Problems within commodity land

US equity indexes closed fractionally mixed, sp +1pt at 2389. The two leaders - Trans/R2K, settled +0.1% and -0.1% respectively. VIX settled -2.1% at 10.46. Near term outlook offers moderate swings into the weekend, ahead of the French election this Sunday. Broadly, the US equity market remains strong.


sp'daily5

VIX'daily3

Summary

It was a seventh consecutive day of minor chop in equity land, with a trading range of 11pts. Volatility was naturally subdued, still stuck in the 10s.

Near term outlook offers nothing to the equity bears, unless you believe Le Pen will win on Sunday, in which case we'd flash lower to the sp'2350/40s, before whipsawing back upward. There was a time I thought Marine had a chance, but I've seen no polling data that suggests she can garner more than 35/40% of the vote this Sunday.
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Commodity weakness

I could post endless charts highlighting weakness in commodities, but the following is a fair way to summarise...

CRB and sp'500, monthly

Today's close of 177.01 is the lowest level since Nov'2016. The next key low is 176.67 from Aug'2016. As things are, the trend is clearly bearish, having seen a double top of 195/196s. The commodity bulls need to see >197 to have renewed confidence that the past year is just consolidation.

I recognise some of you out there are seeking a major deflationary wave. Well, we sure are seeing something in commodities, but equities remain hovering around historic highs. For the moment.. little has changed. Equity bears have nothing to tout unless we're trading <sp'2260.

Extra charts in AH @ https://twitter.com/permabear_uk

Goodnight from London
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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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