Trading with point and figure

DAX
in q pivot area now
10689 area if that fails

ek2i9z.gif
 
The lockout rally continues. The Russell 2000 has moved up 11 of 12 days, and several indexes moved to new all-time highs yesterday.
I’ve said since soon after the election that rallies like this won’t let you in. If you wait to be absolutely sure the rally has legs, you’ll never get a chance to get in. The market won’t pause or pullback. It’ll just keep going and going.
There’s an old saying on Wall Street: Bull markets don’t let you in; bear markets don’t let you out.
This has been a classic example of a bull market that has not let people in. It just keeps going, and anyone waiting for a rest or dip is still waiting.
Sooner or later the price action will calm down…but because Wall Street in a sick place, it probably won’t happen until some of the sideline money gets put to work. Then a top will be put in place, and those late-to-the-party investors will sit in losses. Fun stuff.

from Jason leavitt
 
- 'Flash' PMIs and US Durables, jobless claims, New Home Sales and House
prices top statistical agenda, all eyes on UK Autumn Statement and
US Nov 1-2 FOMC minutes; Germany, Portugal and US to auction bonds

- Eurozone PMIs: seen little changed vs October... as usual

- US Durable Goods: Aircraft orders set to boost headline, core measures
expected to eke out modest rise, underlying trend improving

- US Manufacturing PMI: expected to consolidate around October's one year
high

- US New Home Sales: Starts and Existing sales imply some upside risks
relative to expected slip

- UK Autumn Statement: Hammond tried to play down expectations of large
fiscal stimulus, market expectations all over the place, recipe for
FX and rate volatility?

- US FOMC minutes: focus on discussion on policy outlook and 'credibility'
factor


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

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

Today will be the high watermark for this week in terms of data and events. Statistically Eurozone 'flash' PMIs and Brazilian inflation are accompanied by a pre-Thanksgiving rush of US data - Durable Goods Orders, weekly jobless Claims, FHFA House Prices, Markit 'flash' Manufacturing PMI, New Home Sales and final Michigan Sentiment - along with the final reading on Mexican Q3 GDP. In policy terms, UK Chancellor Hammond outlines the government's spending intentions in the first post-Brexit referendum Autumn Statement, while the Fed releases the minutes from the November 1/2 FOMC meeting and Banco de Mexico issues its quarterly inflation after hiking rates by 50 bps last week. Govt bond supply comes in the form of a very small EUR 3.0 Bln of 10-yr German Bunds, EUR 750 Mln of Portugal 5-yr OTs and USD 29.0 Bln of US 7-yr Treasury Notes.

** U.K. - Autumn Statement **
- While the immediate aftermath of the referendum saw a lot of talk of major fiscal stimulus, Chancellor Hammond has been rowing back on expectations for a protracted period, culminating in last weekend's reference to Britain's 'eye-wateringly high' level of public sector debt (and indeed consumer debt). The £1.3 Bln spend announced for road infrastructure looks to be a pittance given the estimated bill for urban road repairs is north of £1.0 Bln; what is done to be boost Britain's chronic housing shortage will also be of particular interest. But in the first instance it will be how much the Budget is expected to overshoot this year (modestly ameliorated by yesterday's lower than expected PSNB), with guesstimated in the £6.0-8.0 Bln area, and how much projected spending will be boosted relative to the March budget estimates. Given a very broad spectrum of estimates for the next fiscal year, which range from an increase of £15 Bln to £38 Bln, there is plenty of scope for volatility in both GBP exchange rates and indeed Gilts, the latter above all in respect of how much of any extra borrowing will be targeted at the long end of the curve. It will also be interesting to see how much (in)direct pressure is put on public sector (and to a lesser extent private) pension funds to fund the increase in infrastructure spending, with previous 'inducements' having been decidedly underwhelming, though a regulatory type squeeze may well be deployed.

** Eurozone - November 'flash' PMIs **
- As is often the case, the consensus forecasts look for little change in today's flash PMIs, with the only marginally significant change being an expected rebound in the French Services PMI to 51.9, after a relatively steep fall to 51.4 in October from 53.3, while German readings are expected to consolidate October's gains from terror related weakness in August and September. As ever national surveys such as the Ifo generally offer a more reliable 'steer' on the nuances of the economic outlook, though even these would appear to have been signalling a more material improvement in growth prospects in the Eurozone, while 'hard' data has been rather underwhelming, as the ECB has been at pains to emphasize in recent weeks.

** U.S.A. - Oct Durable Goods Orders, New Home Sales **
- September's Durable Goods Orders were rather mixed, though the primary drag at the headline level (-0.3% m/m) came from Defence (after two very strong gains in prior months), with ex-Defence Orders rising 0.7% m/m, thanks above all to a 1.2% m/m rise in Machinery; and while Non-defence Capital Goods Orders ex-Aircraft(the so-called CapEx proxy) dropped 1.2%, this followed solid gains in the preceding 3 months. Aircraft Orders are expected to see strong gains in the October report, and to pace forecasts of 1.7% m/m rise, while core measures are expected to eke out modest gains - ex-Transport +0.2% m/m and Non-defence Capital Goods Orders ex-Aircraft 0.3% m/m. While certrainly not 'punching out the lights', it is clear that the underlying trend has improved markedly, as headwinds from the energy & resources sectors abate. Initial Claims are expected to reverse most of last week's fall to a fresh 43-yr low of 235K, but remain very close to prior lows at 250K, thus underlining the strength of the labour market. After the massive rebound in Housing Starts last week and yesterday's unexpected 2.0% m/m rise in Existing Home Sales, today's New Home Sales are projected to post a modest 0.5% m/m fall after a 3.1% m/m gain in September, though the risks would appear to be to the upside. As for the Markit Manufacturing PMI, this is seen little changed at 53.4 after rising to a 12 month high of 53.5 in October, though in truth the headline index has been in a relative tight range for the past year of 50.7/53.5, in contrast to the sharper gyrations of the ISM Manufacturing (48.0/53.2); Employment, Price and Orders indices will be closely watched. Final Michigan Sentiment also bears some scrutiny for a potential Trump effect, given the rest of the responses captured the post-election period, with the provisional reading (91.6) bouncing back to September's level after 'diving' to 87.2 in October.

** U.S.A. - November 1-2 FOMC minutes **
- Given that this was a non-press conference meeting, and given that markets are now discounting a December rate hike, the discussion around the policy outlook will be of particular interest, particularly the decision to omit inflation remaining low in "the near term", even if this was more a recognition of fact than a policy signal. It will also be interesting to see if there were any nuanced changes to staff forecasts on the economic outlook, though in truth they are likely to have wanted to stay their hand on that front given the uncertainty related to the outcome of the election. It will also be interesting to see what if any discussion was had about the Fed's credibility given the seemingly incessant dithering that has been all too evident over the past year.


from Marc Ostwald
 
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