Bigger Picture
Look ahead: Economic Calendar – for Mon Jan 8, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Two early-afternoon Fed speakers are Monday’s only highlights, as no economic reports are due out in the morning.
3-Month Bill Auction
11:30 AM ET
6-Month Bill Auction
11:30 AM ET
*Raphael Bostic Speaks
12:40 PM ET
*John Williams Speaks
1:35 PM ET
Consumer Credit
3:00 PM ET
Daily Spot…
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today’s Market Wrap.
Eurodollar Mar Contract (EC, ETF: (FXE, UUP))
Holding 1.2060 support Wednesday kept alive the rally’s momentum, at least to fill the gap back up to Tuesday’s 1.2100 close and also to more thoroughly test the rally’s 1.2140 upper-end of its target area that was attacked Monday night. Thursday’s gap up almost immediately fulfilled both, and ultimately held without triggering any higher objective.
Gold Feb Contract (GC, ETF: (GLD))
Wednesday’s post-close test of 1308.85 down to 1307.00 was recovered into Thursday’s open, which then extended higher through the noon hour to test 1322.00. That was still almost a dollar short of Monday night’s high, “ineffectual optimism” that can’t tolerate another test of support.
Silver Mar Contract (SI, ETF: (SLV))
Sliding deeper after Wednesday’s close was able to hold a test of 17.05 support and greet Thursday’s open unchanged. Extending through the morning probed fresh recovery highs at 17.30, but closed back at or under the week’s two prior highs. Almost any immediate selling pressure Fridaywould be credible for extending down into and out of the weekend.
30-year Treasury Mar Contract (US, ETF: (TLT))
Ranging sideways overnight had tested Wednesday’s lows ahead of Thursday morning’s ADP report. The low’s were probed a little to attack 151-16 as support, but eventually recovered to try filling the gap back up to Wednesday’s 152-11 close. Regardless of closing in positive territory or not, closing above 152-22 Friday would target fresh recovery highs.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Extending higher without delay Thursday tested 62.20, now needing to hold 61.10 on pullbacks for potential to 64.75.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Thursday’s EIA report was greeted from a position of strength, but that didn’t prevent reacting down through the noon hour. Thursday’s 2.86 low was tested as support, and must hold to avoid a deeper pullback to 2.78 before recovering.
Look ahead: Economic Calendar – for Fri Jan 5, 2018
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Friday’s calendar is quite busy, which is unusual when also reporting monthly payrolls. The reaction to the pre-open report is likely to be duplicated by post-open reports, if not also to either of the two Fed speakers.
*Employment Situation
8:30 AM ET
International Trade
8:30 AM ET
Factory Orders
10:00 AM ET
ISM Non-Mfg Index
10:00 AM ET
*Patrick Harker Speaks
10:15 AM ET
*Loretta Mester Speaks
12:30 PM ET
Baker-Hughes Rig Count
1:00 PM ET
Contrarian alert…
Stock market maxim: Rallies climb a “Wall of Worry”.
Stock market irony: Bricks are added back to the wall by touting metrics that say a rally has gone too far.
Contrarians know that everyone has already invested in a rally that everyone already believes in. Healthy rallies thrive on converting non-believers into buyers. So, rallies tend to peak along with the conversion of believers.
Of course, nothing is ever 100%. Peaks come well before “everyone” is a believer. For example, the AAII weekly sentiment survey indicates 52.6% of its respondents are
bullish, it’s highest level in 3 years. Bearish sentiment at 20.6% is its highest in 2 years.
None of which prevents optimism from rising further to new historical extremes. Eventually, belief in the rally exceeds the investment arena’s normal boundaries. Statistics permeate into the anecdotal. For example, this from one of the world’s highest-profile couples.
It reminds me of another “signal” ten years ago. Supermodel Gisele Bundchen felt pretty confident after years of watching the Dollar deteriorate. So she began demanding payment in Euros.
The chart locates where the EUR/USD was trading when Gisele decided its 4-year rally would continue. The chart also depicts the next 5-year decline. Complacency among professionals is one thing. Among non-professionals, it is alarming.
Anecdotes aren’t data, and neither of them are timing mechanisms. Who knows? Perhaps Kanye’s stock purchase is a publicity stunt to induce his and Kim’s fans to buy the same stocks, as they would any concert ticket, the shares being their ticket to shareholder meetings where Kanye and Kim may also be attending.
Anecdotes and data are barometers. The market’s temperature can continue rising in the near-term. New highs during January aren’t off the table, regardless of Friday’s late tumble. Although, my patterns neutralized their last “unfinished business above” last Thursday, so the new year could start by extending the tumble.
Our day is geared toward S&P intraday trades, but we’re keeping an eye on the trend’s health. Because, after all, we want you to have a Happy New Year in 2018!
—
Rod David
913 717-8598
IF, THEN… MARKET TIMING
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Daily Spot…
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today’s Market Wrap.
Eurodollar Mar Contract (EC, ETF: (FXE, UUP))
Testing the 1.2125-1.2135 target area overnight Tuesday didn’t improve its gap up. Wednesday’s gap down didn’t extend either, but must hold 1.2060 to keep the target area’s retest likely.
Gold Feb Contract (GC, ETF: (GLD))
Extending higher overnight to 1323.00 was retraced enough to open Wednesday at Tuesday’s 1316.00 high, which served as support through the day’s narrow ranging. Pullbacks still have room down to 1308.85 before reversing momentum down .
Silver Mar Contract (SI, ETF: (SLV))
Probing higher overnight to 17.26 was retraced to open Wednesday flat. Trending up intraday pierced the overnight high by 2 cents, producing the 7th consecutive uptrending session — still unlikely to maintain any sudden reversal down without recovering to retest the upleg’s high.
30-year Treasury Mar Contract (US, ETF: (TLT))
Holding 151-16 and uptrending pivotal support Tuesday launched a bounce into Wednesday’s open up to 152-12. An intraday dip filled the gap back down to Tuesday’s close and held it, so that closing any higher Thursday could confirm a recovery underway — especially if also recovering 152-22.
Crude Oil Feb Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Finally resuming the rally overnight, Wednesday’s gap up extended higher to almost immediately fulfill the 61.10 target, which was exceeded intraday. Closing above 61.10 has potential to also test 61.15-61.65. Thursday’s EIA report is being greeted from a position of strength. A pullback has room down to 60.55 before reversing momentum down.
Natural Gas Feb Contract (NG, ETF: (UNG, UNL))
Six consecutive gaps up, and three being above prior highs, broke their trend by ranging flat-to-lower Wednesday. Thursday’s EIA report is being greeted from a position of strength. Closing back above Tuesday’s 3.07 high Thursday would confirm the 3.17 target remains intact.