E Market Deluge

Commodities: Oil lower, Gold higher, Copper off 1.5% to $2.78

  • Oil: $71.76 off 1.95%.Range $71.63-$72.76. WTI lower on API and equity hit to demand views – 55-day back in play at $69.24 as base with $70 pivot before that against $73 and $75.08 Oct 10 highs. Brent $81.26 off 2.7% - also lower but with 55-day at $77.52 further away and $80 base holding with $81.50 pivot against $83 and $86.74 Oct 4 highs. 
  • Gold: $1205 up 0.9%.Range $1194.50-$1206. Gold going up fast with $1180.90 then $1160.40 far away and as 55-day break at $1200 opens $1211.1 Sep 21 high retest. Silver $14.44 up 0.95% - still watching $14.18 Sep 27 lows as key support but $14.50 pivot back in play for $14.70 retest. Platinum up 0.3% to $825.30 and Palladium up 1.25% to $1082. 

Conclusions: No longer a diverse market?  The usual way portfolios protect from crisis is through the power of diversity. Correlations being negative between sectors and different asset classes drive such logic and bring stability in scary times.  Usually, the S&P500 itself is diverse and needs little more than its wide net of sectors and different companies to keep stock investors happy. This chart of the S&P500 implied correlations says it all about why yesterday and perhaps today matters.  This is no longer a market of stocks but one stock market. The push to deleverage any and all positions will be the central theme if we continue to see momentum unabated. The break in the S&P500 200-day support opens a test of 2600. 

Economic Calendar:

  • 0730 am ECB monetary policy meeting accounts
  • 0830 am US weekly jobless claims 207k p 205k e
  • 0830 am US Sep CPI (m/m) 0.2%p 0.2%e (y/y) 2.7%p 2.5%e /ex food+energy 0.1%p 0.2%e 2.2%p 2.3%e
  • 0830 am Canada Aug new housing prices (m/m) 0.1%p 0.1%e
  • 1100 am US weekly EIA crude oil stocks +7.975mb p +5.082mb e
  • 1200 pm US WASDE report
  • 0100 am US sells $15bn 30Y bonds
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