Wednesday, 13 December 2017

A third rate hike

As expected, the Fed raised rates for a third time this year, +25bps to a new target range of 1.25-1.50%. Yellen is now fading into the sunset, and a grander issue is that it will be on Powell's watch, that things start to break.


sp'weekly1b



WTIC, daily


Yellen's last major press conf. Note the 10yr for historical purposes!

Summary

sp: today was just another day for the equity bulls, as the sp' broke a new historic high of 2671, a mere 12pts shy of my original year end target of 2683. Pretty incredible. The 3K threshold seems a given.. whether in late spring... or the summer. Things will get real 'tricky' around 2950/3047. The latter number should be recognised by some out there in fibonacci land.

WTIC: despite bullish inventory data, oil had a tough day, settling -0.9% at $56.60, settling on rising trend that extends back to late August. A break wouldn't necessarily be super bearish, as the m/t trend is currently bullish. Only bearish if <54s. Soft technical upside target are the 61/62s by early spring.
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Looking ahead

Thursday will see the usual weekly jobs, retail sales, import/export prices, and busin' invent'



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Goodnight from London
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*the next post on this page will appear Thursday, around 6pm EST.

VIX and Index update

US equity indexes closed a little mixed, sp -1pt at 2662. The two leaders - Trans/R2K, settled +0.3% and +0.5% respectively. VIX settled +2.6% at 10.18. Near term outlook still threatens a brief washout to the sp'2646/36 gap zone, before powering back upward into the 2680/700 zone.


 sp'daily5



Dow



Summary

sp: a new historic high of 2671, but settling fractionally lower, as cyclically, the market is s/t tired. A mini washout to the 2646/36 gap zone is possible, before swinging strongly back upward into the Christmas break. M/t... the sp'3K threshold is very much due by mid 2018.. something the mainstream are still not expecting.
 
Dow: a new historic high of 24666.02, settling higher for a fifth day, +0.3% at 24585. The 25K threshold is clearly due.. whether just before year end, or in early January.



VIX'daily3


The VIX remained subdued for much of the day, as the sp'500 broke a new historic high. However, with late afternoon (if only minor) cooling, the VIX clawed upward, settling +2.6% at 10.18. Near term offers a burst to the 11/12s - with sp'2640/30s. The key 20 threshold looks out of range for a very considerable time.


Looking ahead by 6pm EST

Closing Brief

US equity indexes closed a little mixed, sp -1pt at 2662. The two leaders - Trans/R2K, settled +0.3% and +0.5% respectively. Near term outlook still threatens a brief washout to the sp'2646/36 gap zone, before powering back upward into the 2680/700 zone.


sp'60min






Summary

 closing hour action: a little choppy, leaning weak, and turning fractionally negative.
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... and that concludes Wednesday, as rates were hiked for a third time this year, as expected.

It was a day for the equity bulls, as we did break a pair of new index historic highs in the Dow and sp'500.

Notable options. >120000 of the Dec'22nd SPY $270 calls.. effectively 'seeking' sp'2700 ahead of the 3 day Christmas holiday break. Its a bold trade (costing around $2.3 million), but the m/t trend is clearly supportive of it.

Ohh, and we now have just 11 trading days left of the year. Tax loss selling in some stocks (such as GE) will likely be an issue. Broadly though, most recognise the sp'2700s and Dow 25k are on the menu.
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This wasn't enough to merit going out today... not least on a fed day!

Have a good evening
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more later on the VIX and Indexes by 6pm EST