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Morning Note March 3, 2016

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Morning Note-

Thur, March 3, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures -07bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +97bps

08:45ET                                         Update:  [Stockboardasset]FTSE100 -25bps DAX -05bps

Global Equities advanced overnight marking the longest rally since August 2015. Asia equities led higher for the third consecutive day as JPN225 advanced +128bps, as well as Chinese markets remained marginally positive. US data will be in focus today, as initial claims and Service ISM will be clues to the underline health of the economy. Non-farm payrolls will be released tomorrow as this confluence of data will enable traders to develop a thesis into next week ’s central bank circus. Overnight, US Futures are mixed, as the +20 day rally has advanced more than +1000bps on speculation of central bank policies. As a barometer of trend health TRIN and NYMO print at extreme levels signifying overbought conditions in the intermediate timeframe. Gold continues to consolidate in a Symmetrical triangle giving the market mixed signals as a flight to safety. SPX and GOLD have advanced in tandem recently, so we took a poll to find out who is telling the truth. (Poll Below)

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Morning Note March 2, 2016

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Morning Note-

Wed, March 2, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures -17bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +139bps

08:45ET                                         Update:  [Stockboardasset]FTSE100 -86bps DAX -44bps

 

Overnight Global Equities staged an impressive rally extending into the 20th session, which was sparked by the biggest SPX gain since January and the best first day of march on record. Despite recent domestic and global data releases that have been reinterpreted as “great”, and as Reuters peddles fiction“Wall Street surges as weak data spurs stimulus hopes”, we believe the current rally is overextended as depicted by NYMO >90 print. There was weakness in Energy overnight, as API reports the largest build in 11 months clocking in at 9.9mm. Immediately, WTI dropped 200bps, and continues to be under pressure leading into EIA 1030am. We note, if EIA data is less than API, algos will run a bull bias. Our hats are tipped to a well played OPEC and Russia for confusing WTI Traders, as their fiction peddling nonsense has appreciated WTI +30% since January. Near Term, the WTI Market will revisit the Cushing Storage narrative as storage capacity at the facility nears maximum capacity. As long as storage volumes remain >80% there will be pressure on WTI spot. The market has lost focus on storage and refiners, and we believe the narrative of capacity will resurface near term. The PSX debacle in early Feb was a warning signal to traders in the market place as many refiners come under pressure. The spot Price WTI was extreme wide when PSX dumped their crude for immediate delivery. The question arises, when other refiners follow the PSX trend, but are denied by Cushing to bottlenecks in storage capacity what will spot widen to this time around?

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Morning Note March, 1, 2016

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Morning Note-

Tues, March 1, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures +70bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +147bps

08:45ET                                          Update:  [Stockboardasset]FTSE100 +144bps DAX +249bps

 

Global Equities have had a modest advancement leading into last week’s G20 Meeting. Global Speculators were expecting a coordinate central bank program of new stimuli to heal the demand issue. Results of the G20 were constructive, but no such plan of stimuli was conveyed. US Equities advanced more than +900bps in a massive short cover rally of an unstable structure into the G20. The thesis of more stimulus was debunked as current fair value of US Equities levitates as WTI is used as a prop not a true correlation. As the levitation continues, US Pending Home

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Morning Note February 29, 2016

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Morning Note-

Monday, Feb 29, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures -23bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei -106bps

08:45ET                                          Update:  [Stockboardasset]FTSE100 +31bps DAX -22bps

 

Over the weekend, the G-20 meeting was a big disappointment. The expectations of a coordinate central bank stimulus program to lift global equities out of a rout was debunked. The theme of the meeting was the “4C’s”: China, Credit, Consumer, and commodities. Also, two major problems recited at the meeting were US-growth, as well as slow down in the global economies.

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Morning Note February 26, 2016

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Morning Note-

Fri, Feb 26, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures +55bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +108bps

08:45ET                                          Update:  [Stockboardasset]FTSE100 +71bps DAX +124bps

 

In the past 2 weeks, Global equities have diverted from the normal rout and maintain a corrective impulse wave leading-in to the G20 meeting this weekend. US VIX in this timespan has lost more than 50%, as well as US-Equities panic buying +9% short cover rally. US Equities on a double-banded oscillators signal overbought extremes, but what’s more troubling is the volume drop off. Even more troubling is how the US Equities rally was stimulated. First, OPEC announced production freezes saving SPX from the 1800 level, the FED announces MBS POMO cancellation and a US 7YR Treasury auction cancellation creating more panic buying. The structure of the move is unstable and we maintain our view of an unfair high in the near term producing a reversion.

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Morning Note February 25, 2016

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Morning Note-

Thur, Feb 25, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures -4bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +127bps

08:45ET                                          Update:  [Stockboardasset]FTSE100 +126bps DAX +86bps

 

Overnight China Markets crashed, Japan advances, as well as Europe advances. That is the vibe of the Pre- G20 meeting as it’s host country: China continues a rout not seen in a month. Typical comments out of Japan from Kuroda defending NIRP, meanwhile Japanese markets in a post-NIRP era have seen dramatic declines. Apparent this morning, normal coefficient correlations to US Equities have dissipated in preparation to G20. Last week’s OPEX rally short cover advanced US Equities in an unstable structure. The resistance on the advancement is a major 1.414 extension of the entire bull cycle at SPY 195. Markets are testing this level on a non-linear timeline of 4 days. If a rejection of this level occurs expect a reversion to 189.50, then fill the 187 window. If the 1.414 extension is successfully on the upside, a migration to the upper distribution of the bi modal will be seen. Markets at crossroads.

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Morning Note February 24, 2016

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Morning Note-

WED, Feb 24, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures -93bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei -94bps

08:45 ET                                         Update:   [Stockboardasset]FTSE100 -128bps DAX -228bps

 

Last week’s OPEX and Short Cover Rally in US-Equities had an advancement that rejected the 1.414 extension of the entire bull cycle. As we’ve noted, the structure of the rally in US-Equities was unstable due to the composition of how the market moved. Our analogy would be constructing a home without a sturdy foundation. The cracks in the foundation were so obvious that others such as Geneva Swiss Bank and Tom DeMark publicly voiced their concern of the recent advancement. SWFs have been the largest hurdle in US Equities as liquidity is not a constant variable, its highly conditional, thus explaining the volatility. The liquidity floor sits on Fib extensions 1.272 and as of recently a liquidity hole took SPX underneath such level, but a saving grace from OPEC in a well-timed manner saved markets from the inevitable clearing process. Markets are at a cross roads, do we open door number 1 (Market Clearing) or door number 2 (FED).

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Morning Note February 23, 2016

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Morning Note-

Tues, Feb 23, 16

08:45 ET                                         Update:

[Stockboardasset] S&P futures -30bps

08:45 ET                                         Update:

[Stockboardasset] Nikkei -40bps

08:45 ET                                         Update:

[Stockboardasset]FTSE100 -30bps DAX -55bps

 

Last evening we brushed up on our Kondratieff wave reading to determine the winter cycle could be here. The winter wave has characteristics of excess capacity worked off by massive debt repudiation, commodity deflation, geopolitical risk and an economic recession. Monetary policies by the FED in the form of QE have protected the US economy from the inevitable clearing process.

Prior Session, the global stage of economies experienced a terrible miss on manufacturing, as well as the US. The US Manufacturing PMI was 51 vs. 52 (expected). The world’s largest minor BHP reported a massive profit drop and for the first time in 15 years slashed their dividend. BHP echoed what many of economist point out of slower overall growth in China. Not to mention Standard Chartered, the Asian focused lender reported a pre tax loss of $1.5 billion in FY’15, down from a profit of $4.2 billion prior year. This was the first annual loss since 1989. Weakness in Chinese equities was also seen overnight.

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Morning Note February 22, 2016

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Morning Note-

Mon, Feb 22, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures +113bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +245bps

08:45 ET                                         Update:  [Stockboardasset]FTSE100 +156bps DAX +202bps

 

Over the weekend, London’s Mayor Boris Johnson led to Sunday evenings collapse of the GBPUSD after he voiced his concern of supporting “Brexit”. The GBPUSD experienced it’s worst drop in many years, as EU frets the potential loss of it’s critical member. Around the globe, a confluence of manufacturing data showed a bleak forecast of future growth. From the Eurozone to Asia the manufacturing miss on data points to further weakness in coming months. Despite the global slowdown, BOJ still inspired the USDJPY spike driving global equities in an upward trajectory, and even breaking the EUREX. We were astonished to learn in the first 2 months, Chinese loan creation topped $1 Trillion. We assume Chinese firms will do what they do best and continue stockpiling commodities as Iron Ore touches $50 since EOY’15. The bad news is good news gang is back as Eurozone and Asia markets are marginally up. Global equities are sustaining the 11 session up trend leading into an important supply line. We note, recent movements in global equities are artificial and should warrant caution. US Equities have rallied in a short cover spree leading up to OPEX last week. The structure of the short cover is unsustainable and should rotate back into balance area of the high 180s on SPY.

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Morning Note February 19, 2016

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Morning Note-

Fri, Feb 19, 16

08:45 ET                                         Update:  [Stockboardasset] S&P futures +22bps

08:45 ET                                         Update:  [Stockboardasset] Nikkei +277bps

08:45 ET                                         Update:  [Stockboardasset]FTSE100 -53bps DAX +118bps

 

We warned yesterday of the artificialness of the global equity index recent advancement as central bank members generate conversation to manipulate market participants perception of reality. FED Williams was the recent member to speak as he told market, we can’t pull the rug out from the economy right now. Over the course of this week, mutable FED members have acknowledge WTI and USD are generating woes for the US economy. The Global Equity Index is comprised of major markets around the world have halted the 5 day advancement forming an evening star. We believe there will be a retracement of the recent advancement. US Markets have advance near +700bps in a week’s time as forced short covering was produced by OPEC. Coincidently, the SPX tested and rejected 1.272 extensions of the entire bull cycle as support. We learned our markets continue to be highly manipulative as the overseers of the wave function spew nonsense i.e. OPEC. OPEC’s perfect placement of their comments at 26 and range bound of 30 via comments depicts pure manipulation. 4% of the global producers <35 will be below breakeven as the likely hood of WTI rotating the low 30s for an extended period of time is high. We do see improving fundamentals in place for 2H16 in the US Rebalancing, but a dark spot in the refinery sector. Just recently, the market saw the fire sale of WTI from 30-26 as PSX dumped Cushing for immediate delivery. Rumors of an OPEC emergency meeting in the March Timeframe.

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