Wednesday, April 29, 2020

What would it take ...

... for the Fed to announce a policy of direct ETF purchases to support U.S. equities?




I bet a mid-May oil crisis could do it.

The June /CL contract settlement is hanging out there waiting to wreck the fake US shale oil industry, the worthless paper underwriting the mess, and the financial infrastructure that started it all.  Oil was up 30% today at one point, in a crazy act of denial of what is inevitable.

The Saudis have sent an armada of oil tankers to our shores, and we cannot not receive them, or they will go somewhere else, to be paid with something else (non-$USD).  So, short of sinking these ships in the Atlantic, we are trapped now.


S&P 500 hourly May crisis and collapse

What if we don't visit the 200 DMA now?  What if we finally have a proper reaction to these disastrous unemployment reports tomorrow morning?  Any rollover into "C" should be as shocking to us as the initial panic waves off the 3393 bubble top.  The floor just drops out.

The heart of the oil crisis, the chaos into the 5/19 end of trading for 5/20 delivery, becomes the 3rd wave down of such a crash.  The final waves of stock liquidation, probably the little people at this point with their 401(k)s, take us to the FOMC in early June, to beg for Fed pesos to keep the S&P afloat.

So it's June at the earliest, because the fair value of the S&P 500 is still 520.

27 comments:

christiangustafson said...

The /ES looks rather "complete" tonight, and it would not surprise me to see it deep in the red tomorrow.

Bryan Franco said...

A triple zig zag into a wall of supply?

christiangustafson said...

I've never admired thee Saudis or had the least bit of respect for them. But this move with the tankers is badass.

I don't see how May isn't a complete shit-show from this.

christiangustafson said...

Verrrry interesting overnight session in the /ES futures, a possible reversal.

But will we ever get the follow-through? The month of May awaits.

Kevin said...

BTFD meets reality at massive resistance. Could go either way.

Anonymous said...

BPSPX is totally jacked today. It just plunged to ZERO! Technical alerts from stock charts documented the fall.

https://twitter.com/search?q=bpspx&src=typd&f=live&vertical=default



christiangustafson said...

We just crossed a line.

christiangustafson said...

I am informed now that although we did not reach the 200 day SMA on the S&P 500 yesterday, we did make it to the 200 day EMA.

So we have that going for us, which is nice.

whahn279 said...

I agree with direction but not with timing. Stocks are not done on the upside,
and nobody cares about oil

jimmy said...

You certainly have made a bold call, expecting 520 by June. That is the most bearish call I have seen. Don't you think the Fed will be buying everything including stocks well before we get to 520? Their recent all-in approach supported the market and led to the 30% rally. Why won't it work the next time? Remember, they said their resources are unlimited.

Anonymous said...

Great post on Pretzel Charts today. I'm afraid he might be right.

christiangustafson said...

No one expects 520 SPX if at all, then barely more than a month from now. It depends how serious the oil crisis is this month combined with the new political fireworks vs China. The last down leg would actually get ahead of the trend set from March.

520 is a perfect storm that exceeds all sane expectations, but it forces the Fed's hand and we're all monetized from June forward.

But that's just it, I don't see any inherent value in all these debt-ridden companies.

christiangustafson said...

More upside? I dunno, it's May and we have already back-tested the old channel.

2800 visit today -- breakdown. Then 2468 area, maybe political wrangling with CCP creeps over the weekend and we shit the bed on Monday.

Love seeing the CNY get torched.

christiangustafson said...

Today was 2/21 equivalent on the timeline -- a 100-handle gap-down Monday morning followed.

We can stair-step our way down the supports at 2700, 2450, and 2085.

jimmy said...

A gap down on Monday is certainly possible if China escalates the war of words with the US. Then the Fed comes out and announces another program :)

christiangustafson said...

Fed's on ice until June, Jimmy. They are patient and cautious!

Kevin said...

I expect Trump to walk back his China trade tariff thing this weekend. That's the usual MO. Get the bears excited, then pull their shorts down. Not enough fear - too much hope of mega profits - in bear-land for stocks to go down. When that changes, then watch out below. Maybe one more high is all that is needed, along with a close - and run above - the 200 day for SP near 3000.

Anonymous said...

According to Pretzel Charts it's either all over now, or we have a few more years of gas in the tank then it's all over. Neither are good scenarios.

umdengineer said...

According to Jeff the Fed hasn't bought any CBs yet.

https://mobile.twitter.com/TruthGundlach/status/1256352949787176960

Wonder what happens when they actually do.

Randall Beehomes said...

I'm still in the negative rates are coming to the USA too. I know they say they have watched Europe blah blah blah. But they will say Europe and Japan were not aggressive enough and you end up at like 2% negative here or something like that. Remember short rates would be there but you could still see a 10 year around 0. Mortgages wouldn't be negative like in Nordic regions where that happened. But you might see a 1% 30yr or something like that. Grandma needs to be punished for her savings. It's important that the Boomers can strangle the generations both above them and below them. B/c they are the chosen people. Reminds me of the book of Genesis. Perhaps it was written by a boomer.

christiangustafson said...

Looks like we gap down and out of the rally channel from the 2009 lows tomorrow ... and keep going.

Deeznizzuts said...

Better turn soon I guess.

Randall Beehomes said...

And now negative rates on 2 year. Just the tip. Just to see how it feels?

Randall Beehomes said...

Correction, interest rate futures calling for negative rates by Dec

christiangustafson said...

We are testing the bottom of this channel right now.

Randall Beehomes said...

You were warned

Deeznizzuts said...

We were warned about what exactly.