Waiting For Intervention
Pls have a look at my intermarket analysis from this morning - a quick 15 min review of charts I show regularly that highlights ... that nothing has changed: Market is still guilty until proven innocent! That, and the only way I don't see VIX higher is if we get GOVT INTERVENTION. BOJ tried yday... but it didn't stick for long!! Oil Short is working WELL!!
WTIC below 93.50 monthly resistance was the trick.
XLE and VLO pullback was as expected: slowly than all at once. EIA reported that Gasoline demand is anemic at same time gasoline inventories have surged recently. Speaking of economic data this morning - from ADP private payrolls slowing with wages to ISM Services orders falling - more evidence appears that intonates economic growth is slowing. Will market care? Or will they bid up equities on expected Fed rate cut? (read: intervention) Only thing market seems to care about are the Magnificent 7 which are disguising the intense breadth destruction UNDER the surface as net selling CONTINUES. That is not a backdrop for buying but SOLD-TO-YOU (until intervention).I am still looking for massive volume to come in to turn this around (read: intervention).
Seasonality for EOY rally can then support equities. Earnings have a low bar so that is also bullish, potentially, but we need to get there first. We could bounce all the way into 4400 but I doubt we would stay above. And right now, the longer we stay below 4300 the greater the chances of more de-risking/de-grossing. Basically: The only way I see a rally of size is with INTERVENTION. I said it yesterday before the BOJ came in - with a reminder to clients it took them once in September 2022 and again a month later - before coordinated CB intervention lifted stocks and bonds. I will keep looking at Japan for intervention.I also said months ago Fed/Treasury needs a panic to force demand to absorb the massive treasury supply. TLT at 85 may be it, but more likely the 2009 high near ~$81. Other than intraday bounces, I still see best course is they sell risk equities until they panic buy the supply of bonds. (read: intervention).
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