evening wrap
market vibes
December 12 … )
“Whither goest thou, America in thy shiny car in the night?” Kerouac
PPI confirmed what CPI implied, inflation is still here. Will it get worse?
Bonds started the day weak and accelerated down after PPI. Fixed income was weak throughout the session. The 30-year auction drew 4.535% vs 4.523 when issued. From Friday’s high to the close today March bonds fell a full 3 big handles from 120.08 to 117. 09. Technical development has been featureless, OI and volume flat. The chart looks like a leader, not a follower.
The Dow Industrials fell for a 6th consecutive day of lower lows and lower highs while diverging from the NDX 100’s sharp rally to all-time highs yesterday. S&Ps and NDX were moderately lower all day and made new lows on the close.
Trudeau said he’d put an export tax on oil and uranium if Trump puts tariffs on Canadian imports in America. despite that prices were steady across the NYMEX complex apart from an early dip. The range in force for several months is showing no sign of a breakout either way.
Speaking of ranges, Bitcoin futures are no stranger to long periods of horizontal activity. Dec Futures traded 100k on Nov 22. So far range extension higher has been elusive. OI is stable but flat, Ocillators are flat and prices are flat. There are no new narratives for the coin.
Short covering in nat gas has been steadily driving up prices (next chart). The November rally and this one in December have a similar technical pace and development. Usually, I’d say declining OI indicates the end of a move but OI is so big in natty it has a lot of room to unwind, especially if we get a late La Nina and the Trump effect develops as expected. If, however, prices rise and OI rises concurrently that would imply new buyers are not only competing with shorts for liquidity, it would mean new buyers are out-sizing them. So far, it’s all one way.
In other markets precious metals got hosed as the rout in EFP spot length climaxed on Tuesday and Wednesday. So that's over. The dollar is strong and cheaper rates in Europe and China are going to keep it strong. The Dec cut seems like a long shot.
my vibe
I doubt there are going to be many more big moves this year. Maybe a 3.10/ 3.70 range in natty. Gold could range between 2650 and 2700 or tighter. Stocks look tired. Even a whip won’t help. Another rate cut might hurt long bonds. or a pause might hurt them more. There is nothing worse in trading that having an unforced error in December. It’s time to spend money not risk it.
Good luck in Asia
JJ
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