Interest Rates are the Target
A few weeks ago, CNBC rolled out yet another economist, after the equity markets moved lower to prove they were right again. Every time the market moved higher, another analyst or economist was there to exclaim, markets are overvalued. Fair enough, but I’ve lost track of the narrative. In the Fall 2017, the matra was “no way tax-reform gets passed.” The markets were supposed to head lower. different. Before that it was funding the government among other things.
Price is King – Futures are Higher
The only thing that matters is price. We can guess and opine on what catalyst will sink the markets. But, price and what institutions are doing are the only true harbinger of thinigs to come. To put it another way, since insitutions rule the market, where they are placing their trades should be our focus. The size and quantity of block trades and price tell us where to place support and resistance.
Last night, after the market closed, institutions began their trading. 270.00 (+/-) blocks stand out, so the idea is open above on Thursday is bullish and open below is bearish. Simple enough, yet the media is once again repeating the current matra. “It’s about interest rates stupid.” Perhaps it is about rates and perhaps its Congress and the immigration debate, or inflation. WHo the hell knows? We surely do not have all the answers.
Interest Rates? Or Cycles?
Noise, all of it. All that matters is price. The cycle in the indices and individual sectors all look similar. Price pulled back, bounced and inflected at a new pivot. For now, we see a lower high, but major VBP support does reside just below. This level is important in the short-term. Blocks are below 270.00.
If price action moves below 270.00 then next level 268.50 (+/-) and 258.50 (+/-) would be in play.
While CNBC and Bloomberg continues to scare everyone into watching their programming, price still remians the one benchmark that does not have a bias.
Happy Thursday,
Vinny
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