What will Today's Markets Present Us?

Tuesday, December 6, 2022-- Mptrader Pre-Market Update: Macro Musings...

Friday was a peculiar session in the equity (ES) AND bond (TLT) markets because they reacted positively to what was perceived as "too strong" economic data to be considered good news that might entice the Fed to adopt a "kindlier and gentler" policy posture at its upcoming decision on December 14. Then yesterday, those very same markets retraced all of Friday's up moves, as if the post-Jobs Report reaction was an error! 

And then there is Crude Oil, which initially climbed from 80 to 82.70 (+3.4%) in its initial reaction to the OPEC+ decision to maintain the 2 million barrel per day output cut implemented at the October meeting, but thereafter, yesterday into today has plunged to 75.58, a decline of 8.6% in about 24 hours. Perhaps there is a huge flotilla of Russian crude oil bobbing around off the coasts of Asia and Europe that will keep pressure on prices for some time to come, or alternatively, given the mini-implosion of commodity prices across the board yesterday, just maybe Mr. Market is sniffing some sort of face-saving peace accord or cease-fire between Russia and Ukraine before year-end? Who knows? What we do know is that the day-to-day volatility has ratched-up noticeably in the past couple of weeks.

What will today's markets present us? 

ES Bottom Line for today's session: My battle lines are drawn at 3975-3992 on the low side versus 4040-4042on the high side (see my attached hourly chart). Whichever side of the range is taken out will trigger directional follow-through toward either target zones of 3900-3920 or 4085-4110...

Cash VIX (possibly the most important chart of my initial update this AM)-- Bottom Line: All eyes should be focused on the dominant down trendline off of the 10/12 high at 34.53 that cuts across the price axis in the vicinity of 21.80 this AM, and if taken out and sustained, will be a BIG negative omen for the SPX... 

TLT (20+ Year T-bond ETF) Bottom Line: As long as the dominant up trendline off of the 11/09 low at 93.24 and that cuts across the price axis in the vicinity of 103.90 this AM remains intact, the TLT uptrend points higher, toward a next upside target of 110-112... 

January Crude Oil: Bottom Line: As long as the significant corrective upside reversal on 11/28/22 at 73.60 remains intact, my intermediate-term pattern work instructs me to view all of the action up to the 12/01 rally peak at 83.34 followed by the decline into this AM's low at 75.58 as the bottoming process after a multi-month correction (3/07/22 high at 118.20) ahead of a new bull phase. That said, however, for Jan. Crude to regain bullish traction, it needs to claw its way above resistance lodged from 82.35 to 83.35...