Enis’s Macro Wrap – Which Way from Here?

by Enis November 7, 2012 7:21 am • Commentary

With the elections over, and the House, Senate, and Presidency essentially unchanged, markets will quickly shift their eyes towards the events of the next few months.  Foremost is the fiscal cliff, as Dan mentioned in his MorningWord yesterday.  But issues and events aside, I wanted to do a quick chart tour of macro markets as we approach the end of 2012.

First, SPX:



Has found resistance at the 50 day moving average at 1435.  Obvious support at 1400, but more important support at the 200 day ma (and summer resistance) at 1380.

Treasuries, through TLT:



This has been a choppy, listless market, stuck between 120 and 130 for months.  Perhaps the most notable aspect of the price action is that QE3 has not sent TLT lower (while QE1 and QE2 did).

Dollar, with UUP:



The dollar briefly made a yearly low the day of QE3, but has since gradually recovered.

What’s notable about all 3 major markets (stocks, bonds, dollar) is that each market is trading between its 50 day and 200 day moving average.  In other words, there has actually not been much movement in the past 6 months, but a lot of up and down in between.  I also view that as a sign that we sit at a crucial inflection point to determine the next trend of risk-on or risk-off.  I expect a convincing move in the next few weeks.

Markets overnight:

  • Active overnight session in SPX futures.  The SPX futures initially traded down to 1411, but then rebounded 20 points to a morning high of 1431 shortly after Europe opened (and rallied) in a broad risk-on reaction.  However, SPX futures are down about 12 points from that morning high around 5:30 am EST, now indicated down 0.3% from yesterday’s close.
  • Asia was mixed, with no big moves in either direction.  Europe opened in the green, but is now trading flat.  German construction PMI and industrial production data were both weaker than expected
  • Treasury bonds have been higher the entire session, up about 1% right now (breaking above the 50 day ma shown in the chart).
  • The dollar has just swung from lower to higher against the Euro on this risk-off move in the last 30 minutes.
  • Gold and silver were sharply higher, but are now both close to flat.  Oil and copper are both lower.