The collision of global markets and social mood

Friday, February 24, 2017

Friday -- Since '87, Belligerence, Mood Swings & Momentum

S&P E-mini Futures:
Sharply lower though currently finding support.

Social Mood:
Bloomberg noted, "The Dow posted a 10th day of gains, its longest streak of record closes since 1987."

"Since 1987" has a nice ring to it. The market could be setting up for something similar to 1987 if it keeps rising on hopes and dreams.

This morning it seems those reflationary hopes are getting dashed. Commodities got crushed. Europe is blood red.

A UBS strategist commented that "Mnuchin's comments were less belligerently reflationary than they could have been." So that's the world we live in now.

Amazing how fast the market's mood can turn. There are ample news stories today posing as reasons. We don't need to know the "reasons," only the mood itself and when it changes.

These guys should be very careful. Markets can get belligerent, too.

Trump at Brink of His Own Bull Market as Dow Flirts With History

Mnuchin says the stock market is a report card

Pretty sure neither are prepared for an F.

CHF & JPY still showing strength. AUD & CAD stronger, bucking the commodity disappointment, while the buck itself, USD, has a new swing point to worry about: 100.40.

Mega volume yesterday took prices for a moonshot.

Per Bloomberg, sellers in Europe "are now focusing on Italy where the German-Italian 10Y spread rose above 200 bps."

WTI crude down along with heating oil and RBOB (gasoline) while NG continues its bounce.

Most precious metals well higher, but would like to see gold put some more distance away from 1250.

Copper and iron ore got hammered yesterday and while copper is bouncing now, iron ore was still under pressure in China earlier this morning.

S&P Outlook:
Today we should see whether the juicy volume shelf at the 2343 area has any magnetic qualities. Yesterday's break of 2358.34 blew apart the wedge and opened the door to lower prices. So even though we didn't get the "sharp and convincing close below 2362," we're seeing the effects now.

VIX is already up over 6% in the pre-market.

However, the way futures are acting thus far, 2343 may be optimistic for the cash S&P. Futures are already getting support well above the equivalent area. Today's cash action will be important, especially the open, to see how much damage happens to internals.

23.6% Fib support lies at 2344.41. Feels like the market would need an ugly close below 2343 to ward off higher prices in the near-term.

The 38% level isn't until 2329.66. Even that would still keep the market in a bullish configuration.

And don't overlook the fact that the market reached a higher high yesterday on an expansion of volume. Kind of bullish.

The point is that until something "breaks" in a technical sense, momentum can continue at any time.

Mood swings go both ways.

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