Rates to continue climbing

US equity indexes closed a touch weak, sp -3pts at 2388. The two leaders - Trans/R2K, settled lower by -0.2% and -0.6% respectively. VIX settled +0.8% at 10.68. Near term outlook still offers the sp'2410/20s, as underlying price action remains powerfully bullish - as also reflected in almost all other world equity markets.


sp'daily5

VIX'daily3

Summary

It was another rather subdued day in equity land, with a trading range of just 10pts, a mere 0.4%. The FOMC naturally announced nothing of significance at 2pm, and cyclically, we saw a moderate late afternoon recovery.

Volatility remains very subdued in the 10s. A little pop to around 12.00 seems possible this Friday afternoon, ahead of the French election on Sunday.
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As for rates...

The mainstream is seeking the next hike in June, with third hike between Sept-Dec'. I'm broadly in agreement with that. If the sp'2600/700s in early Dec', then a fourth hike will be on the menu, and that would be extremely bullish for the financials. I like BAC, JPM, and SCHW.


TLT, monthly2

If you believe the fed will raise rates another 2-3 times before year end - as I do, then you have to see price structure in TLT since last November as a big bear flag.

I'm well aware some of you think rates won't go any higher, but then.. those are generally the same people who thought rates wouldn't ever be lifted from zero in late 2015. 

Goodnight from London
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The breakaway gap

US equity indexes closed moderately mixed, sp +2pts at 2391. The two leaders - Trans/R2K, settled +0.9% and -0.6% respectively. VIX settled +4.7% at 10.59. Near term outlook offers a push to the sp'2410/20s, assuming AAPL earnings are at least 'reasonable'.


sp'daily5

VIX'daily3

Summary

It was another rather subdued day in US equity land, with the sp' seeing a tight trading range of just 7pts.

There remains a large gap of sp'2370/48 - from the opening jump after round'1 of the French election. Such gaps almost always get filled, but there are exceptions. A key short term issue is indeed whether the market has to first cool to 2348, before it can more solidly advance across the summer.

What might be the excuse? Well, we do have round two of the French election this Sunday, but on balance, Macron will surely win. I'm not aware of any underlying polling data that suggests Le Pen can garner 1 in 2 of the electorate. It seems too difficult a challenge.

Were Le Pen to win though.. then yes, we'd flash drop to 2350/40s this coming Sunday night, before whipsawing back upward.
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Here in the metropolis...

I guess you could say it was... a bearable day.
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*extra charts in AH @ https://twitter.com/permabear_uk

Goodnight from London
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Bernanke on the loose

US equity indexes closed moderately mixed, sp +4pts at 2388. The two leaders - Trans/R2K, settled -0.3% and +0.5% respectively. VIX settled -6.6% at 10.11. Near term outlook offer new historic highs into the sp'2400s, as the bigger weekly and monthly cycles both offer the 2420s in the immediate term.


sp'daily5

VIX'daily3

Summary

It was a pretty sleepy day in equity land, although the underlying upward pressure is still clearly seen. The Nasdaq comp' saw yet another new historic high of 6100.

Market volatility remains very subdued, with the VIX falling into the 9s, for the first time since Feb'1st. The key 20 threshold looks out of range until at least October unless something 'nuclear' happens in North Korea.
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Meanwhile, the Bernanke was on the loose this morning...

For the equity bears, the Bernanke sure did cause a lot of problems. I actually could understand the multi-trillion (15 or so) credit line/back-stop, that the Fed launched in late 2008. However, the T-bond/MBS buying was suspect from the start. I was always against QE, as it never did much other than to falsely pump equity prices. It remains notable that its only very recently that a few ex fed officials have admitted the 'wealth effect' was a direct intention.

Anyway, Bernanke is now a fading memory, and Yellen will likely be out early next year. Indeed, the real issue is who will be leading the Fed when the next recession hits? Who will be cutting rates back toward zero, and initiating QE4? We all know its coming... its just a matter of when.

Goodnight from London
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