After an ugly close yesterday, the US majors are rebounding with the Dow, S&P, and Nasdaq, all up around 0.50%, and the Russell up 0.80% on Wednesday morning. European markets are essentially flat, with Asian markets catching a bid. The Hang Seng was up by as much as 2% at 8:45AM. Consumer Inflation data came in moments ago; CPI came in lower than anticipated at 0.3% vs 0.4% expected, with Core CPI coming in flat vs 0.2% expected. With CPI finally showing some signs of life, maybe the Fed will consider letting yields rise naturally, so markets can finally correct? Don't hold your breath, folks. Powell is set to speak at 2PM this afternoon, so let's see what he has to say about the "recovering" labour market, and if he mentions rates/the future outlook on the economy.
Platinum is is on an absolute tear and is up almost 5% today, tagging a 4th straight day of gains, along with Copper, and Palladium, which are also catching a bid today, and up around 1.75%. Gold is holding onto the week's gains, and is still hovering around 1844/oz. In crypto, Bitcoin is seeing some weakness after tagging a 48k handle yesterday. We're now back at 45,500, with Ether trading at 1732.99, and down around 2% on the day.
The Dollar (DXY) is seeing further weakness this morning after falling back to a 90 handle yesterday. We're sitting at 90.30, and holding up well just below the neckline in the IHS pattern. Vix is holding on to a 21 handle for dear life. We're seeing a tight range here near the post March crash lows, and we look poised for another near term spike, when markets finally realize valuations are in outer space. We may be seeing the LOW.
In Cannabis, The HMMJ is booming, and is up over 100% since Jan 1. Companies like Aphria, Canopy Growth, and Aurora Cannabis, are seeing massive gains off the back of rolling short squeezes in the highest beta stocks, and optimism over the prospect of near term profitability in the Cannabis sector. With the cost per gram of dry bud falling, and costs of production dropping, Canopy says they may see profit as early as 2022. We all know the Cannabis space is going to be a multi-hundred billion dollar a year industry, and these guys are the main players. There are others, and we'll see a lot of action when the US legalizes, but for now these companies are the main beneficiaries of the recent flows, and are now looking overvalued. The HMJI is one way to profit off an imminent correction as an inverse ETN on the global Cannabis basket.
On SPY, we'll be looking at the 21EMA (h) to break (388.74), before we get any notable pull back, with the upper band of the green channel now acting as support around 391. The bulls really don't have any excuses, 400 is right there, and no one is selling. I'd be surprised if we didn't melt up to 400 as early as today. Once we hit that level, though, I expect a massive correction down to the 350 level, and then 323. If this Feb Opex is anything like last years, we're in for one hell of a repricing of risk by month end. February 19th is the day to watch, and the monthly doji preceding last years crash, looks an awful lot like January's doji. Let's see how it plays out.
Thanks for your time today guys, and I hope you enjoyed the analysis. Cheers! Michael.
*The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
Back in Uvxy at $10.01. Hit that about right and will look to add even more after literally doubling what I did on the last run.
I appreciate you! Must read info every single day!
Hedge_Of_The_World
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@rshowers nice work buddy! Appreciate the kind words. I might quote you on this. Lol. Cheers!
MirandaSimandl
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Big fan of your post & nice update..
moczk9
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What do you think about the impact of the upcoming stimulus package, Powell saying that quantitative easing must continue (aka more bailout money coming)....when do you anticipate (i know that no one really knows) a market top & large move to the downside??