On to the SPX/SPY and what is ahead. Of Note, I am Using the SPX as Large traders and Institutions are most heavily positioned here. Levels for the SPY are contained below.
Trader Sentiment began the Week at 18.1% Bullish & 53.3% Bearish for the next 180 Days.
ISM Price Paid Component declined 34.6% on the latest print as Commodity Intermediate Inputs have declined significantly.
Interest Rate Forwards are indicating the FOMC will be @ 4% by January. The short end of the Curve continues to confirm the Fed Fund Futures. The DX took a breather on the Effective Rate Tussle between the EU and US.
Powell will not do anything less than 75Bps and should the CPI be above 8.1 - 8.2, odds favor Powell stepping up the odds of 100 BPS, anything below 8 and 75Bps will be the LIS. The Fed is "data dependent" - ie. they bought themselves time and have already indicated it will be, at minimum, several months of observing the Data and not one nor two.
Market Internals were solid with 90% Up, 10 :1 Advance peaking at 17 : 1 Intraday. Breadth improved as well, not significantly, but an improvement pushing the Closing Basis above the 10-Week Moving Average. Friday's rally was broad as was Wednesday's.
NQ's Up/Down was higher as well, with a slight broadening after coming very close to putting in a lower low.
The Put/Call ratio fell from 1.01 on Tuesday to .80 on close Friday - a 3-day decline.
The ViX has 19.46 wide open again as we move into Roll through Settle, expect a surprise soon. It is ahead. The VVIX came up to its Pivot and failed badly.
Extreme awareness of the UST Curve and Futures is vital to success as we are seeing 4% come into our view. DX, same considerations, the Ball is in Powell's court now that LeGarde has made her tit for tat. FX Disruptions were not considered not all that long ago. I pointed out they would be arriving shortly back in August of 2021. Very large disruptions were promised and delivered. 100% Ditto Bonds and their impending implosions.
Dung was Flung then, not so much now and it is quite far from over for Bonds.
As for the Levels in Trade this week, they can be observed on the Weekly Chart in a larger context.
For Sunday Globex / Monday, here are the levels:
NQ - Range Expands from 12,438 to 12,866 with 12508 as the Pivot.
SPY - Range Expands from 405.44 to 415.22 with 406.17 as the Pivot. The 407.37 Gap is filled.
100 bps might be in the cards this time...didn't feel that way before but something has me thinking if CPI surprises a little to the upside then they could do 100 bps with a "nip it in the bud" sort of statement. I don't see a way for it to be less than 75 bps after Jackson Hole remarks. Some things have come down in price BUT food & rent are still really, really high and those are two areas that have tremendous affect on people living paycheck to paycheck.
HK_L61
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@Vixtine, Let's see how the cooks in the Kitchen perform, it's up to the 1 -2's and the 20 - which recently hit 3.75. At present, although Curve inversions backed off... it will be Q3 EPS that drives the stake thru it, should early warnings fail to appear.
There's a great deal in the Wind, as they say, options positioning/hedging is troubling.
Price Pai components are for both Elastic and Inelastic goods, I'd lean towards the Substitution Effect playing a more important role and Price elasticity beginning to have a dramatic effect on overall Consumption.
Food Prices have not come down at all, they are fixed at higher levels. Rents certainly have not backed off and yet Rents is arrears have absolutely Skied.
The Economy is giving way, for now Wall Street will continue the Game until it's clear the Economy is not going to recover, Hope Floats until then.
Good to see you Christine, have a great weekend.
CapeAfrican
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@Vixtine YEP AS YOU SAID....What are all those options going to do Friday ???????? CPI rose 8.3% in August from a year ago. Prices climbed 0.1% in the one-month period from July. Those figures were both higher than the 8.1% headline figure and 0.1% monthly decline forecast by economists. The Federal Reserve as it seeks to cool price gains and tame consumer demand and will respond with a larger rate HIKE next week..
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@CapeAfrican Watch the spreading effect to November. Keep an open mind to Forward Rates @ 4.5%.
I have suggested for months to follow the yield curve from one's to twenties. this has been the best indicator of the forward effective red funds rate.