The collision of global markets and social mood

Thursday, February 2, 2017

Thursday -- The Facebook, Sentiment, Star Wars Convexity, Greece, USD

S&P E-mini Futures:
Overnight weakness.

1) The Facebook blew doors on earnings yet blew most of its afterhours gains. Heads up. (FB down nearly 2% at the open.)

I keep harping on this, but sooner or later this dog is gonna bite:

Madison Avenue media buyers are notorious herders. If the Facebook ends up in their crosshairs for crappy ads and crappy metrics of dubious veracity, it will go the way of the dodo.

Right now, the Madison Avenue sentiment is building against it.

2) Latest Investors Intelligence Sentiment Survey. Looks pretty giddy.

Source: @Not_Jim_Cramer

3) Probably one of the coolest things I've read about volatility in the past several years:

"Everything you need to know about smart volatility trading you can learn from George Lucas and Star Wars."

Great read.

With apologies to Bananarama, looks like it could be another cruel, cruel summer for Greece.

From Credit Suisse:

"July 17 – or 20 – would be the “hard” deadline for redemption of ECB bonds, as Greece would be, same as in July 2015, unable to repay those amounts without additional support under the EU/IMF programme."

GBP pounded as Carney held rates steady. Ditto with USD as Fed stays put, but not currently looking as grim.

Commodity currencies ripping higher.

But CHF & JPY red yet again.

Regarding USD: open interest has been trending lower for a over a month now as DX futures have declined.

~$10 trillion of global dollar imbalances, as noted by the BIS, cannot be jawboned indefinitely.

One more USD potential, as noted by Raoul Pal via Twitter:

"IF the US border tax will apply to #oil then that could remove $2trn of petrol dollars from the global system, which is incredibly bull for the US dollar. Scarily so. And might well cause a huge global funding crisis. This is potentially very important."

Prices started yesterday by cratering then made most of it back. Marginally higher thus far. Still acting like ABC action.

WTI crude displaying a possible geo-political bid. Chart looks suspect yet prices fail to come in. Warship excursions by China and Russia, Pakistan-India nuclear standoff, and Iran's test firing of a missile -- take your pick.

NG down over 1%.

Precious metals love the Fed's hesitancy. Copper could care less as it probably has its sights on China imbalances.

S&P Outlook:
Price did remain in the middle of the two volume shelves cited yesterday: the 2294.50 area and the 2274 area. Notable is that volume contracted with yesterday's rally.

2267.21 looks like it's a key test level for now. Would look to sell any low-volume test of the 2294 level.

Also, forget that weekly 123.82 swing point on Apple. Seems the better odds at the moment would be to watch for the record highs 134.54 with weekly volume of 420 million shares. That seems like the Big Test (and so far, Apple is coming up short of fuel).

The Facebook has a multi-year Fib extension target at 135.43 that it is approach on lighter volume as well, while last night its CFO flagged 2017 for slower growth.

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