 2016 but also the closest full Moon in the 21st century and it won’t come this close to Earth again until November 25, 2034.

"Besides appearing large and bright in the sky, this extra-close Perigee Moon (or, Supermoon) will also have a more dramatic effect on the tides."

A more dramatic effect on the tides could also effect your moods . . . and the market's.

Peak Selfie:

FX:
USD pierced 100 again for the first time in almost a year. Risk On tone for commodity dollars, but not for EUR, GBP, or NZD (terrible earthquake, sending prayers).

Treasuries:
Prices showing bottoming tails thus far suggesting yield in for a possible breather.

Energy:
WTI crude down another 1% but looking like it wants a bounce. NG ripping, up 4%.

Metals:
Mixed. Gold and silver trimming losses as recent decline slows. Platinum and copper up, palladium down.

S&P Outlook:
Another unimpressive day Friday. Nothing broken however. Still do not trust the current rally structure but thinking it may have a bit more to run.

As mentioned Friday, viewing 2135.25 as a critical level, but even a break of 2151.17 would be a warning shot for me

Gap at 2186.16 remains.

Friday -- EM Hysteria

S&P E-mini Futures:
Down but looking choppy from yesterday's highs.

News:
We awake to Emerging Market hysteria over Trump's policies. Ridiculous, unless they have correctly predicted his presidency for several months.

What we're likely seeing is the end game of a 35-year credit cycle. Credit spreads have been widening. The servicing and repayment of an ocean of US dollar-denominated debt is causing a small EM liquidity crisis. It has nothing to do with protectionism, or Libor regs, or The Donald. It's simple supply and demand.

Of far greater concern should be rising yields in the world's third-largest bond market: Italy.

It could soon become the EU's biggest problem whether it has a referendum or not.

Bloomberg reported that  last week as the capitalization of the global bond-market slid more than $1 trillion (for only the second time in two decades), global stocks gained $1.3 trillion in the same period.

That's money just sloshing around.

Lest anyone think animal spirits have left the building, a 1962 Ferrari 250 GTO, one of the rarest of the rare, was just listed for sale at $56 million.

Car sales, like art, seem to be slightly lagging social mood indicators unlike fashion, but it will be interesting to see what it actually sells for, and when.

Classic Ferrari 250 GTO set to become world's most expensive car with £45 million price tag

FX:
Risk Off. JPY and CHF bid.

Treasuries:
Volume spilled out of these the past two days. Epic. Stay alert.

Energy:
WTI crude and NG down. Baker Hughes rig count 1pm.

Metals:
Copper up another 3%, yet gold, silver, platinum, and palladium sitting out the Trumpflation nonsense. Red.

S&P Outlook:
Reality: most everyone on the Street was offsides once again. Now we're seeing the aftermath. Soon the real action will take place. It too will probably catch many offsides.

Yesterday took only a few minutes to negate the bearish wave count. So far the decline looks choppy, so it appears the more bullish ending diagonal count is correct.

But I can't stop feeling as if there is a surprise count in store, one that I'm overlooking. Keeping an eye on 2125.35.

Unless 2125.35 breaks, however, it will be assumed that the S&P is headed higher in a third-wave of the final 5th-wave to 2200-2500.

Thursday -- Competing Narratives & The Bond Spook Scenario

S&P E-mini Futures:
Follow through higher but off its best levels.

News:
Sea Of Green amid global equities with the UK FTSE 100 sitting it out (along with credit). Yields are skyrocketing. How soon before they spook equities was my thought intraday yesterday and this morning too.

Competing narratives in play: inflation coming due to fiscal stimulus via Trump. Growth ahead. Massive short covering. Boom time for banks. Buying spree after a long period of uncertainty. Echoes of Reagan-Era Morning In America.

Seems like each scenario is in play at the same time and the dust needs to settle.

One thing supporting short covering: total volume is huge, but where's the up volume?

FX:
Mostly a Risk On tone thus far (ex-commodities; lack of safe haven bid) along with USD strength.

Treasuries:
Prices cratering and yields booming. Not sure the market -- or the Fed -- is ready for this.

Energy:
The big word making the round this morning is "relentless" and comes from the IEA regarding crude oil supply growth. If correct, expect that WTI crude may not have ended its relentless decline from its 2014 highs.

WTI crude and NG are down this morning in the face of Sea Of Green in global equities.

Metals:
Of all the metals, copper seems to be saying boom the loudest. The rest seem to be calling the bluff of inflation except for palladium which may be setting up for more of a run, but would need above 728.

S&P Outlook:
Two competing scenarios. One has been shown before. One is new.

This is the one from before (not updated). We may be in the first leg of "3" before a little choppy corrective action.

The other has a tight stop (2179.99) and might be called the Bond Spook scenario if the market suddenly decides that the Fed is behind the curve and needs to jack up rates quickly.

So if price declines sharply rather than a choppy sideways affair, get ready to rumble. Wave 4 may not be over. The good news would be that a ripping wave 5 rally would be laying in wait somewhere around 1800 or below.

Wednesday -- Globalism Rejected

S&P E-mini Futures:
Sharply lower, yet well off their overnight limit down lows.

News:
First Brexit. Now Trump. Soon perhaps Italy in December and France later on: globalism is being rejected by ordinary people worldwide who have had enough of governance by elites and their secret cabals.

Again, not talking politics. Purely social mood. Following up on a topic that was discussed on this blog a while ago:

Anger, Trump, And What It Means For The Market

Trump's election doesn't mean anger will just go away.

The cautionary tale is that Trump has a history of peak popularity at market tops, the most famous example being the publication of his book The Art Of The Deal on November 1st, 1987, days after the historic stock crash, and just a few months after the markets peaked that August.

Was he just elected president the same few months after the markets peaked? Possible, yet not yet probable.

The point is, anger won't automatically be healed by his election. The same cabals will be working harder than ever, plotting their next move. The same millions of people who voted against him will only hate him more. The entire mainstream media, discredited as they are, will continue to unload on him.

And the worst cabal of all, the root cause of the entire mess -- the Fed -- still remains. If their reckless policies continue, markets could recover -- yes -- then crash. Anger could then be projected on Trump even by his own supporters.

Counter-intuitive, quite possible, yet not yet probable.

FX:
MXN said it all last night -- USDMXN showed a three wave decline which strongly suggested a new high for the pair (new low for the peso). This, coupled with strength in JPY and CHF (safe haven flows while S&P e-minis were making new highs) was the reason I went to bed early: I thought it was pointing to a contested election that would drag out for days like Bush/Gore 2000. Ended up awake later to see the whole thing unfold shortly after The New York Times projected a 95% chance of a Trump victory. Long night.

Treasuries:
Messy action 2s-10s overnight. Note that bonds weren't happy yesterday while stocks continued to rip higher.

Energy:
WTI crude broke its September swing point and is bouncing. Let it. It looks like much lower lows are in store eventually. NG could be setting up for another rally soon however.

Metals:
Strong bid in metals, another reason why equity futures still might retest the overnight lows.

S&P Outlook:
The epic bounce from the overnight lows likely reflects the relief that the result was a quick decision. Futures were limit down, a la Brexit, then bounced heroically. Light volume however.

JPY still well bid. Asia and Europe red red red.

Still looks like the overnight futures lows (ES 2028.50) will be tested in the regular session. This calls attention to the 2050-2070 area and the 2036.09 gap on the S&P cash. Still am a buyer down there.

What if markets get a bid due to the uncontested election and dreams of massive fiscal stimulus? Gaps at 2163.66 and 2181.30 remain. Wild times.

Tuesday -- Poetic Pictures Of People Falling Down

S&P E-mini Futures:
Slightly lower.

News:
National holiday here in Puerto Rico for the local elections. No booze sold until the polls close at 5pm which is kind of funny. But not much else for sale either, which is kind of a pain. Supermarkets are closed. Bizarre.

Have noticed Europe flip from green to red thus far this morning then found the following:

Mood is turning as seen by this biker inspired fashion from down under, ironically upside down.

And French photographer Adeline Mai's gravity-inspired portraits are entitled Poetic Pictures of People Falling Down:

An eerie metaphor of the times, perhaps.

How poetic.

FX:
Mostly Risk On thus far.

Treasuries:
Prices under pressure.

Energy:
WTI crude down slightly. NG getting pummeled, currently down over 4%.

Metals:
Gold and silver slightly gaining. Palladium red.

S&P Outlook:
The S&P broke through the 38% without blinking an eye and closed above the 61.8% level and 2030 volume shelf, but not without pondering it -- going sideways for over 3 1/2 hours. Still, it did it.

Now what.

Now we wait. Given the election anything can happen. Safer to just play it by the numbers.

There is a higher volume shelf at the 2150 area along with the 50dma at 2147.

Below Friday's lows is the 2070-2050 area, but the Big Kahuna is 1991.68.

Volume dropped off on yesterday's rally, and it felt like frantic short covering after a record number of consecutive down days. Some follow through is expected but TRIN spent much of the day in the sell zone and closed at .46.

Yes, the TRIN can go lower. But it's a warning to bulls.

Monday -- Mind The FBI Gap

S&P E-mini Futures:
Sharply higher, leaving a huge gap from Friday.

News:
Sea Of Green worldwide on the FBI's director's Sunday afternoon back flip.

Quote of the day: “A Clinton win would clear the decks for the Fed to raise rates in December and for markets to price in a more aggressive profile for tightening over 2017,” said Sean Callow, a senior strategist at Westpac Banking Corp. in Sydney. (via ZeroHedge)

In other words, futures probably not pricing in a one-way jet ride to new record highs.

Elsewhere, jeweler Blue Nile sold to Bain Private Equity for $500 million, a 34% premium.

Animal spirits still alive and well even after the longest string of down days in the market since 1980.

Fantastic Fearless Fall -- just think, a fashion mag warned you in early September.

The Socionomic Implications Of September Vogue: 2016

FX:
Hot mess of Risk On amid dollar strength. Mind Mr. Callow's quote above.

Treasuries:
Gapped lower yet struggling higher.

Energy:
WTI crude and NG gapped lower.

Metals:
Gold and silver gapped lower and remain so. Platinum gapped lower and is struggling back, while palladium and copper rallied strongly higher. Mixed action here according to mixed uses.

S&P Outlook:
Friday's action was not encouraging. Nor was the overnight action in futures. Sure it's great for my positioning but it has the knee-jerk feel of emotional, news-related trade that eventually gets entirely retraced.

Candidly, not sure if either candidate will want to be president after the election.

The market could target the volume shelf at the 2130 area which coincides with the 61.8% retracement of the recent decline, but it has to make it through the 38% level first, close above it, and do so convincingly.

That level is 2110.91.

Any failure would likely presage bad news.

Thus today and tomorrow might represent an ideal hedging opportunity.

Friday -- NFP

S&P E-mini Futures:
Flat all night and positive yet muted reaction thus far to NFP.

News:
The S&P just had the longest losing streak since the Lehman crash 8 years ago. September Vogue's Fantastic Fearless Fall called another one.

Where do we go from here? Once again social mood suggests we're getting close to an inflection point.

Cover Girl recently introduced their first-ever Cover Boy (an InstaBoy with 428,000 followers). According to socionomics, gender role shifts are hallmarks of bear market mood.

Smith & Wesson is buying survival and camping equipment maker Ultimate Survival Technologies which sounds a bit like bear market mood as well.

These are not major news items, but they may represent the near-term bearishness of the recent decline and signal a reversal soon.

Non-Farm Payrolls (NFP) just announced 161,000 new jobs, higher than forecast, and wages rose at fastest pace since 2009, while the unemployment rate dipped to 4.9%.

September was revised up 191,000 new jobs vs 156,000. August was raised to 176,000 vs 167,000.

This news felt a bit hot, yet it feels like the Fed wants to let economy run. So at the moment the market seems to be taking it as "just right." This kicks the can, however, and will likely mean more ramifications down the road.

Red-red-red across Asia and Europe.

FX:
USD liked the NFP figures suggestive of higher rates. CHF still higher yet JPY softer.

Treasuries:
Small negative reaction with prices to NFP. Ditto above.

Energy:
WTI crude fresh lows on lower volume. NG may be trying to rally.

Metals:
Muted reaction to NFP thus far. Silver slightly down at the moment. Gold, Platinum, palladium, and copper slightly higher.

S&P Outlook:
Grim action yesterday amid ample positive divergence and low volume. None of it mattered.

If current levels do not hold, there could be still more carnage. Upper level price target is 2074.74-2068.89 and lower level is 2048.75-2034.94 and includes a large gap at 2036.09.

My own money is on a bounce however, yet 2105 likely needs to be exceeded for it to get any legs.

Thursday -- Parliament, Advertising & Hubris

S&P E-mini Futures:
Modest bounce from fresh lows overnight.

News:
You don't matter. That's what Britain's Parliament thinks.

You voted to leave the EU, but your vote doesn't matter -- we'll decide.

England's High Court ruled that the British government requires parliamentary approval to trigger the process for exiting the European Union. So much for the referendum.

Source: @mckinneytweets

"Parliament can, by enactment of primary legislation, change any law of the land in any way it chooses."

It does not appear that the elites understand what is really happening at street level where ordinary people are waking up from their slumber en masse. History is replete with grim examples of those that failed to take heed.

Wall Street better wake up too: the Facebook handily beat every growth metric and got pummeled because it guided lower on advertising. Its long-standing multi-year Fib projection of 135.43 could be in jeopardy below 117.59. It was down over 4% in pre-market.

Advertising (and hubris) could turn out to be the markets' Achilles heel before long.

FX:
USD finding support. CHF has turned weaker, and JPY is only mildly gaining.

GBP loves Parliament.

Treasuries:
Topping tails on price bars already this morning.

Energy:
WTI crude has continued to slide. If 43.06 breaks, it becomes more likely the entire rally from the 26s could break as well at some point. NG is flat before EIA numbers.

Metals:
Copper up. Gold, silver, platinum, and palladium down.

S&P Outlook:
The S&P made a weak three-wave bounce from yesterday's lows. Likely further lows in the post. Could it rally a bit beforehand? Of course. But the 2050-2070 area is in the crosshairs now.

It likely needs to clear 2105 for any bounce to get some mojo. Above 2113.12 would probably call this analysis into question.

Wednesday -- Surprise Surprise

S&P E-mini Futures:
Bouncing around the flat line with slight upward bias yet weak.

News:
Red and green across the world.

Equities red, bonds green. It's getting messy.

Bonds are not being used for upside price speculation as they have for much of the three decades since their generational lows in 1981. They're being used for safety at the moment.

It's a big deal when the FBI begins aiding Wikileaks.

FX:
Shortly after the equity markets opened yesterday, JPY surged in strength to join its Swiss safe haven cousin in warning that things were about to get nasty. It did not disappoint.

Same for this morning thus far, JPY & CHF stronger.

The USD did however. It has corrected hard yet not with the same amount of force it had while rallying.

Treasuries:
Bouncing along with their sovereign peers, yet not looking as enthused as one would expect.

Energy:
WTI crude and NG racing each other lower into DOE inventory readings at 10:30am ET. Lots of product still being reported. Will see what DOE says.

Metals:
Gold and silver bid while platinum, palladium, and copper sit out

S&P Outlook:
Was way wrong -- the S&P surprised to the downside. Right into the 2103.25-2094.55 zone that I had gotten so tired of typing each day.

The only inkling of the surprise was the possibility of "b" being complete and not needing another rally.

Wave 2 could be close by if 2050-2070 holds. TRIN showed no fear at all yesterday. A bad sign for bulls.

Tuesday -- USD Supply & Demand, M&A, Libor

S&P E-mini Futures:
Modestly higher in choppy trade.

News:
Giddy feelings from gains in China and Russian PMI readings, yet very mixed trade in Asia and Europe thus far. And Japan had to extend the likely time needed to reach 2 percent inflation just six weeks after announcing its new yield curve policy. In other words, it's not working.

Amid this backdrop, here is a must read.

Economic stress as world runs out of dollars. 

When there are far more dollar credits on computer screens around the world than there are actual cash dollars backing them up, there is a supply and demand problem.

When there is a supply and demand problem, the price of whatever is in short supply goes up.

When the cost of dollars goes up, interest rates must adjust accordingly, no matter what the Fed with its puny $4T balance sheet may or may not want.

In a leveraged credit and debt economy, when interest rates go up, things break.

Wonder why we just had the hottest month for M&A in the past 12 years?

Fear.

Fears that rates are about to rise and thus make debt-funded deals more expensive, according to Bloomberg.

Last week Gluskin Sheff's David Rosenberg pointed out that M&A manias like the one we are experiencing "invariably takes place at or near cycle peaks, as companies realize that they can no longer grow their earnings organically," Zero Hedge reported.

Almost half a trillion dollars of mergers and acquisitions were announced globally in October.

More than the previous record of $471 billion . . . back in April 2007.

So if anyone wonders why the regulation deadline for US prime money market funds has come and gone yet Libor rates (which were supposedly going up because of the new regs) are still elevated, there may be another reason worth considering.

FX:
USD weaker. AUD, CAD & EUR higher. Slight Risk On tone. CHF stronger though.

Treasuries:
Prices still under pressure.

Energy:
WTI crude looking decidedly less messy in its decline and looking more impulsive in sympathy with NG. Both looking oversold and in need of at least a bounce.

Metals:
Metals cheering a more complex decline in USD. Silver leading.

S&P Outlook:
Yesterday the Dow, Nasdaq, and S&P each closed below its 2015 record high on a monthly basis.

3rd time for the Dow, 1st time for the Nasdaq, and 1st time for the S&P.

Such action is weighing on the 2016 breakout and increasing the odds that it has been a false one with much lower retests to come.

However probably not much action at least until the Fed meeting concludes on Wednesday at 2pm.

And even then, for the S&P, the 2050-2070 area still stands, and more importantly, so does 1991.68.

Still thinking the market can surprise to the upside until it surprises to the downside.