The collision of global markets and social mood

Friday, December 16, 2016

Friday -- Quad Witching, Sentiment, China's Failed Treasury Auction

S&P E-mini Futures:
Choppy. Quad Witching today could add volatility.

Another dubious stat for the Trump rally: "The Dow has recorded the biggest five-week jump to greet any new president since 1900."

And another one from BoAML: "'Trump trade' drives ninth biggest weekly rush to stocks."

Sentiment is high but doubts are creeping in. The latest AAII Sentiment Survey shows bulls increased by 1.5% last week as bears increased 5.8%.

Ooops. China’s Finance Ministry Falls Short of Target at Bill Auction

As Bloomberg reported, "the Chinese government failed to meet a debt sale target for the first time in almost 18 months, with some bids falling short of minimum requirements, according to traders required to bid at the auction."

“No one has the time or demand to bid for short-end government bonds,” said Guotai Junan Securities Co. bond analyst Xu Hanfei. “Short-term funding is tight, money-market fund redemptions are ongoing, certificate of issuance rates are rising and short-term liquidity hasn’t eased markedly.”

This from the same government that flipped out when the president-elect took a phone call from the leader of Taiwan. Maybe they should focus on their own communist crap.

Back here, was struck by the following quote by a senior currency strategist at a major German bank. “Interest rate expectations in the U.S. show the Fed has regained most of its credibility and the market is now convinced there will be an aggressive rate-hiking cycle.”

While the latter part may be true regarding an aggressive rate hiking cycle (ironically brought on by the Fed being behind the curve), the Fed has accomplished nothing.

Once again, the market established credibility.

The Fed merely followed the market.

Quiet but for weakness in AUD, CAD, NZD.

Another day, another unconvincing liftoff attempt.

WTI crude bouncing, NG not.

Gold, silver, and platinum, stronger. Copper and palladium not.

S&P Outlook:
Thus far the measured move from the current structure is roughly 2306. There are another six Fib extension targets from 2303-2373.

Unless 2187.44 snaps in an expected violent reversal, it's still a BTFD market.

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