JohnKicklighter

JohnKicklighter

Next week is the FOMC rate decision and the markets are pretty confident that there will be no change from the group according to Fed Funds futures (subtracting the contract value of the time frame we are looking for from 100 gives you the loose implied rate). Interestingly though, the OECD said this morning it expects the Fed to peak at 5.25-5.50 percent which...

JohnKicklighter

I don't think it escapes anyone's attention that market activity levels (volatility) are exceptionally low compared to recent history. The VIX dropped below 17 and the innate activity levels on the major indices (like the ATRs) have followed the same course. The medium-term activity reading on the Dow (20-day) has dropped to the lowest levels since before the...

JohnKicklighter

There are issues when it comes to the VIX volatility index's ability to project impending volatility - in part because options themselves are increasingly speculative vehicles rather than mere hedges to the underlying - but there is still a lot to glean from the the implied measures of activity. Aside from the SKEW in implieds showing tail risk and volatility of...

JohnKicklighter

I like to follow the course of 'risk appetite' but there are many definitions of sentiment from the perception of confidence in a particular asset up to an assessment of the entire financial system as a whole. I like the top down approach in this case as much of what happens in individual assets on a regular basis roles up to an industry/region/asset class or the...

JohnKicklighter

We started this week off with a massive gap higher from WTI crude, but where is the follow through? The jump from Friday to Monday makes sense on the OPEC production cut news, but the EIA reporting US strategic petroleum reserves (SPR) hit their lowest levels since the week of Nov 25, 1983 barely offers a hiccup of demand-backed bullish interest. It could be...

JohnKicklighter

The day is finally upon us that the Federal Reserve has announced it decision to taper that begins the slow process of turning off the tap of heavy stimulus infusions into the financial system. Rate hikes will be the next move after the QE program is capped (according to the Fed itself), but it is still some ways off that interest rates will move meaningfully...

JohnKicklighter

USDMXN is up nearly 1.5% today - the biggest single-day charge in four and a half months - and working on a sixth straight session's gain. There have been other 6-day rallies over the months, but we haven't seen any more 'productive' advances since the height of the pandemic back in March 2020. With a large descending wedge's resistance coming into view after...

JohnKicklighter

The ratio between the Nasdaq 100 and and Dow Jones Industrial Average is hovering near its highest level since the Dot-Com boom peak in May 2000. Given that these two indices enjoy an incredibly high, positive correlation between them, the relative aspect here speaks to something more speculative in nature. I believe risk taking has been driven by artificial...

JohnKicklighter

For many, a break like the one we've seen from the Dow (here the $DIA ETF) is a 'break' and has set expectations for a productive follow through. However, I think it is clear that general market conditions are not conducive to trend development. I would categorize the Dow's break from its tight wedge this past session as a 'break of necessity' where the market...

JohnKicklighter

One of the most liquid Emerging Market currency crosses, $USDBRL, is advancing for an eight straight trading session through Thursday. This is the longest unbroken bull run for the exchange rate since September 2014. It's impressive that it is advancing in today's session given the Dollar is under pressure of its own, but it seems general risk aversion is the...

JohnKicklighter

Though much of the attention in the FX market automatically goes to the majors, there are some remarkable technical pictures among the Dollar-based EM pairs. In particular, I am impressed by the pattern shaped by USDZAR through the past year. The post-pandemic recovery trendline resistance is still guiding the exchange rate lower, but we are starting to come upon...

JohnKicklighter

Top event risk for the week is tomorrow in the US CPI release. No guarantee that it can unseat the market's inertia, but inflation taps into one of the few themes that seems to strike a nerve with global investors: the beginning of the end of stimulus. There are a lot of very interesting markets exposed to this event risk like the S&P 500, US 10-Year Yield and...

JohnKicklighter

While there was heavy interest in the meme-stocks this past session, the emerging market FX space generated remarkable volatility on its own. Some of the most liquid BRICS member currencies were posting impressive rallies - like the Brazilian Real (USDBRL) and South African Rand (USDZAR). However not all EM was outpacing the Greenback. The Turkish Lira was one...

JohnKicklighter

Gold is working today on its 8th consecutive trading sessions' advance. If we close in the green, it would notch the longest series of gains for the commodity since July of last year. The pacing on the other hand is lackluster. Over an 8-day ROC, we are not even at the highs of the month. What does that mean? It will be difficult to keep progressing as significant...

JohnKicklighter

The Dollar is rallying across the board after the significant CPI beat. The 'market's favorite inflation reading' has accelerated to the fastest pace on the headline read since 2008 and fastest for the 'core' figure since Dec 1995. Going to be hard for the Fed deny the price pressures - but I wouldn't count out their commitment just yet. While there are a bunch...

JohnKicklighter

The Nasdaq 100 is a better concentration of tech companies and has been one of the driving forces of speculative appetite over the past five years - and particularly in the period post pandemic. Yet, that outperformance seems on the verge of capsizing when looking at the NDX relative to the Dow (the value index). This wouldn't necessarily suggest a full scale risk...

JohnKicklighter

The five-week rally for the SPX that we just concluded with a down week on Thursday's close was the largest since the climb that ended at the beginning of November. Looking back, it seems the duration of rallies are growing shorter - albeit modestly. I won't write off the possibility of a new record high over the next month; but I do believe that medium-term, we...

JohnKicklighter

There was considerable capitulation across 'risk' assets this past week. The question is how far the towel is thrown. Merely a pause for liquidity or the snap from reality that spurs full profit taking?