Pre-Market Brief

Good morning. Futures are a little higher, sp +2pts, we're set to open around 2110. US equities will likely be increasingly weak across the day, with a primary downside target of sp'2080, with VIX 15/16s. USD is flat.. as are the precious metals and Oil.


sp'60min

Summary

A busy day is ahead... with Yellen due to appear at 10am.

From a pure cyclical perspective, the hourly equity and VIX cycles are suggesting the market is going to get increasingly upset today. Primary downside target is the micro gap around sp'2080.. along with VIX 15/16s.

*don't forget, there is a fed Beige book at 2pm, and the algo-bots will very likely react to that.
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notable strength: BAC, +3.0% in the $17.60s... post earnings. The $18 threshold remains key... and I don't think it can break/hold it in the current cycle.

weakness...  FXI -1.2%,... as the China market cools.

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Doomer chat, Hunter with Kirby

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Overnight China action: As expected, Chinese equities are starting to slip, settling -3.0% @ 3805. The low 3700s look due... before resuming back >4K.... and then getting stuck around 4400.
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Have a good Wednesday
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8.31am.. Somewhat bizarrely, a Yellen press release detailing her opening remarks to the US house has already just appeared.

sp +2pts... still set for 2110.
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8.55am. sp +1pt.. 2109...

INTC not looking so great @ $29.60... with earnings at the close of today. If the main market rolls lower... INTC will be in real trouble for the Thursday open. As it is... I am likely going to stay out of it. The primary trade - at least from my perspective, is as a short... but preferably from higher levels.. and not for another few weeks.

Certainly though... it'll be one to watch in AH.
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9.11am.. Transports having issues... DAL -2.5%, with UAL -1.3%.... leading the way lower... main market looks set to follow.


9.21am.. With USD building gains, Oil/metals are starting to slip, Gold -$8, with Oil -0.8%.... that sure won't help energy or resource stocks.

.. and eventually.. DXY 100 will be re-taken... with a straight run to the 120s... and that has a great many implications.

... sp'500... back to flat.... 2108.


9.28am.. Gold @ $1145... .a mere $15 from breaking the Nov'2014 low. Keep in mind..  Silver has already broken that equivalent level. Gold is surely headed to the giant $1K threshold.

The Chinese drama continues

Chinese equities saw a relatively moderate Tuesday decline of -1.2% @ 3924, having briefly broken back above the 4K threshold. Near term outlook offers a further 5% retrace to the 3700s, before battling upward to the 4300/500 zone. From there, renewed powerful downside to the 3200/000 zone.


China, daily

China, monthly

Summary

More than anything, it will be fascinating to see how the Chinese leadership react to another wave lower in August/September.

If the Shanghai comp' breaks the recent low of 3373, will they simply shut the entire market for a week or two? One thing is for sure... it remains one of the more dynamic markets to watch for 'entertainment purposes'.

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Looking ahead

Wednesday will be busy... not least with Fed chair Yellen set to address the US House Financial Services Committee. That will begin at 10am.. and probably last until around 1pm. There will be the usual blanket coverage across clown finance TV.

Data points: PPI, Empire State, Indust' prod', Fed Beige book (2pm).
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Broadly bearish INTC

I am a major fan of the company, but from a pure technical perspective, INTC is in real trouble.

INTC, weekly

INTC briefly lost the $29 threshold last Thursday... thus completing an essentially perfect H/S formation. They really don't come any cleaner.

A move to the 26/25s appears due between now and early October. Ideally, the H/S formation is suggestive of $22.50... but I realise that is an extremely long way down.

As an aside, if INTC is in the $22s by early October.. what would that mean for the sp'500, the mid/low 1800s, with VIX in the 30s?
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*I exited INTC-long this morning from $29.90. Price action is increasingly bearish.. and if there is sustained action <29.30 tomorrow, it would be suggestive of a gap down to the $26/25s at the Thursday open - post earnings.

As it is... considering the broader market... if I had to take a trade.. I would still go long.... but I consider that overly risky. Instead, I will probably sit on the sidelines, and merely seek to short INTC in the $31.75/32.00 zone in early August.. if it gets there.

In any case... it does look like it will be possible to pick up INTC in the mid... or low 20s by early October.

Goodnight from London

Daily Index Cycle update

US equities closed moderately higher, sp +9pts @ 2108 (intra high 2111). The two leaders - Trans/R2K, settled -0.1% and +0.6% respectively. Near term outlook is offering a wave lower to around sp'2080... along with VIX 15/16s. From there, renewed upside into next week.. and probably all the way into early August.


sp'daily5

Dow

Summary

Little to add.

Regardless of any weakness across Wed.. or even into Thursday, the market looks set to battle upward into next month.
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a little more later..