Some reflation hit the commodity space yesterday with oil, copper, and gold leading higher as the Powell doubled down on his dove speak in front of Congress yesterday.  The USD took a hit yesterday on Powell (-0.45%), and has continued lower overnight (despite the recent CPI data which came in hotter than consensus).  Our call is that we’ve seen the peak for the intermediate to longer term in the USD – but we expect it to make feeble attempts to hold the upside bias – manage the range. 

We’d fade most of this bounce in commodities here in the near-term, specifically oil and copper.  Note – at some point we’ll be bullish on the entire commodity complex as the USD suffers further downside into the Fall and we move back to a Growth Slowing/Inflation Accelerating set-up, but we’re not there yet. 

Asian equities bounced following a string of consecutive down days – the Kospi (South Korea) lead +1.00% and the Shanghai, Heng Seng +0.08%, and 0.81% respectively. 

Growth is slowing, that’s not up for debate anymore.  Our q/q forecasts for Q2 GDP is running at 1.33% (Seasonally adjusted), but the Fed continues to eat the Bears lunch every chance they get.  Corrective set back are warranted and likely from here, but undoubtedly the technical structure of equities is strong and projecting higher prices. 

The Fed is cutting, that’s no longer up for debate.  They’re clearly attempting to front run something (we think Q2 earnings and growth/inflation slowing domestically) – are they dovish enough and will they be able to bend and smooth economic gravity are the questions we’re asking ourselves now.  

Bullish
Gold	GC	Jan 8 2019	Commodities
Utilities	XLU	July 5 2018	Equities
2yr Notes	ZT	July 5 2018	Fixed Income Futures
10yr Notes	ZN	July 5 2018	Fixed Income Futures
30yr Bonds	ZB	July 5 2018	Fixed Income Futures

 

Bearish
Russell 2000	RTY	Feb 5 2019	Equity Futures
Financials	XLF	July 5 2018	Domestic Equities
Interest Rates	N/A	July 5 2018	Fixed Income

Actionable Levels

Market	Trend	Range Low	Range High
SP500	Bullish	2912	3019
Nasdaq Comp	Neutral	7848	8246
Russell 2000	Bearish	1515	1590
10yr Yield	Bearish	1.94%	2.09%
VIX	Bullish	1207	1758
Oil	Bearish	5576	61.05
Gold	Bullish	1386	1430
USD (Cash)	Neutral	95.06	97.26
EUR/USD	Bearish	1.11	1.14
USD/JPY	Bearish	107.03	109.16

 

Feel free to reach out to John Caruso at jcaruso@rjofutures.com or 1-800-669-5354 if you’d like to get a 2 month free trial of our proprietary trade recommendations by email. 

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