The collision of global markets and social mood

Wednesday, January 18, 2017

Wednesday -- Citi Sleeps, Liquidity, CPI, USD, Choppy Trade

S&P E-Mini Futures:
Slightly energized by pre-market earnings news.

Mixed red in Europe, only FTSE and DAX higher. Perhaps on the heels of City optimism regarding PM May's announcement of a UK Parliamentary Brexit vote and the fact that Deutsche Bank might hold back bonuses on up to 90% of its workforce.

Goldman reported stellar earnings but Citigroup missed on revs.

The latest social mood indication that there's too much central bank liquidity in the world:

Yellen speaks at 3pm ET.

CPI headline: Core CPI jumped 2.1% the fastest since 2011. Slight dent in futures.

Broad USD strength, after slightly exceeding the 1:1 Fib level yesterday. Still a crowded trade, but still hearing it's toast, too.

What is a crowded trade is the $10 trillion USD short that keeps the Bank of International Settlements up at night, probably because they know that there's little the Fed can do if Emerging Markets continue to show stress amid a global shortage of physical dollars.  If this dollar short begins to get covered en masse, it's a problem. Crowded trade or not.

Perhaps the crowd is frontrunning this knowledge.

Bitcoin down over 4% after ripping 6% yesterday.

Prices starting to confirm all those topping tails we've been seeing. Eyes on Friday's minor swing points.

WTI crude and NG down rather well.

Gold and silver trying to buck a red day in metals.

S&P Outlook:
Choppy mess. Looking closely, one finds several deep intraday Fib retracements. These can have a nasty way of appearing on a daily level at some point. And yes, a deep retracement would likely test the volume shelf at the 2050 area, for starters.

The picture brightens if 2272.08 can be exceeded. But even then, a stop is warranted. Yesterday's 2262.81 low being important to hold.

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