Trading with point and figure

[Dentalfloss]

correction 23500

 

[Dentalfloss]

updated again

 

[Dentalfloss]

23660 is support area
there now

 

[Dentalfloss]

23500-23660 is a decent supp area..supposedly
could get a hammerin

 

[Dentalfloss]

Whack

 

[Dentalfloss]

scalps off that support area
and then it broke

 

[Dentalfloss]

Mornin folks

 

[Dentalfloss]

SPX into the open
lookin a tad oversold

 

[Dentalfloss]

Close up

 

[Dentalfloss]

Ftse updated
our rez line worked a treat

 

[Dentalfloss]

Naz 100 updated
a tad out on our rez area....who cares
great results

 

[Dentalfloss]

Dow
our 23500 supp area worked a treat yesterday
a tad out...the low was 23455
when yu are catching a falling knife...yu have to expect overshoot

 

[Dentalfloss]

Do the Indices get bought from oversold..??

 

[Dentalfloss]

SPX
areas to watch

 

[Dentalfloss]

DAX into the open

 

[Dentalfloss]

Pre-FOMC vigil (market meltdown? ed.) continues; digesting empty handed
Xi speech, awaiting Germany Ifo survey, US Housing Starts and Canada
Manufacturing Sales; more ECB speakers, no change seen in Hungary or
Morocco rates

- Markets 'blackmailing' Fed? Not likely, but Dudley comments on financial
conditions and comparison with 2005-2006 well worth noting

- Empty handed XI speech an example of Hirschmann's 'hiding hand'

- Germany Ifo: further fall to fresh 2018 low expected, but perspective
required

- US Housing Starts: seen little changed, though Street 'whisper' likely
looking for a fall after further NAHB slide

- Canada Manufacturing Sales: expected to rise modestly again, but well
off pace of February through July, first of run of key Canadian data
this week

- Charts: FOMC rate probabilities & GS US Financial Conditions Index

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

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

The pre-FOMC vigil and wind down to the Christmas and New Year holidays continues with a very modest run of statistics - Germany's Ifo survey, US Housing Starts and Canadian Manufacturing Sales - and a very limited schedule of events - December RBA minutes, some ECB speak and expected no change policy decisions in Hungary and Morocco. However pride of place was meant to go to China President Xi's address to the annual economic policy summit, which celebrates the 40th anniversary of Deng Xiaoping's reforms, and obviously is coming around just when fears about a sharp slowdown in the Chinese economy appear to be getting traction in actual terms. But in the end, there was nothing in the way of announcements, though the summit does continue until Friday, even if the increasing impression is that the authorities are at something of a loss about what to do. Perhaps this is another prime example of Albert Hirschmann's concept of the "Hiding Hand". He above all challenged the dogma that has been attached to Adam Smith's 'Invisible hand' , above all its over simplification of human behaviour into a set of axioms steeped in 'laissez-faire' and 'rational choice' dogma. Hirschman argued that creativity is the key problem solving tool when we face unexpected situations; and that it is only via the experience of impotence when faced with the unexpected that we develop the innovative knowledge to solve problems, and that 'rational choice' often stifles innovation and creativity. This of course also echoes Einstein's oft cited observation that "We cannot solve our problems with the same thinking we used when we created them".

It is hard not to have the sense that markets are now actively blackmailing (yes I know markets are never that smart of scheming!) the Fed into a rate pause tomorrow (probability down to 66%, see chart), but perhaps they should note a) where the US Financial Conditions Index is (see chart) relative to 2015, and b) read these comments from former NY Fed chief Dudley in today's WSJ. He is talking about the lessons from the 2005-2006 period, when the Bernanke signalled it was ultra 'data dependent': "The lesson from that period is you've got to tighten financial conditions, and the Fed didn't really tighten financial conditions in that period" (when there was not $17.0 Trln of central bank QE sloshing around markets) .

Unsurprisingly given last week's PMIs, the Ifo Survey is forecast to slip again to 101.7, which would be the low for the year (July was 101.9), though still implying a solid pace of activity by any historical standard, and certainly an overall modest drop from last December's 105.1 cyclical high. Canada's Manufacturing Sales data kick off a busy week for statistics which includes CPI, Retail Sales, monthly GDP and the BoC's quarterly surveys (Business Outlook, Loan Officers), though following the BoC meeting, markets have pushed back the possibility of a further BoC rate hike all the way to April, and even that is seen as little better than 50/50. In perspective terms Manufacturing Sales have lost considerable momentum since July, with the expected 0.5% m/m following 0.2% and -0.5% in prior months, as against gains of 1.0% plus five of the six months to July, per se vindicating the BoC's signal of a lower near-term rate trajectory, with yesterday's accelerated fall in Existing Home Sales (-2.3% vs. prior -1.6%) only adding to that impression. Yesterday's further drop in the NAHB Housing Market Index (56 vs. November 60 and October 68 will certainly have the alarm bells ringing about the housing market, and with the sharpest 2 month tumble occurring in the NorthEast (37 from Oct 61) suggests that affordability is becoming a major issue, even if the unusually high level of respondents (412 vs. a 6-month average of 344) does beg some questions. Be that as it may, the previous month run of reports was remarkable for the fact that the normally gradual movements in the NAHB vs. volatility in Starts and Sales was upended, with Starts (forecast +0.6% m/m at an SAAR pace of 1.235 Mln) and Existing Home Sales little changed on the month, with the consensus looking for a similar pattern this month. As previously noted, Housing is an at best marginal contributor to GDP at the current juncture, though a further persistently sharp drop in residential construction would inevitably have some impact, above all in terms of any companies with proximate refinancing needs, particularly where balance sheets are relatively highly leveraged in debt terms.

From Marc Ostwald

 

[Dentalfloss]

Dow into the open
Tricky......lol

 

[Dentalfloss]

bulls need to see that line as support

 

[Dentalfloss]

Twas tricky

 

[Dentalfloss]

Cable updated