Markets 21 - 25 March 2016

Key Metrics:  

SPX  + 2040 

Oil    @$40 pb

DXY @95

VIX  -14

US10Yr -1.90%

FOMC 'Staying put'
Forecast: Cautious optimism for new market highs.

Last week markets behaved as predicted in our weekly premarket post both before and after the Wednesday FOMC statement which was accommodative due to, according to nine of ten Fed governors, the deflationary energy sector, weak business spending, soft net exports, and risks of global economic instability.

For those, however, still sipping the sauce of monetary policy interventionism I assembled a chart of the Baltic Dry Index (below) to exemplify how impossible it has been for the world's central banks to create demand with debt and inflation. And, yes, we can expect, despite the global downtrend,  more debt, more inflation, and continued shrinking demand unless an Andrew Jackson, or someone like him, becomes President of the United States or head of the European monetary union.

Baltic Dry Index Monthly Chart

This Monday (tomorrow) we will start the trading week looking for pullbacks (selling opportunities) around SPX 2050 - 2055 as low risk entries into the ongoing intermediate uptrend.

Keep in mind that, despite the technical, fundamental, and monetary policy aligning of planets, markets have not resumed the overall, broad market uptrend and will not until breaking through the historical interference between SPX 2060 - 2130.

SPX Weekly: The boundary to pass lined in red

Happy Marketing.

Markets 14 - 18 March 2016

Last Tuesday I said "price action suggests a push trough (SPX) 2000 without retesting 1950." With that move calibrated we can now focus on whether price will break SPX 2110, and resume a broad market uptrend, or get crushed by sellers at 2040 - 2060 and pounded back into bear market territory.

Available technical evidence suggests a struggle (selling opportunities) at  2040 - 2060 for bulls, as bears wait to "prove" their assertions about weak earnings and low single digit GDP growth, but an eventual push through SPX 2110 into new market highs.  

SPX Daily

USD strength, for example, is failing as the DXY looks more poised to test 90 than maintain 96 - 95, assuming there are no abrupt exits from the Euro. In our inflation and debt-based consumer economy US dollar weakness, as demonstrated over the past forty years, boosts stock prices to the detriment of our purchasing power.

DXY Weekly

Accompanying probable US dollar weakness is rising commodity prices. Does the oil chart below look like a picture of weakness to you? If so I'd like to know your reasoning.
 

Oil Monthly

Adding to the bullish outlook is the VIX which, now below 20.00, looks ready to dive deeper into the mid teens.

VIX Daily

Lastly, from the fundamental perspective, there is a perfect storm of uneventful, non-consequential US economic data for the remainder of the month following this Wednesday's predictable FOMC statement. Expect a rosy forecast form a "prepared" FOMC this Wednesday bolstered by positive February Non-farm numbers and ascending risk asset prices.

Happy marketing.

Markets 7 - 11 March 2016

Weeks ago we stated price would test SPX 2000. With that move complete we now shift focus to one of three eventual outcomes; a resumption of the broader market downtrend, a test and rally from 1950, or a push from Monday's close to SPX 2060.

SPX Daily

Evidence from yesterday's price action suggests a push trough 2000, without retesting 1950, to 2040 - 2060 where we can expect a strong showing from sellers.

Be flexible and ready, however, for selling and buying opportunities on your SPX correlated products between 2000 and 1950.

Happy trading.

Market Snapshot Thursday 3 March 2016

Adding strength to our "SPX 2000" theme is the VIX resuming its teen status as the risk averse are dissuaded from insuring falling stock prices.



VIX Daily

The questions now become, will buyers overwhelm sellers at SPX 2000 and 2060, push price into new highs, above 2120, and resume a broad market uptrend?

SPX Daily



Available evidence suggests "yes" assuming risk assets can make peace with their common foes; a stronger US dollar and rising treasury yields.

DXY Daily

US 10 Year (Yield)

Bulls, with the obstacles of SPX 2000 and 2060 to overcome, are not out of the woods yet and can expect a fight from institutions will millions of dollars bet on bear a market.

Happy trading.

Markets 29 Feb - 4 March 2016

We ended last week with optimism for a run at SPX 2000 where we were looking for an early Friday bounce at 1940.

SPX 60M

The issue now is less whether we can participate in the intermediate uptrend to SPX 2000, but whether the current uptrend holds at a level in the vicinity or fails and resumes the broader market and economic downtrend.

SPX 60M

The most compelling argument for a rally and resumption of the intermediate uptrend, if 1930 fails, is SPX 1910 (above chart) as price moving into the 1800s will threaten the upward drive.

Happy trading. 

Markets 26 Feb 16

As the intermediate uptrend continues the broader market has cleared the lane to SPX 2000 where buyers and seller will battle it out for overall trend domination. I am looking sell SPX correlated products at SPX 2000 but, until then, adding to upside entries.

SPX Daily

Expect a challenge to the overall downtrend if SPX 2000 turns out not to be an ambush for buyers. Price closing in on SPX 2130 will hint a resumption of the broad market uptrend.

Happy trading.

Market followup 24 Feb 2016

Although nothing has happened to change the overall downtrend of markets, today provided a massive upside trading opportunity for those with the knowledge to catch it.

S&P Futures 5m 

Nailing moves like this, in the face of overwhelming negative market commentary, truly distinguishes the pros from the majority of industry noise makers.