Macro Bonfire

The Socionomic Implications Of September Vogue: 2017

noreply@blogger.com (Marz Bonfire) — Thu, 24 Aug 2017 18:05:00 +0000

No need for an exhaustive mood report this year.

It's all about the cover.

First consider the iconic July 1942 cover created during the most gruesome war in history which took the lives of over 50,000,000 human beings.

Then consider September 2017.

Whether planned or not -- most likely accidental subtext (unintended, subconscious communication) -- September Vogue 2017 can be summed up in three words.

Sunset Of Liberty

Let us hope that's 100% wrong.

Yet, it's a result of the same methods that forecast the riots in Ferguson, Missouri, the polarization beneath the real-life Hunger Games economy, both dramatic stock market declines of 2014 & 2015, and the longest stock market decline in over 35 years during last year's "Fearless Fall."

What are the implications?

Think of what you cherish yet take for granted as an American.

The freedom to move about or do as you please.

Freedom from physical restraint.

Freedom from arbitrary or despotic control.

Losing such things could feel like Evening in America, a phrase Vogue was kind enough to provide on page 696.

The Sunset Of Liberty could therefore telegraph the rise of authoritarianism, or worse, totalitarianism.

As for the market implications, we're a long way from the 1981 bottom in bonds and the 1982 bottom in stocks.

A long way from Morning In America.

Stocks have risen largely in line with bond prices as yields have shrunk to multi-decade lows.

Real estate values are back to historic highs. As is mortgage debt. And Federal debt. And Federal tax receipts.

Commodities are back to multi-decade lows versus stocks.

September Vogue just announced the end of the cycle is coming soon.

Weirdness With Google -- Was Locked Out

noreply@blogger.com (Marz Bonfire) — Wed, 21 Jun 2017 13:24:00 +0000

Google is acting evil. I've been locked out of the blog for days. The same computer that I log in with each and every day was suddenly not "recognized."

All I needed to do was enter my mobile phone number.

Actually, I think Google already had it. It already knew exactly which phone and model number it was.

Gone was the email recovery option.

No one to call. No place to send an email inquiry.

Just a maize of "help" and "support" topics, none of which was any help at all.

Then, as if by magic, it started working again.

Spooky.

It's probably not over.

It'll probably happen again.

Who knows if I'll even be able to log in again.

So...that's it for me. That's the end of the road with Google and Blogger.

Sadly, the alternatives don't look much better. But they're there.

The weird thing is that not writing out a plan for the past several days has felt strange. Something hasn't felt right. It's more than a habit now. It's become something that I simply feel better doing each day before I enter the fray.

So I'll continue somehow. I just don't know where.

Check Twitter, as that is where I'll post the new blog address when I've figured it out.

Thanks for reading. It's been a long time together.

Sincerely,

Marz Bonfire

Friday -- Quadruple Witching Options Expiration

noreply@blogger.com (Marz Bonfire) — Fri, 16 Jun 2017 13:13:00 +0000

S&P E-mini Futures:
Coming off best overnight levels.

Markets:
Asia was mixed and Europe is all green.

Quad Witching today: all four asset classes expire simultaneously -- stock index futures, stock index options, stock options and single stock futures.

Turns out BoJ's Kuroda was just kidding. That talk of stimulus reduction? Just trial balloons. Stimulus going nowhere, he says. Besides, we're still miles away from out inflation target.

Train wreck in making.

Mood:
Not politics, just an update on the Starbucks/Howard Schultz cycle noted back in December 2016.

Having just reached records highs, Starbucks may have gotten ahead of itself:

Starbucks customer says she was bullied for supporting Trump

Last December Starbucks CEO Howard Schultz announced he was stepping down . . . again. The first time was 2000. He returned in 2008. Another Fibonacci 8-years later, he announced he was leaving again.

Maybe a bottom in 2024?

Friday -- NFP, Peak Caffeine, China Repo Madness, High-Volume Highs

FX:
Skandies and AUD & NZD on the move, stronger. JPY weaker (barely) on BoJ/Kuroda but CHF still flashing red.

Treasuries:
Short-end implosion continues.

Energy:
WTI crude looking more bouncy this morning. NG consolidating a two-day rally.

Metals:
Green finally.

S&P Outlook:
Possible scenario for SPX with not one, but two clean stops. Reaching "5" later on would not be THE top but merely a tradeable top of some significance, possibly 100+ down.

Thursday -- The Day After

noreply@blogger.com (Marz Bonfire) — Thu, 15 Jun 2017 12:51:00 +0000

S&P E-mini Futures:
Down hard, yet a bit sloppy.

Markets:
Asia and Europe red. Rough action, sharply lower.

Reality sunk in that that was no Dovish Hike. That was a whole lotta detail about draining $50 billion per month from the punchbowl.

Hearing and seeing "policy error" getting thrown around suddenly. A little late perhaps.

Policy error started back in 2008 with the bailouts and continued as the Fed attempted to "paper over" a debt problem with endless liquidity.

Debt can only be fixed by less debt.

So now we have the Fed, the BoE, BoJ, and ECB openly discussing balance sheet reduction and stimulus removal. Whether it's for real or just jawboning is not yet clear. But the liquidity pump may be slowing, and markets will need to sink or swim.

Mood:
Probably belongs here in Mood even though it's FX:

81% Euro bulls per the Daily Sentiment Index means very few dollar bulls, and it shows.

FX:
USD shot straight up after the Fed decision, statement, and press conference, all of which erased the Dovish Hike fantasy.

Widespread dollar strength continues against all majors.

Treasuries:
Yield curve (2s vs 10s) flattened considerably, along with 2s vs 30s. If it continues, things could get bumpy.

Energy:
WTI crude possibly gunning for its May swing low (43.76) but could turn at any time. NG showing a bit more grit, up slightly.

Metals:
Red and messy.

S&P Outlook:
E-mini futures have come off hard from yesterday's double top, but they haven't broken last Friday's swing point.

That level is 2412.50.

On the NQ it's 5643.25.

The S&P cash has a pattern which suggests higher prices may still be possible unless 2419.97 fails.

If it does, the gap at 2411.80 may become the next target.

The Dow laughed in my face yesterday, laughing off Janet & Co. as well, and closing close to its highs.

I may be wrong about it being the weak link, and will watch it carefully as a leading indicator. It could hold the clue to equities as a whole if it continues to hold up.

Wednesday -- Fed Day

noreply@blogger.com (Marz Bonfire) — Wed, 14 Jun 2017 13:25:00 +0000

S&P E-mini Futures:
Modestly higher overnight, challenging last Friday's best levels.

Markets:
Asia mixed with China down .73%. Europe green.

Fed decision 2pm with a news conference following at 2:30pm.

Mood:
Death Of Equities, 2017-style.

Death of the human investor: Just 10% of trading is regular stock picking

This is slowly but surely making me want to position for the return of volatility in a big way.

FX:
Wild action. AUD up over 1%. CAD smashed its April swing point finally. EUR & GBP up well. USD on the ropes. But JPY & CHF sending a warning signal.

Treasuries:
Ripping pre-Fed.

Energy:
Both WTI crude and NG down currently.

Metals:
Green ex-copper.

S&P Outlook:
Turns out this rough guide from last week wasn't so bad. The actual dip was a bit more shallow than depicted, so maybe the rally will be a bit muted as well.

With the Dow's new high yesterday, the SPX may be set for one as well. But FAANG action left a lot to be desired, thus NDX may have some trubs.

The way treasuries are moving though -- ripping higher currently -- maybe Janet isn't going to hike at all.

The weak link is the Dow in my opinion, and it's looking a bit shaky pre-market. But unless the S&P decides to bail, maybe it can muddle through. It did reach the 2440 level and does look like a small head 'n' shoulders.

NDX looks the weakest and has the most to prove. 5800-5850 is still possible. But it would still look better with a new low in "C" down.

Feeling the Fed is getting increasingly desperate to look "in control" so anything can happen.

Tuesday -- Weird Scenes From The Mood Peak

noreply@blogger.com (Marz Bonfire) — Tue, 13 Jun 2017 13:23:00 +0000

S&P E-mini Futures:
Modestly higher.

Markets:
Asia and Europe mostly green. "The tech rout is over." Haha.

Mood:
Rarely is the crowd short from the top.

Weird scenes from the mood peak:

Meanwhile, out in the Hamptons: "driven" by excess.

San Francisco cashing-in on tech again.

This Bizarre Italian Supercar Has A Built-In Fish Tank

A world awash in too much liquidity . . . eventually no one has any clue what to do with it.

FX:
CAD having issues with its April swing point? If so, it's the sort of thing that could make it go Loonie the other way.

GBP having a good day.

USD possibly setting up for a bounce continuation.

Treasuries:
Still a trend toward flattening, not good.

Also, yet more stuff you don't want to hear from Japan:

"10yr JGBs were lower amid an improvement in risk sentiment throughout the session, while today's 20yr auction later also failed to spur demand with the results mixed in which the accepted prices declined from prior."

Energy:
WTI crude down but trying to bounce, NG up but off early morning best levels.

Metals:
Red.

S&P Outlook:
The tech wreck is "over." It's now called "crash-lite." To me, it's just the return of a real market. One that expands and contracts like an actual person rather than an algorithmic imitation.

Did the tech wreck even start? Maybe a correction did. Hard to say. So far it feels like "surprising disappointment."

I do want to use a bounce to position for another probe lower in NDX, and be on guard for a possible new high in Dow, SPX, or RUT before lower prices.

Holding some remaining VIX 11 calls from last Thursday which I still think were a better deal than the NDX puts, even if the puts would have paid for my entire weekend up and back plus drinks for my entire class (small school, haha).

Current action feels like an ABC in NDX and perhaps a fake out in S&P, but either way, probably higher before lower.

Maybe a deep retracement in NDX to the 5800 level or perhaps even 5850.

SPX 2440 area could provide a juicy head and shoulders for everyone to get excited about.

Monday -- Back Home Barely

noreply@blogger.com (Marz Bonfire) — Mon, 12 Jun 2017 12:19:00 +0000

Miss one day of work Friday, market tanks. Flight home from Boston delayed until midnight. 4am arrival. 1.5 hour nap in car. Trip to supermarket on way home. Shower. Futures crater overnight after a flat open Sunday. Bloomberg running helpful story... Tech Selloff Spreads: Why tech stocks are taking a tumble. Maybe they were overvalued? Asia and Europe decline. Treasuries decline, yields rise. Energy rallies.

Doubtful the market decides its fate in one day -- a summer Monday no less -- unless NQ 5557 along with ES 2341.75. Got VIX from Thursday. Going to sleep until the afternoon session. Good luck.

Thursday -- Eye On The Ball: The BoJ

noreply@blogger.com (Marz Bonfire) — Thu, 08 Jun 2017 13:03:00 +0000

Note:
No blog Friday. Heading back to the States for Alumni Weekend and High School reunion.

S&P E-mini Futures:
No new high overnight, while NQs made one.

Markets:
Not Comey, not the UK elections, not the ECB (which moments ago dropped guidance on rate cuts in a step toward exiting stimulus) -- the real news is from the BoJ:

"The yen rose and Japanese bonds fell as the central bank was said to be re-calibrating its communications to acknowledge it’s thinking about how to handle a withdrawal from monetary stimulus" -- Bloomberg

This is not about success by the BoJ to conquer deflation. It's acknowledgement of failure.

As in they can't afford to keep going.

As in look out below when the markets figure it out.

Rates are moving higher around the world so far this morning.

Mood:
Taking their cues from a supermodel (Giselle) a while back, British Football players demand to be paid in Euros

Wonder if it has anything to do with weak GBP sentiment and sky-high EUR sentiment -- currently at 89% bulls.

Short EURGBP may be in order.

FX:
JPY reversed and weakened considerably after the BoJ news hit, a sign of disbelief possibly. Or a sign that the current market momentum can last for a while longer, one that I agree with.

Treasuries:
Prices red. Slight buying tails appearing, however.

10-year JGBs "sold off aggressively" on the BoJ story, never a good sign.

Energy:
WTI crude faceplanted yesterday after DoE data showed a huge build in inventories.

Guess we know not to trust API, which only a day before reported a draw.

WTI and NG both down. Maybe crude can bottom around 45.

Metals:
Gold and platinum lower. Copper and palladium higher. Silver trying to turn from neg to pos.

S&P Outlook:
Both the SPX and NDX kept the pressure on higher prices, with the NDX quickly negating the possible impulse down yesterday.

This should at least target the 2440 and 5900 areas respectively.

Hope it doesn't happen Friday when I'll be away from the screens.

Option shopping:

1) A 15-day .74 delta QQQ put asking 4.62

2) A 19-day .75 delta VIX call asking 1.55

I think I see the better deal.

Might get some for Friday, just in case, if VIX can get back under 10.

Even if there's a market rally Friday, VIX might stay where it is or even firm up.

Wednesday -- Pinterest's 24X Multiple

noreply@blogger.com (Marz Bonfire) — Wed, 07 Jun 2017 13:06:00 +0000

S&P E-mini Futures:
Flat.

Markets:
Asia was mixed, and Europe mostly green ex-UK.

Lots o' monetary & political drama before the week is done.

Mood:
Still pretty frothy in Silicon Valley.

Pinterest Raises $150 Million at 2015 Share Price

The pretty photo company is now valued at $12 billion on revenues of "targeted" $500 million.

A pretty euphoric multiple.

FX:
AUD & SEK the big movers thus far, stronger and weaker respectively.

USD firming.

Treasuries:
Long end still outperforming short end. Not a good trend.

Energy:
WTI crude down, even on API figures showing a draw. NG rallying.

Metals:
Red here across the board.

S&P Outlook:
Part 1 of yesterday's scenario may have played out.

Of concern is the NDX which may be working on an impulse down, raising the odds of a trend change. But note, in the pre-market, the NQ contract has just about completed a wave-1 overlap.

Tuesday -- Super Thursday, JGBs, Lace For Men

noreply@blogger.com (Marz Bonfire) — Tue, 06 Jun 2017 13:25:00 +0000

S&P E-mini Futures:
Small, choppy breakdown from yesterday's consolidation thus far.

Markets:
Asia mixed, Europe red.

Bloomberg is touting "Super Thursday" when the ECB meeting, the UK elections (which are looking stranger and stranger for PM May), and former FBI director Comey's congressional testimony all take place.

I'd rather watch the yen and 10yr & 30yr JGBs which are acting weird along with a 1% decline in the Nikkei.

Mood:
Lace for men. Apparently it's an LA thing.

It's also the latest example just how weird things get when liquidity is out of control.

Who you lookin' at, tough guy

It's from Hologram City.

FX:
JPY jumping by nearly 1%.

"10yr JGBs were relatively flat with only minimal gains seen amid a cautious risk tone, while the 30yr JGB auction also failed to spur firm demand despite the b/c printing its highest in 8 months of 3.63."

Failed to spur demand . . . if it continues, it's as close to Doomsday as you can get in today's fragile world.

Treasuries:
2s &5s looking a lot shakier vs 10s & 30s lately, meaning the curve is tilting toward inversion, meaning keep your eye on the ball.

Energy:
WTI crude down slightly while NG rips.

Metals:
Copper red while the shiny stuff rips.

S&P Outlook:
Very rough plan for next few days.

Monday -- Late Post

noreply@blogger.com (Marz Bonfire) — Mon, 05 Jun 2017 14:33:00 +0000

Errands, man. Step out before the bell for some greeting cards and gasoline and it's amazing how time just gets vaporized here. Gave up trying to make it back before the open and went out to breakfast at a new place I've had my eye on. Had a couple empanadas argentinas. Muy rico.

Another weak decline has been bought, yet the upside is getting weaker too. Perhaps a near-term peak is coming soon.

VIX, A/Ds, ticks, TRIN -- all lining up as price completes the subdivisions of the five-wave rally.

This is what I was thinking Friday afternoon. Still am. SPX probably much the same as well.

Friday -- Weak Jobs Mean More Fed?

noreply@blogger.com (Marz Bonfire) — Fri, 02 Jun 2017 13:20:00 +0000

S&P E-mini Futures:
Higher, though off best levels of new pre-market high.

Markets:
Green across Asia and Europe. Energy & metals getting slammed, but could be a buy setting up in oil.

Possibly the weak NFP has something to do with Wall Street's giddy feeling vs the reality in commodities:

138K new jobs vs 182K estimated and prior 211K.

Weak jobs mean more Fed -- the last thing we need.

Mood:
The latest tear-jerker from the press:

Puerto Rican Exodus Is Speeding the Island’s Economic Collapse

Fiscal mismanagement and corruption is speeding the collapse of the PR government while the US gets blamed.

Puerto Rico gets $6.5 billion in assistance from the US each year.

The power utility monopoly, broke. The water monopoly, broke. The pension system, broke. The highways, crumbling. The malls, filled.

"The population drop is astonishing."

The traffic is astonishing. The crowds at the mall are astonishing. The number of new restaurants is astonishing. The amount of lines for just about anything, even gasoline, is astonishing.

I've waited for an hour just to deposit a check at a bank.

Maybe the writers from Bloomberg and The New York Times could visit the island before they simply print what is handed to them by public relations firms.

Elsewhere, this story has a vague '80s feel to it:

Chinese Firm Buys 253-Year-Old French Crystal Maker Baccarat

Recall the Japanese practically bought half of NYC just before the Nikkei imploded. Will be interesting to watch how China behaves.

FX:
More USD weakness on NFP. More CHF & JPY strength for possible macro warning.

Treasuries:
Looking positive post-NFP.

Energy:
WTI crude slammed. Brent slammed. Gasoline slammed. Heating oil slammed. NG higher.

Metals:
Copper the lone ranger, lower. Shiny stuff green post-NFP.

S&P Outlook:
Yesterday had a weird feel to it. It could have been the last gasp of some "b" wave sucker play or, based on several internals which were quite strong, it could have been a small wave 3 in a rising wedge that would have bearish consequences in a couple weeks or so.

Thursday -- Uber, Airbnb, Peak Passive Investing

noreply@blogger.com (Marz Bonfire) — Thu, 01 Jun 2017 13:06:00 +0000

S&P E-mini Futures:
At upper end of choppy holding pattern overnight.

Markets:
Asia and Europe mixed to mostly green. Rates higher around the world.

Mood:
Sadly this story was presented as a good thing:

Soon more people will be driving Ubers and renting out Airbnbs than working in finance

(Ironically, I just rented an Airbnb. While viewing a listing, the site kept telling me to "go ahead and book, you won't be charged." Weird. Then when I did book, the price magically jumped 25% and, yes, my card was charged immediately.

Launched in San Francisco, but now run in Dublin, Ireland. No phone number. Just a website. Doubtful I'll be using this company much more.)

Peak Passive Investing:

An Amazon engineer is letting thousands of Twitch users play the stock market with $50,000 of his own money

Hilarious quotes and tidbits:

"After the first day, I'm a lot more bullish than I already was" about the game, the engineer says.

"Players have chosen for him 'a reasonable, diversified portfolio' that includes hot tech stocks like AMD, Tesla, and Apple."

"He's really in it for the love of the game."

"If a lot of these [stocks] start crashing tomorrow, then things could get dicey," says the engineer.

FX:
USD strength. JPY weakness.

Treasuries:
Prices heard Fed's Powell loud and clear: the Fed wants to reduce its balance sheet by half. The good thing is it's not different than what has already been reported previously.

Energy:
WTI crude and NG rallying.

Metals:
Gold, silver, and platinum down, because who needs shiny metals when the Fed might cut its balance sheet. Copper and quasi-shiny, quasi-industrial palladium higher.

S&P Outlook:
Here's the way things looked right after the bell yesterday in the NDX:

Still think there is a possible flush in store down to around 5740-5750 in "4" before a zoom to "5." Then a bigger flush.

Both NDX and SPX closed at 78.6% retracements, which raised the odds of the above scenario.

There is no reason why a more complicated pattern such as a triangle can't materialize, but all it means to me is to keep my powder dry a bit longer.

Materially below 5740, especially on a closing basis would have me looking short.

Bought QQQ 141 puts at the close, just in case. Would not want to miss a trip to 5300.

Looking for above 2418.71 in SPX. Below 2400 probably negates this idea.

Wednesday -- Trump Pulls Out, USDCNH Mess, Crude Mess, NQ Plays Solo

noreply@blogger.com (Marz Bonfire) — Wed, 31 May 2017 13:30:00 +0000

S&P E-mini Futures:
Modestly higher, but still below recent high.

Markets:
Asia mixed once again with Europe all green. Month-end window dressing.

Mood:
Not much in mood land other than Trump pulls out of Paris.

"That's hot."

FX:
Today's big mover is the Chinese offshore yuan (CNH). Notably stronger.

Per Bloomberg, CNH jumped the most in four months as funding costs exploded amid speculation policy makers were supporting the currency in the wake of a surprise sovereign rating downgrade.

Beijing hiked the overnight lending rate sharply, intent on burning shorts. Seems to be succeeding.

Treasuries:
Three-wave structures inside of three-wave structures. Messy.

Energy:
WTI crude cratered after its three-wave rally. Interested in the 46.50 area for longs. NG down in choppy trade.

Metals:
Silver red while gold, platinum, palladium, and copper rally.

S&P Outlook:
All the action appear to be in the NQ & NDX.

NQs are currently gunning for another five-wave rally, the end of which may be a prime spot to try shorts. Maybe around the 5840-5880 area. Maybe even 6000 could line up.

Seems the S&P may be taking its cues from NDX. Dow still lags. As does Russell.

NDX does not make me bullish as it probes the ether virtually alone.

Monday -- Greece, Italy, The Honeymoon Period & A Yacht-Inspired Rolls-Royce

noreply@blogger.com (Marz Bonfire) — Tue, 30 May 2017 12:41:00 +0000

S&P E-mini Futures:
High-level consolidation amid choppy trade slightly lower.

Markets:
Mostly green last night in Asia. Mostly red today in Europe as Greece hinted it might skip a debt payment and Italy edges closer to early elections (which is causing a steady widening of Italian and German yield spreads).

On Bloomberg, St. Louis Fed President James Bullard said that at some point "the honeymoon period will come to an end" and Washington will need to deliver on the policy expectations that have driven the stock market higher.

San Francisco Fed President John Williams sees a “much smaller” Fed balance sheet in about five years at the end of an unwinding process that could start with a “baby step” later this year.

Fedspeak is getting more and more explicit.

Mood:
Mood is getting more and more ebullient.

13-MILLION-DOLLAR YACHT-INSPIRED ROLLS-ROYCE

TO BE MOST EXPENSIVE NEW CAR EVER

Stunning £10M yacht-inspired Rolls-Royce Sweptail sails into record books

as most expensive new car ever

True, it's a one-off at this point. But the fact that the unnamed, ultra-wealthy customer commissioned the project to echo luxury yachts of the 20s and 30s speaks volumes about where we're at on the mood curve. And it's feeling more and more like 1999 and 1929 all in one.

FX:
Another day of CHF & JPY strength.

Treasuries:
Rollover to September contract. Prices slightly higher on the day but down vs June.

Energy:
WTI crude as bounced in three waves thus far from its most recent decline and is currently down for the session. NG hammered nearly 4% lower.

Metals:
Palladium higher amid a red metals tape.

S&P Outlook:
Want to let things settle in after the long weekend. No sudden moves early on.

Choppy consolidation in E-minis leaves the door open to new highs. If so, the high might be sold if internals keep up their current weakness.

SPX 2400 and NDX 5720 would likely be levels that would be needed to fail in order to increase the chance of a considerable down move (actually, this morning's E-mini low of 2407.75 would be a warning shot).

Friday -- More "Different This Time", Pre-Holiday Bias, VIX June Swoon

noreply@blogger.com (Marz Bonfire) — Fri, 26 May 2017 13:25:00 +0000

S&P E-mini Futures:
Down in what appears to be a three-wave pullback. Thus corrective.

Markets:
Asia mixed, Europe mostly red.

Bitcoin and Ethereum have bounced after yesterday's roller coaster rides that saw historic highs couple with sharp intraday reversals of 20%. It could get wilder.

All in all, it would appear the new moon propensity for change struck again

Mood:
"It's different this time."

Source: Marketwatch.com

FX:
JPY bursting with strength. Might not be as good as it sounds.

GBP notably weaker on UK political concerns that the upcoming snap elections do not sound as favorable to PM May as previously thought.

Treasuries:
Slight bounce mode.

Energy:
WTI crude trying to bounce after a five-wave, 5% decline from 52. NG has gapped higher but looking a bit messy.

Metals:
Copper sitting out today's shiny rally.

S&P Outlook:
One would think pre-holiday positive bias would help the markets end the week on a high note, but they already feel a bit heady. Today could be a low volume day with many bugging out early, so am not placing a high degree of importance on price action up or down -- unless volume expands.

Breadth and internal volume metrics continue to erode.

Here are a couple potential counts:

Given the internals, am on guard for the first potential which is a sharp decline to the 2300 area.

If price can stay elevated, perhaps a shallow decline to 4 with another even weaker rally up to 5.

VIX is slowly setting up for a move. Note the contraction starting in its 2-standard deviation bands. This could suggest a June Swoon in equities.

Thursday -- The Hint Inside The Fed Minutes

noreply@blogger.com (Marz Bonfire) — Thu, 25 May 2017 13:18:00 +0000

S&P E-mini Futures:
Modestly higher, off its best levels

Markets:
Huge breakout last night around 10pm, possibly as a certain paragraph in the Fed minutes was finally realized:

"...asset valuation pressures in some markets were notable... vulnerabilities appeared to have increased for asset valuation pressures.. a sharp decline in such valuations could pose risks to financial stability..."

Other than a great example of the Fed speaking out of both sides of its mouth, this seems to be a big hint: "we're ready to step on the gas again."

In today's world, it seems any risk to "financial stability" is cause for the Fed to save the day, the realization of which might have been the delayed interpretation of the machines last night.

Or maybe its today's New Moon.

More than half of the breakout was taken back in the ensuing hours. Asia ended green, yet Europe has had a shaky start and remains mostly red.

Mood:
Bitcoin was up another 9% yesterday, and is up yet another 10% today thus far, above 2700. So for now, this behavior seems like runaway social mood at play. Unless China is about to implode.

Got a text from a friend yesterday who has never traded anything in his life. Has now tripled his money in Ethereum. Adamant it's not a bubble, and was not amused when I suggested that he sell enough to take his principal out.

He can pay for lunch next time.

Speaking of China, an epic mood cue has appeared.

The 5 ‘Handsome Girls’ Trying to Be China’s Biggest Boy Band

Maybe we won't get a bubble gum pop band to mark the top this time, a la Hanson. But maybe there's one in China, and it's marking a major mood shift.

According to socionomics, "in bear markets, sexual stereotypes fall from favor and society embraces a greater variety of gender roles and identities."

Girl boy bands fit the bill, and might suggest to approach the Shanghai Composite with caution.

FX:
USD still hanging in there. CAD had a strong day yesterday but is giving back some, along with several other majors.

Treasuries:
Volume continues to explode as price rallies, keeping the pressure on for the larger rally pattern. But caution will creep in once the pattern matures, as it would likely suggest a sharp decline.

Energy:
WTI crude rolling over from recent rally. NG holding and adding to gains.

Metals:
Modest gains here across the board.

S&P Outlook:
Love this chart by John Hussman at Hussman Funds which show that over valuation is far more widespread this time vs 2000 and 2007.

You can fool P/E ratios, but you can't fool revenues.

Source: John Hussman, Hussman Funds

In Elliott terms, that five-wave advance from 2009 is a beauty and probably very close to concluding.

Five waves have yet to form in the actual price of the S&P, but for now the trend remains up and dips are likely buying opportunities as long as levels and risk are respected.

For instance, if the S&P is in a high level consolidation or a triangle, 2300 could get tested easily. It would likely be scary, but it would likely be a good buy.

Likewise, prices could grind higher and form the final subwaves of a larger third wave. My strategy then would be to sell the completed pattern for a fourth-wave pullback. That could be up around 2500.

In between, it's not much other than scalping the E-mini to stay sharp and earn some lunch money.

I've held SSO against SQQQ for a while and the delta of SSO has helped vs SQQQ, but looking for leg out soon.

Wednesday -- Moody's Downgrades China, Doggie Architecture

noreply@blogger.com (Marz Bonfire) — Wed, 24 May 2017 12:54:00 +0000

S&P E-mini Futures:
Flat, yet a possible flat top rising wedge in play since early Tuesday. They usually resolve higher, yet can cave in quickly.

Markets:
Moody's downgraded China's credit rating for the first time since 1989. Global markets are in such as state of euphoria they could care less. Asia was mostly green, and Europe is mixed but mostly red, but not materially so.

This is on the heels of a Bloomberg report that flagged China’s deleveraging efforts have pushed the cost of borrowing beyond the rate which banks charge customers for loans for the first time in history.

Bitcoin up another 4%.

Mood:
I thought doggie day spas were crazy. Now there's doggie architecture.

Build it, and the canine will come

A doggie real estate bubble can't be far behind.

FX:
USD bounce mode. Quiet thus far elsewhere.

Treasuries:
Trying to rally.

Energy:
WTI crude and NG lower.

Metals:
Red.

S&P Outlook:
Potential for a pop 'n' drop in ES futures could either bring new record highs in the S&P cash or not. But the potential for reversal is high.

TRIN has been signaling caution for two days. A/Ds have been easing. Yet the S&P seems content to follow the NDX higher.

Would much rather act later than guess wrong at this point. Especially ahead of Fed minutes. Have to head into San Juan to replace my phone anyway, which is so hot it feels as if it's ready to explode at any time. No more iPhone ever. Buying a cheapo with a removable battery.

Tuesday -- Mood Outa This World, Therein Lies The Risk

noreply@blogger.com (Marz Bonfire) — Tue, 23 May 2017 13:21:00 +0000

S&P E-mini Futures:
Filled 2397.50 gap. Firm.

Markets:
Asia mostly red last night while Europe is all green thus far.

China's yield curve inverted several days ago. Now it's getting worse. The spread between 3s and 10s is the most negative ever. And there is inversion between 3s and 5s and 7s to 10s. Double the trouble.

This is causing considerable stress amid China's $4.2 trillion Wealth Management Product industry as China tries to reign in liquidity.

All in the name of making its markets less risky.

Therein lies the risk.

Mood:
Peak positive mood . . . outa this world.

Jeff Bezos lays out his vision for city on the moon, complete with robots

'Nuff said.

FX:
EUR six month high. Slight sell off on stellar French and German PMI figures which raise the odds of an ECB hike.

USD still acting firmer than news would suggest. CHF & JPY warning once again, stronger.

Bitcoin almost hit 2300 overnight. Ethereum up over 9%.

Treasuries:
Prices firm, digesting recent gains.

Energy:
WTI crude's three-wave pullback from 51.43 thus far suggests higher prices. NG lower.

Sell half of the Strategic Petroleum Reserve? Why?

Metals:
Gold and copper red. Silver, platinum, and palladium green.

S&P Outlook:
S&P stalled at yet another significant Fib level, the 78.6% retracement. Thus the odds of a high level triangle are much higher now.

Regardless whether a triangle or an ABC materialize, still leaning toward buying dips until new highs.

Big news day:

US Manufacturing PMI
New Home Sales
Richmond Fed Manufacturing Index

Three Fed speeches: Kashkari, Kashkari again, then Harker at 5pm.

Fed minutes tomorrow.

Monday -- Fed Damage Control?

noreply@blogger.com (Marz Bonfire) — Mon, 22 May 2017 13:06:00 +0000

S&P E-mini Futures:
Flat in chop.

Markets:
Mixed in Asia and Europe. Higher rates around the world thus far.

The latest Federal Reserve data noted a worsening of C&I loan growth contraction, with another 50% decline over the past two months.

Commercial and industrial loans are kind of a big deal for the economy, and we're back to the lowest growth rate since May 2011.

Each time C&I loan has peaked, a recession has followed.

A sharp rebound is needed. Perhaps that's why there are four Fed speakers today:
Harker, Kashkari, Brainard, and Evans.

Damage control?

Mood:
Someone please locate the massive pent-up demand for self-driving cars. Otherwise it's yet another symbol of mood gone mad. Seeing a lot of ink about how inevitable it is.

Speaking of mad, Bitcoin blew the top off 2000, up another 5% and closing in on 2200.

Madness in da House, too:

H.R.2366 - Discharge Student Loans in Bankruptcy Act of 2017

$1.4 trillion. Poof.

FX:
USD could be close to firming. JPY weakening. USDCAD still taking its time.

EUR ripfest higher continues.

Treasuries:
Starting the new week with declining prices, except 30s.

Energy:
WTI crude and NG higher together once again, though crude may have reversed from 51.43.

Metals:
Gold and silver higher. Platinum, palladium, and copper red.

S&P Outlook:
Thursday the S&P was repelled from its 38% retracement. Friday it recovered but was eventually repelled by the 61.8% retracement later in the day.

Thus we're at an important juncture. If the S&P can rally a bit higher, it would raise the odds of a triangle or perhaps even an impulse to new highs.

If it rolls over, the 2335 area could be an ABC target. Would be a buyer there.

Friday -- Bitcoin's World, SPX ABC

noreply@blogger.com (Marz Bonfire) — Fri, 19 May 2017 13:24:00 +0000

S&P E-mini Futures:
Continued bounce mode.

Markets:
Most green in Asia (Ex-OZ & Singapore). Europe green.

Mood:
Not seeing many social mood cues today other than positive mood in Europe.

Bitcoin up another 3% into the 1900s. Still unsure if it marks animal spirits or banking stress. Seems to be entering a world of its own where nothing matters other than its own momentum.

FX:
Another rough morning for USD, but possible buying opportunity.

CHF & JPY still flashing red.

Treasuries:
Prices digesting recent rips.

Energy:
WTI crude and NG continue to ride the latest boost, both up over 1%.

Metals:
Weird action as a group. Gold & palladium flat to +/-. Silver, platinum, and copper showing relative strength to the upside.

S&P Outlook:
All the tell tales of an ABC thus far.

Thursday -- VIX & Markets Wake Up, Classic Car Prices, CAD, NQ

noreply@blogger.com (Marz Bonfire) — Thu, 18 May 2017 13:00:00 +0000

S&P E-mini Futures:
Slightly down, but seems to be in healing mode thus far.

Markets:
Blood red across Asia and Europe.

Perhaps that one-day 46% gain can lay to rest fears of VIX being manipulated into oblivion by AI algos and central bank trading bunkers.

Excess liquidity naturally suppresses volatility because it makes assets prices rise and no one "needs" insurance.

Until they do.

Mood:
Recall the guy who recently called for a "life changing" rally.

He commented yesterday, "Such a strange thing to see the S&P 500 make a new all-time high yesterday and break below its 50-day today."

That's what happens when markets wake up and get real. Too much complacency leads to too much fear. Too much yang leads too too much yin. Hoping for much more two-sided market action.

At this juncture, just hope it's a warning.

Like this one:

Source: Wolf Richter, Wolf Street

Using only the data shown, we could be experiencing the "surprising disappointment" of a 4th-wave correction before a manic drive to new highs. Hard to say if it's a peak or not without seeing more data.

From Marketwatch.com: “The global asset class of collector cars ... is quietly but persistently and very unenjoyably experiencing a downturn that parallels and in some aspects already exceeds the one during the financial crisis,” Wolf Street's Wolf Richter noted.

"And here’s why that’s important. Classic car prices move similarly to other assets, such as equities and real estate. The Hagerty index peaked and then plunged in April 2008, a few months before U.S. stocks suffered the biggest crash in decades, suggesting it’s an early indicator of what could be in store for other asset classes."

A cool socionometer.

FX:
CAD action not suggestive of continued USD decline last few days. USD also firmer today vs EUR, CNH, DKK, NOK, MXN, and SEK.

Treasuries:
High volume ripfest yesterday. Still not out of the woods though. Yields still in danger of increasing inconveniently.

Energy:
WTI crude down over 1% while NG rallies over 1%.

Metals:
More solid red -- gold, silver, platinum, palladium, and copper.

S&P Outlook:
Beautiful 5-wave structure in NQs. Perhaps a bounce to 5600-5650? If not, then much lower.

If correct, perhaps A of an ABC correction inside a large 4th wave. This would line up with Dow and S&P.

In other words, this chart probably wrong.

Probably not

Maybe something like this.

Trader's market

Wednesday -- The New New Economy: Different This Time, All Over Again

noreply@blogger.com (Marz Bonfire) — Wed, 17 May 2017 12:35:00 +0000

S&P E-mini Futures:
Down sharply, but off their worst levels.

Markets:
Asia and Europe red. India green. Metals and commodities up on USD breakdown, and VIX liking equity turmoil.

For the fifth time in the past few months, the Facebook has acknowledged either overstating or understating ad metrics.

According to the WSJ, the Facebook is issuing refunds to some advertisers after discovering a bug leading it to overstate clicks on the advertisers' websites which were mistakenly registered as advertiser website clicks.

Media buyers have jumped on the social media bandwagon because it's hot. At some point, that perception will change, and so will the fortunes of these companies.

Mood:
I could not believe my eyes when I read this. Then I realized the writer was serious (I think):

American Gods

Our belief in the new thing...

Our new beliefs...

A new Pantheon...

Our new Gods...

Wasn't this already written about the New Economy in 1999?

Is it really different this time, all over again?

FX:
USD index broke a key level this morning, 97.94, and has opened the door to some bad scenarios.

CHF & JPY strength continues to be a red flag.

Treasuries:
Bid.

Energy:
WTI crude and NG up in unison.

Metals:
Gold, silver, and platinum higher. Copper and palladium lower.

S&P Outlook:
Posted this chart late yesterday.

Here's a different version even though they both suggest similar things.

Got stopped on some QQQ puts yesterday. Will wait for a clearer tell.

Tuesday -- Darkest Before Dawn

noreply@blogger.com (Marz Bonfire) — Tue, 16 May 2017 13:17:00 +0000

S&P E-mini Futures:
Overnight levitation to new highs.

Markets:
NG and grains not so clever thus far while metals & heating oil perk up.

Asia and Europe slightly mixed.

Perhaps Xi's Big Belt speech calmed some nerves. Or perhaps animal spirits are fading. But Bitcoin remains an inconclusive tell around 1700.

Mood:
According to a CIO interviewed by Marketwatch.com, "use of the ’bubble’ label further degrades a term that’s already lost most of its meaning,” he says.

Daylight also loses its meaning . . . right around 4am.

FX:
Supposedly the USD is "puking its guts out" but I see a marginal new low in a falling wedge which could have bullish ramifications if it can claw back above 98.54. USDCAD still hesitant to break.

Also seeing EUR rallying into resistance and CHF & JPY stronger. Not the most narrative-supporting mix.

Treasuries:
Prices down slightly. Odd action if USD was toast.

Energy:
WTI crude rally continues. NG down again.

Metals:
Good bids here.

S&P Outlook:
Daily NYSE A/D line remains strong while the NASDAQ A/D is diverging negatively and remains in a down trend since 2015.

Many seem to be betting on a breakout from current levels. I don't see it yet. Perhaps a gap 'n' crap today from new highs.

Sentiment is high.

Whether a new rally is dawning, or a new direction, only the market truly knows. But anything below 2381.74 might be a big tell.

Monday -- FX & Commodity Ripfest, Xi's Rebuff, Premium Coolers

noreply@blogger.com (Marz Bonfire) — Mon, 15 May 2017 13:27:00 +0000

S&P E-mini Futures:
Chop chop.

Markets:
Commodity ripfest brought to you by a weaker USD. Asia mostly green. Europe mixed.

Chinese President Xi Jinping had a small problem when presenting his "One Belt, One Road" globalisation initiative: not even the EU wanted to sign on.

France, Germany, Estonia, Greece, Portugal and Britain would not sign one of the summit documents on trade. And India bailed as well.

Nationalism is replacing collectivism as mood shifts from the warm and fuzzy effects of peak positive mood to the negative mood trend of the coming Grand Supercycle.

Mood:
This weekend I stopped into West Marine in San Juan. The latest category to become completely unhinged from reality is the premium cooler category.

This cooler doesn't even fit a case of beer but costs $200.

This one fits even less and costs $285.

But the prize goes to this beast. $899 for a fashion-inspired "luxury" cooler that could only belong at the Fyre Festival.

As tweeted, we are witnessing extreme psychology. Take note.

Take note also of an excellent interview with Lacy Hunt for a masterclass in credit and debt. Most illuminating, even though I strongly disagree with the premise that the economy is too over indebted for rates to rise and stay up.

Behold Greece. Regardless, awesome stuff.

Macro Voices: Lacy Hunt interview

FX:
EUR & GBP stronger, AUD & CAD stronger. CHF & JPY stronger.

CAD broke the 1.36257 line. Now biased to short side of USDCAD when the opportunity arises.

Bitcoin down over 3%.

Treasuries:
Friday was key for the near-term bullish scenario. Prices ripped higher.

Energy:
WTI Crude up over 3%. Potential for 55+. NG cratering.

Metals:
Ripping. Green.

S&P Outlook:
Both the S&P and NDX need new highs for me to try being short. Until such time, the opportunity still appears to be with the trend.

There is, however, the opportunity for a complex corrective pattern to take the S&P down to the 2300 area which would be welcome.

The NDX 5620 area could echo this potential decline.

If there is a good entry for this scenario, I'll take it.