The collision of global markets and social mood

Friday, February 17, 2017

Friday -- Options Expiration

S&P E-mini Futures:
Falling, along with Europe.

Political front-runner Marine Le Pen continues to shake up the French establishment and its bond market, along with European equities, even in the face of her left-wing opponents joining forces against. Cool.

High-stakes Dutch and French elections could also cause the renewed debt troubles in Greece to be put on the back burner until the last minute (like July, just before it runs out of money again). So Europe could be pretty exciting (and pretty volatile) until then.

Otherwise, it's options expiration today. Probably should keep focused on that instead.

JPY continues to flash red, and USD is messing with AUD & CAD. EUR & GBP weaker.

Bitcoin up 1%.

Big up day yesterday was notable for flying in the face of the status quo, specifically the 83% jump in the Phily Fed. Either the bond market didn't believe it, shrugged it off, or maybe these lopsided short positions are starting to be unwound. Whatever, if there was a case for still higher prices that was it. Strong follow through this morning, too.

Do I think it jeopardizes the potential ABC formation yet? No way.

Regarding interest rates and how entrenched the bond market narrative is, I just heard a NJ trader say that the housing market is slow at his price point and that he thinks the recent rise in rates is bullish for the stock market because real estate is counter-cyclical to stocks.

Where was this guy in 2006?

WTI crude while lower hasn't budged from its high level consolidation. NG bouncing after its long rout.

Gold is not showing as much escape velocity from its recent recovery as one might expect. 1245 seems to be a hurdle. Hearing a ton of bulls lately as well.

Silver has been more forceful, but it too looks like it needs a breather at the 18 area.

Platinum looks the weakest since its 2016 lows, and is resting currently as well, while palladium looks the fiercest since its lows.

Copper is down nearly 1% at the moment and looking as if China is ready to begin teetering again and the Chilean mining strike might soon be resolved.

S&P Outlook:
E-mini futures look like they're forming a falling wedge or perhaps a zig-zag. Both patterns would suggest still lower prices. ES 2332.75 possible.

Until the cash S&P opens, however, it remains to be seen how true price will act in light of current e-mini weakness reflecting a weird day in Europe and the end of a long week for short vol funds with too much negative gamma exposure.

As prices fell yesterday volume increased. A/Ds rolled over yet not remarkably so. Still anything below 2343 could see a test of the 2315-2325 area. The 38% retracement level is 2326.12.

The decline lacks an impulsive look thus far, so it is likely a smaller degree fourth wave correction leading to yet higher prices. Will be watching to see if it retains its corrective look today.

Unless 2338.87 breaks, a triangle is possible leading to higher prices before more of a correction. Would add SPY calls if that appeared to be the case.

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