US Markets traded relatively flat in the overnight session, with European and Asian markets getting clobbered. The FTSE 100 was down 1.75%, with CAC 40 seeing a 1% sell-off. The Hang Seng was down by as much as 4%, while Japan's Nikkei 225 saw a 2.7% drop. I think it goes without saying that yields across the globe are rising, particularly on the long end of the curve, and after yesterday's insane rally in the US 10Y yield to 1.563%. The US 10Y yield saw some light selling this morning back to a 1.46% handle, but is looking poised to rally higher. YCC is being tested specifically in Australia and Japan, as key benchmark yields cross YCC thresholds. YCC not working? Although, I would say, many investment banks are talking about buy the dippers coming out to take advantage of the anticipated interim short covering. I don't see that happening, as I think yields are now getting started, and US Treasuries are still overvalued.
In volatility, after a slow start to the day yesterday, Vix caught a massive bid as we approached the afternoon session, and again at the close of trade. We spiked as high as a 31 handle, before cooling back to 29. We're currently sitting around 28 in premarket trade, and looking poised to go higher, particularly if global sentiment is any indication of today's price action. I'm holding my UVXY, and HUV until I see a major correction in risk assets. Absent a spike to 40's, I'll remain long Vix (barring a material improvement in the outlook for risk).
The Dollar (DXY) is extending gains today after a strong performance yesterday. We opened down at an 89 handle, but were quickly bid as yields spiked and risk got sold heavily. The neckline (90.75) acted as resistance this morning, with the 50 day MA (90.37), now acting as support. If we get a continuation of yesterday's selling, we may see a dollar breakout back near the early February highs around 91.50.
On SPY, we have heavy resistance overhead with the lower band of the green ascending channel standing in the way of the bulls, as well as the 21 day EMA at 386.38. Major support sitting at the 50 day MA (379.50), which we've yet to retest this month. On the hourly, we have resistance at the 200MA just overhead, around 384.90. As we speak, we're seeing bullish price action and appear poised to test resistance levels on the open.
Finally, on the data front, we saw Personal Income rise 10% vs 9.7% expected, and Personal Spending coming in at 2.4% vs 2.3% expected. PCE and core PCE both came in at 0.3%, vs prior prints of 0.4% and 0.3% respectvely. The trade balance stayed consistent at -83.7B vs the previous print of -83.2B. Retail Inventories fell slightly by -0.6% vs the prior print of 1.9%, with wholesale Inventories rising by 1.3% vs 0.5% prior. Chicago PMI is out at 9:45AM, with consumer sentiment out at 10AM.
Best of luck out there today, my friends! You guys know where to find our live daily analysis. Cheers, Michael.
*I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
Check out the SPY channel dating back to November. Looks like we bounced off of that line (bottom of channel, ~378.5). Seems like it could be a major channel of support worth watching...
Hedge_Of_The_World
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@chuckk555, For sure, major support at the 378-379 level. The lower band you're referring to is definitey helping the bulls cause, for now...