Monday, 24 December 2018

PPT activated

US equity indexes closed powerfully lower, sp -65pts (2.7%) at 2351. Nasdaq comp' -2.2%. Dow -2.9%. The two leaders - Trans/R2K, settled -2.7% and -1.9% respectively. Near term outlook offers major support starting at  2350/40s, with secondary of 2250/40s. A major multi-week bounce to the old floor of 2532 will then be due.




US equities opened weak, and quickly spiralled to very significant declines, breaking a new low for the year of sp'2367. There was a powerful morning swing to sp'2410, but then the US President decided to tweet...

That really roiled the mainstream, with equities swinging back lower, and breaking a new intraday low into the early 1pm close.

Volatility naturally broke a new cycle high, settling in the low 36s. The 40/50s appear viable (if not probable) before the weekend.

PPT Activated

Sunday evening saw US Treasury Secretary Mnuchin announce on Twitter he had been calling various bank CEOs, and that he was arranging a Monday meeting of the President's working group on financial markets. This is better known as the Plunge Protection Team... the infamous PPT.

Whilst the mainstream don't even like to use the acronym PPT, the PPT is indeed real, and is effectively tasked with ensuring stability in the US capital markets. No doubt, a key part of this is propping up equity prices.

Whether you believe the Fed (or its partners - the 'primary dealers') are directly or indirectly pumping up the market (most viable via index ETFs or overnight ES futures), doesn't really matter. What does matter is that its recognise that 'they' are very much already scared.

It only took the sp'2400s for them to start freaking out. My grander target for 2019/20 are the sp'1500s. What 'magical' monetary easing schemes will Print Central initiate by that level? We've seen Govt' bonds and MBS in the precious cycle. Next due are corp' bonds, then index ETFs, and finally... individual stocks, as the BoJ and a number of other central banks are already doing.

2018 is ending on a wildly bearish note, with 2019 set to be a fiercely bearish year. There will be very powerful bounces... but they are to be seen as such.

Christmas Eve
Extra charts in AH (usually around 7pm EST) @

Goodnight from London
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