- Tax reform and a strong durable goods report were bullish catalysts for today’s equity markets. Taking exception were bonds, which made new lows as 10-year treasury rates confirmed a higher probability that Fed Chair Yellen will make good on yesterday’s word to hike in December. Consequently, US Dollar power surged to levels overwhelming the Euro, Yen and Gold.
- Real Estate also responded negatively to today’s higher rates.
- Energy prices are still consolidating “well-gotten” gains and mostly trading on their own encouraging fundamentals, which indicate a supply glut gradually being abated.
- Lastly, late day profit taking in equities leads me to believe the devil will be in the the details of Trump’s tax reform proposal . GOP bastions of fiscal conservatism will scrutinize its costs and feasibility and unlikely to be easily sucked in by the mere implication of mentioning “lower taxes”.
Market Moving Events
- Durable Goods, a key leading economic indicator, exceeded consensus expectations for August-2017 (month/month @ 1.7% vs @ 1.5% and prior @ -6.8%; and year/year @ 5.1% vs 4.2% prior).
- Long overdue and much awaited details on #45’s (POTUS TRUMP) blueprint for tax reform plan were finally released. Across the the board, the proposed cuts sound quite appealing. Some highlights are the proposed 20% corporate tax rate and the 35% cap on individuals.
- Pending Home Sales for August-2017 contracted 2.6% month/month, while the index for it slipped to 106.3 vs. previous @ 109.1.
- EIA Petroleum Status Report for week of Sept-22-2017: Crude Oil inventories dipped -1.8mm barrels as refineries, steadily increase production to regain capacity since Hurricane Harvey. Gasoline stocks were up 1.1mm barrels primarily due to large drawdowns of supplies caused by the Gulf storm’s demand.
- SP-500 Dec-2017 Futures: Primary trend remains bullish, but we are going thru a consolidation/support building phase.
- DJ-30 Dec-2017 Futures: Primary trend still up, but short-term is fading the highs. So far maintaining support of Monday’s low.
- Nasdaq-100 Dec-2017 Futures: Primary trend bullish, but attempting to reverse bearish correction. Taking out Monday’s high @ 5954.25 would confirm bulls in control.
- Russell-2000 Dec-2017 Futures: This little piggy went to the market and is now taking it to the bank with 5 out of 6 days of positive returns. Today, we hit a new high as well.
- Volatility (VIX): Daily trend is down as the fear index makes a new 3-day low. Support is very nearby @ 9.45.
Just Doing “MAFANG”
- Microsoft (MSFT): Intermediate & Primary trends up. Short-term trend bearish but consolidating. A close above yesterday’s high would confirm reversal.
- Apple (AAPL): Now that AAPL has filled the up-gap from the onset of August, it seems to be finding support and attempting a reversal, which technically has been confirmed as of yesterday. If it can close above yesterday’s close, in spite of its gapping up this morning, it will lend more credence to the reversal.
- Facebook (FB): This one is also attempting reversal. For now, I’m going to rate current price action as consolidation while it struggles to maintain support @ lower range of August-2017 prices.
- Amazon (AMZN): Technically, AMZN is really at a critical support level ($930), which it needs to maintain. If not, look to $860 for next test. In spite of existing trading patterns, overall trend remains bullish.
- Netflix (NFLX): Weekly trend still within bullish channel. Yesterday’s bullish hammer and today’s slight gap up have all the classic signs of a reversal. Let’s see if it holds.
- Google/Alphabet (GOOGL): Coming off a level of solid support that has been consistently tested, which should bode well. However, if 925-915 range fails to hold, then GOOGL could potentially retrace to fill gap @ 893.
- 10-Yr Treasury Dec-2017 Futures: Downtrend resumes, especially with today’s new low. I do not like green eggs and ham and I do not like bonds either. Next level of support @ 124’260.
- 10-Yr Treasury Rate: Today’s gap up in rates marked a 6-day high and clearance of resistance and a bearish channel.
- 30-Yr Treasury Dec-2017 Futures: New short-term bearish trend in bonds becoming more pronounced. Still not too late to get out…
- 30-Yr Treasury Rate: Short-term bearish channel resistance taken out today with the gap up in interest rates.
- US Dollar Index Spot: Bullish reversal in play after support established @ 91.36. Dollar could retrace its most recent price swing & test 94 and 95 price levels.
- EUR/USD Forex: Euro correcting, but there is support @ 1.166 level. Daily uptrend has clearly reversed.
- USD/JPY: Dollar has made quite a move against Yen. After breaking above 78.6% retracement target @ 112.967 and up to 113.25, it has retreated while maintaining positive territory.
- Gold Dec-2017 Futures: The yellow metal is pulling back and making a 5-day low. Fear trade gets no respect for the moment. Bullish channel intact and I’d anticipate a bounce off lower range for support.
- Copper Dec-2017 Futures: Attempting to consolidate but downward move could extend further until established support @ 2.872 area.
- WTI Crude Nov-2017: Bulish momentum in crude continues, but $52 area is a resistance level and some consolidation could unfold and set up for a classic cup with handle and potential for further upside. Prices have already advanced @ 24% off the June-2017 lows.
- Natural Gas Nov-2017 Futures: Gap up for bullish reversal. Next resistance test @ 3.16. It should be noted that volume is surging too.
- DJ Real Estate Index: Once again the Real Estate index is bouncing off the support of its lower bullish channel within its daily timeframe.