Trading with point and figure

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Baloney

 

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Cos you cannot trade price action with a set plan

 

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Disequilibrium between buyers and selles...price breaks out

 

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11700 needs to get sorted...one way or another

 

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Consecutive bearish signals
price in rez

 

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supp held@11700
decent bounce

 

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11785 break/poss rez

 

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Rip or dip.?

 

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Good Morning: The Long & the Short of it and The Bigger Picture - 28 May 2020 - ADM ISI

Inbox

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Ostwald, Marc

08:36 (37 minutes ago)

to Marc

- Busy data schedule in EU and US; digesting Fed Beige Book, escalating
US / China tensions; Germany/Spain CPI, EC Confidence surveys; US revised
Q1 GDP, Durable Goods, Jobless Claims, Pending Home Sales; KC Fed
Manufacturing; auto & retailer corporate earnings; auctions in UK, USA
and Canada; rate decisions in Poland and Nigeria: EIA oil inventory data

- Emerging divergence between US and EU on China

- Germany/Spain CPI: energy again likely to be key drag, food perhaps an
offset; but data collection challenges and erratic price formation
keep focus on activity and labour indicators

- EC Confidence surveys: expected to bounce modestly after slide, still
likely not better than GFC lows

- US Q1 GDP: few revisions expected, focus already shifted to Q2

- US Durable Goods: autos perhaps more of a drag than aircraft on headline;
core orders decline in focus

- US Jobless Claims: further slowdown in initial expected, focus on signals
on re-hiring from Continued Claims

- Charts: USD IG Corporate issuance; WTI Oil future; EUR/PLN; EC Industry
vs Services Confidence; Eurozone CPI breakdown

..........................................................................

********************
** EVENTS PREVIEW **
********************

The data schedule is heavy on US releases - revised Q1 GDP, Durable Goods, weekly jobless Claims, Pending Home Sales and the KC Fed Manufacturing survey; though ahead of that there are German and Spanish CPI and a raft of European confidence surveys will attract some attention, with China Premier Li's closing NPC address and the expected 25 bps rate cut in South Korea to be digested. A busier day for corporate earnings sees results from automakers JLR and Nissan, as well as more from US retailers via way of Costco and Nordstrom, amongst others. Govt bond supply is again plentiful with another deluge of muni issuance in China, UK 7 & 29-yr, US 7-yr and $230 Bln of various Bills, and Canada selling 5-yr. Last but not least, BoE, ECB and Fed speakers are plentiful, while central banks in Nigeria and Poland are seen holding policy rates, with some NBP now hinting at a rate hike in the not too distant future, given that inflation remains relatively high, which in turn has prompted a relatively sharp rally in the PLN (though it remains well contained in its longer term range vs. the EUR). Politics remains a key point of focus, with US/China tensions escalating following a) Pompeo's statement saying that Hong Kong no longer deserves US 'special status' accorded prior to 1997, and b) the BC court ruling on the extradition of Huawei CFO Meng. Division between Europe and the US on China are also coming into clear view with Merkel stating that Germany will prioritize relations with China when it assumes the presidency of the EU on July 1st. A close eye will also need to be kept on the UK, where the furore over PM Johnson's adviser Cummings appears to have bounced the UK govt into implementing its 'test and trace' programme as of today, even though many anecdotal reports suggest that the necessary infrastructure has not been fully tested, and may not be effective. It may prove effective, but it is a very high risk strategy to try and distract focus from the Cummings saga, and per se is at best cavalier, and at worst runs the risk of inciting even more public unrest, and possibly dissent and resistance. Last but not least, oil markets will be watching this afternoon's EIA oil inventories data very closely after the overnight API report showed a sharp 8.7 Mln rise in crude stocks against forecasts for a 1.9 Mln draw, with gasoline and distillate data also posting larger than expected builds, and thus leaving some questions about the extent to which futures prices can extend their recent recovery.

** Germany / Spain - May CPI **
- Ahead of tomorrow's Eurozone readings, German and Spain publish provisional CPI readings, with both expected to post a drop of 0.1% on the month, which would drag headline CPI rates down to 0.4% from 0.8% and -0.9% from 0-0.7% respectively. Energy prices will again be the main drag as they were in April (see chart), though there may be some offset from Food; however as elsewhere compilers are struggling to collate reliable data, both due to problems in collecting data, and distortions due to lockdown related restrictions. As such CPI measures may well display some rather quirky & erratic patterns in coming months, and activity and labour data and surveys will continue to be the primary point of focus for markets and policymakers. It should be added that as most of the world starts to relax lockdown measures, supply bottlenecks for some products due to recent output suspensions/cutbacks may also result in further price distortions.

** Eurozone - May EC Confidence surveys **
- While there were sharp revisions to yesterday's French confidence surveys, the original April surveys were notably out of line with patterns observed in surveys for other major European economies, as can be seen in the EC Industry and Services Confidence chart attached. Therefore the risks of similar revisions in today's EC surveys for May look to be quite low. These are expected to see a modest bounce across all measures, but still leaving most measures barely above the previous record lows seen during the GFC.

** U.S.A. - Q1 revised GDP, Durable Goods Orders & Initial Claims **
- Following on from yesterday's Fed Beige Book https://www.federalreserve.gov/monetarypolicy/beige-book-default.htm , which noted: "although many contacts expressed hope that overall activity would pick-up as businesses reopened, the outlook remained highly uncertain and most contacts were pessimistic about the potential pace of recovery"; Q1 GDP is expected to be unrevised at -4.8% SAAR, and for many the report will be of little relevance, given that the focal point is just how bad Q2 GDP will be. In the detail, a minor upward revision to Private Consumption to -7.5% is anticipate, offset by a bigger drag from inventories, but the focal point should probably be the first estimate of Corporate Profits. Durable Goods for April will be rather more timely and are forecast to collapse 19.1% m/m, with the ex-Transport measure seen down 15.0% m/m, though with Boeing Orders net of cancellations dropping slightly less on the month, and a favourable seasonal adjustment (Orders tend to drop in April), the key factor for Transport Orders may well be vehicles rather than aircraft; core Non-defence Capital Goods ex-Aircraft Orders are expected to drop 10.0% m/m, though in Q2 GDP terms the anticipated 12.0% m/m fall in core Shipments is of greater importance. But it remains the case that all of those numbers are moot by comparison to the unprecedent level of job losses in such a short period, and the reality of the risk that many of these turn out to be permanent rather than transitory, and adding to job insecurity among those that are employed, which will be a large drag on Private Consumption, in addition to the broader restraint on activity due to Covid-19 infection fears, for as long as there is no vaccine. Initial Claims are expected to slow again, but at 2.10 Mln the pace would still be 2.5x the previous all-time records, the rise in Continued Claims is expected to be relatively modest from 25.07 Mln to 25.50 Mln, with easing of lockdown restrictions expected to have prompted some re-hiring, and thus offsetting some of the layoffs - in that respect anything better than expected will doubtless be 'jumped all over' by the massed armies of Panglossian fundamentalists that stalk the halls of financial markets. The word to the wise is never to over-extrapolate from one week's data.

========================== ** THE DAY AHEAD ** ===========================

 

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Could get a 100 point rally to our 11878

 

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There again we might not

 

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\\\\feelin blue..??

 

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gotta get thru 11.8K first

 

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yellow...dump

 

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A bad bounce off our 11743 support..and dump

 

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and bounce