Charts To Watch Today
Jackson Hole is upon us and clearly none of us is going to be very active today, given that we’ll be treated not just to one but two central banker speeches during the session. Thus expect obligatory whipsaw across the board while market participants are trying to decipher various mutually contradictory statements by first Mrs. Yellen at 10:00am followed by Mr. Draghi at 3:00pm EDT. While I’m not going to do much trading today I can however still point you to the charts you ought to be watching:
The first one is a no-brainer – the U.S. Dollar (here shown are the futures the USDX ticks slightly different). Clearly it’s attempting to paint a medium term floor here and daily panel has been coiling up over the past week in anticipation of the ‘big day’. A drop through 92.7 leads to fiat currency hell and a pop above 94 will put the squeeze on any remaining Dollar bears.
Equities of course are well worth watching here as they are closely tied to what comes out of the Federal Reserve. The E-Mini futures have painted a classic series of lower highs and lower lows over the past two weeks with the major low touching my 100-day SMA. Seriously, it couldn’t possibly get any more textbook and you don’t need to be a world class analyst to figure out that a drop through the 100-day here would probably trigger a sell-off while anything else will most likely lead us back higher.
My charting x-ray vision must be getting rusty as the 2nd VIX Buy Signal earlier this week had completely evaded my attention. Tisk tisk… now this is very important so please pay attention. A double VIX Buy hasn’t happened for a long long time – and I track those things pretty religiously. What is supposed to happen of course is that we continue upward in the coming week or two. But if we DO NOT and if the E-Mini somehow breaches through its 100-day SMA then it would represent a major failure of a double buy signal, and most likely hell will break loose. And the timing for that could not be any better of course:
It just so happens that we are heading straight into trading week #36, which historically happens to be (drum rolls) the most bearish week of the year! That one is followed by an up week, which then again is followed by two consecutive down weeks, the second of which again statistically is the second most bearish week of the year. Ergo, if Yellen as much as coughs the wrong way strap on your helmets as we may be embarking on a rough ride.
Crude is coiled to the max on the weekly (right) panel whereas the daily has produced what a series of lower highs and lower lows. Looks bearish but then again, a breach through of that weekly NLBL at 50.41 could unleash a short squeeze out of Hades. And of course a further weakening Dollar may just provide the fuel needed. On the inverse a strengthening greenback could tip crude over the edge and lead us quite a bit lower here.
Finally gold which is currently parked at the falling diagonal I painted on the weekly panel. Clearly the key inflection point for more upside is the 1300 mark and if that gives it’ll unleash a blood hungry army of Viking berserkers on anyone still short the shiny metal. I for one hope this won’t happen today as I would rather take my chances near 1260 during a last kiss goodbye shake out. But frankly I have my doubts we’ll get that opportunity as gold looks like it’s ready to rock & roll and that soon.
Words To The Wise
Don’t do anything stupid today. If you must participate then use small position sizing. See you all Monday morning bright eyed and bushy tailed.