Global Futures are trading broadly in the red on Tuesday after drifting sideways for most of Monday. Having said that, we're still at ATH's, and looking like a freight train without breaks. As of 9:00AM the Dow was down -0.25% to 35,055, the S&P was down -0.14% to 4,416, the Russell was down -0.66% to 2,202, and the Nasdaq was up 0.06% to 15,134.
Despite the parade of perma bulls leveraging their asses to go all-in on this ponzi of a market, the Vix is still holding on to multi-year trendline support with conviction. We're seeing accumulation here, with a high probability of a Vix spike in the near term off the back of extremely elevated asset valuations, and essentially unrecognizable fundamentals/ historic technical deviations. We're up around 5.5% on the day and sitting at 18.60.
At 8:30AM we saw Durable goods come in significantly below expectations at 0.8% vs the 2.1% expected. We also saw Durable goods ex-transports come in at 0.3% vs the 0.9% expected. Based on the previous ISM and PMI prints, we may have seen the peak of the "recovery," in Q2, absent another massive stimulus every quarter going forward (not impossible in this Truman Show version of Capital Markets). The S&P Case-Shiller Home Price Index came in hotter than expected at 17% vs the 15.2% expected. Looks like inflation isn't so transitory after all. Powell is a liar. Period. He's doing his best not to bankrupt the US goverment by raising rates. Let's see how well that plays out. Later on around 10:00AM we'll see Consumer Confidence with the expectation of a minor drop from the last print (127.3) to 124.5.
The US10Y yield saw a solid rejection at the 200DMA (1.291%) and we're seeing some notable weakness today as bonds are bid on the broad market weakness. We're back at 1.249% and looking bearish. If we see a sell off in equities, yields may crash. Then again, if we hear more talk of taper from the Fed tomorrow, then all bets are off and yields could spike hard on the confirmation of diminishing demand for bonds by the Fed. Imo it's only a matter of time until we get that confirmation, and both the bond and stock market crash hard. Let's see how the cookie crumbles this week...
Stay tuned for our live analysis at 9:30AM. Cheers, Michael.
@Jabronitrades, What's your target? Virtually no one is expecting a hawkish Fed tomorrow. Trade with caution. If more members begin to see rate hikes as early as 2022 (7/15 ATM), then markets may see some persistent selling for a change. Then again, DJ Powell loves to play the hits...
Jabronitrades
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Ya I’ve been tracking with you this whole time but we keep getting faked out. It’s gotta go eventually. How are your positions? And do you have LEAPs or something in the Vix?
Hedge_Of_The_World
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@Jabronitrades, No LEAPS for Vix, just the usual ETN's/ETF's like the UVXY, VXX, HUV, SVXY, etc. I'm always trying to work my position and also taking the odd long to offset my Vix premiums. But, I'm looking okay and waiting for the main event. Looking at a few longs but no exposure without holding a boat load of Vix...
Jabronitrades
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Thanks for sharing that man, I appreciate your analysis!
pechi123
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The premise that the FED raises rates is unfounded, they respond to the market. Though there tend to be volatility around FED meetings/announcements more times than not the markets head fake news.
Schmitty69
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Fed is powerless at this point. And Mrs. Powell was right (thats a trans person fo sho) this inflation IS transitory (different trans). Fed just sees where the wind is blowing and says that is what they are doing. If inflation was real WHY would bonds be so low? Bond market knows whats up. You have to be some sort of maniac to be long this infinite PE nonsense.
ATH's are not just slightly eclipsed. Bull market crushes ATH when actual bull. They will probably hold til EOM. Aug gonna get choppy. September collapse. That is my view....
deadsquare214
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@Schmitty69, weird comments on trans, Schmitty69. Nevertheless, I am leaning towards choppy August as well and or major correction in or before September. I've been wrong before ofc.