IBB
329.94
-1.33
-0.40%
 
AAPL
151.89
-1.5
-0.98%
 
TVIX
12.54
+0.1
+0.80%
 
XIV
92.83
-0.54
-0.58%
 
TNA
59.6
+0.66
+1.12%
 
TZA
14.91
-0.18
-1.19%
 
UVXY
22.87
+0.29
+1.28%
 
NASDAQ
6426.922
+4.229
+0.066%
 
S&P500
2502.22
+1.62
+0.06%
 
NYSE
12151.795
+18.175
+0.1498%
 
IBB
329.94
-1.33
-0.40%
 
AAPL
151.89
-1.5
-0.98%
 
TVIX
12.54
+0.1
+0.80%
 
XIV
92.83
-0.54
-0.58%
 
TNA
59.6
+0.66
+1.12%
 
TZA
14.91
-0.18
-1.19%
 
UVXY
22.87
+0.29
+1.28%
 
NASDAQ
6426.922
+4.229
+0.066%
 
S&P500
2502.22
+1.62
+0.06%
 
NYSE
12151.795
+18.175
+0.1498%
 

MACRO MORNING NOTE APRIL 20, 2017

SPX Up, DXY Down, WTI Up

SBA’s Alastair Williamson concludes the Macro Morning Note from Baltimore, Maryland. 

Global stocks are mixed ahead of this weekend’s French elections. In mainland China, SCHOMP -04bps with HKG33 +70bps. Over in Japan, the Nikkei225 is flat with a 109.15 USD/JPY. Over to Europe, where the French elections plague upside in regional equity indices. In the latest Opinionway Poll: R1 Macron 23%, Le Pen 22%, Fillon 20%, Melenchon 19% (all unch.).

The US reflation trade continues to unwind with a dollar at the midpoint of the 99 handle and risks a major downside imbalance. Last week in a WSJ interview, President Trump flipped on a strong dollar narrative, as well as calling for lower interest rates. To us this seems Trump understands there is an economic contraction on the horizon, and his administration is attempting to deflect the upcoming blame leaving it solely on the Federal Reserve. More unwinding in the reflation trade occurred yesterday with a near -400bps liquidation in WTI after EIA data. This morning a slight rebound in WTI is seen after a barrage of fake news via OPEC in attempt to curb downside. Stock Board Asset’s Research Desk in Baltimore projects a pivot 44.81 reversion for WTI. The desk does note geopolitical risk in Syria and North Korea arE risks for upside, but overall physical market is over saturated. Renowned ex-Hedge Fund Manager @RaoulGMI was quoted yesterday, “When breaks $47, it is the final signal that its going to $20, in my view. This sell off has long been expected, after a perfect set up”.

Back to the French Elections,  2017 French presidential election, first round, % of votes Fillon Hamon Le Pen Macron Mélenchon projected.

<EVZ> EuroCurrency Volatility Index is skyrocketing ahead of the first round of the French Elections.

Spotted in <EVZ> is a right angle descending broadening structure

Weekly European regional stock markets are in resistance. Potential for unfair highs signal possible reversion.

DB 6 scenarios for weekend elections:

  • Macron-Le Pen (63%/37%, Ipsos poll April 14): The most plausible. The 2 candidates have led the polls for a few months. This scenario would come with no surprise on the financial markets, which have already integrated it.
  • Melenchon-Le Pen (60%/40%): The most feared. Risk is not fully priced, so it would come as a bomb on markets. Choose between the devil and the deep blue sea.
  • Macron-Fillon (64%/36%): The most welcome. This would give much appeasement with both Le Pen and Melenchon moved away.
  • Melenchon-Fillon (60%/40%): The most surprising. Fillon was not even favoritein the right party primary elections (Juppe was), Melenchon got 11% in 1st Round in 2012 Presidential, but French people know how an outsider can surprise (2002 elections, Le Pen (father) passing in 2nd Round)…
  • Fillon-Le Pen (56%/44%): The most at right. With huge abstention expected from left voters in this scenario, financial markets would not exclude a Le Pen win.
  • Macron-Melenchon (55%/45%): The most erratic. It would be feared that Le Pen voters slide towards Melenchon.

More technical in this morning note. Let’s start with the declining Dow and Transports

SPX500 weekly Coppock Declining

SPX500 weekly bearish crossover PMO

McClellan Indicators at or heading towards negative territory

Stocks above 20/50/200 EMA SPX500

Monthly Williams%R Overbought SPX500

Central Banks at all cost are attempting to avoid a bearish crossover on the All World Index FTSE 20/50sma

This time around China matters

Iron ore crash in China v. SPX500

EEM v. DM markets

SPY/TLT Ratio

XRT/XLP Ratio

 

SPX500 monthly/weekly R1 2398 resistance with downside projections R2 2287

DXY monthly/weekly R1 103.74 resistance in bracket pivot 99.26 support. Maturity of bracket nears prepare for major imbalance if pivot is violated to the downside. If that occurs, Baltimore’s desk would flip down projections to 94 handle.

UST10Y monthly/weekly R1 2.63 resistance with reversion to pivot 2.13. When pivot is probed, Baltimore’s desk will reassess next projection.

WTI monthly/weekly R1 55 resistance with pivot 44.81 reversion