This looks like a double top in the S&P 500 and now you have to ask if we will go down and test the August low or consolidate here. The chipmakers certainly aren’t sending a great signal with NVDA down to $102.

On the day:

• S&P 500 -1.7%
• Nasdaq Comp -2.5%
• DJIA -1.0%
• Russell 2000 -1.7%
• Toronto TSX Comp -0.8%

On the week:

• S&P 500 -4.2%
• Nasdaq Comp -5.8%
• DJIA -2.9%
• Russell 2000 -5.4%
• Toronto TSX Comp -2.3%

This article was written by Adam Button at www.forexlive.com.

None of how the market is acting today in reaction to the lack of a strong 50 basis point signal from Waller should be a surprise.

Here is what I wrote back in June:

It’s been awhile since we’ve had a ’normal‘ rate cutting cycle so it’s worth a reminder about what happens and what always happens:
The market turns into a whiny teenager. It starts kicking-and-screaming
for rate cuts, with equities bleeding on anything that isn’t overtly
dovish.

If you don’t like that reference, then consider it like a toddler that wants a candy. They always want more and they want it right now. As the father of four young kids, there is no pleasing them.

This is exactly how markets behaved in 2008, in 2016 when rate hikes came too soon and how they behaved during the taper tantrum. The episode in 2019 was slightly less because Powell was seen as easing pre-emptively.

Fed funds target rate history:

This article was written by Adam Button at www.forexlive.com.

WTI crude is still clinging to support but the picture is looking increasingly dire for brent. The global benchmark closed today at the lowest since December 2021.

There have been a series of daily lows right around these levels and there are intraday lows that are worse since 2021 but this is the lowest daily and weekly close. That’s not a good sign.

I’d argue that the physical picture isn’t this bad, as we’ve seen hefty draws in US supplies and draws in global inventories. I think the market is anticipating a global growth slowdown and selling based on that as well as the likelihood of global production oversupply in H1 2025.

I think it’s also worth zooming out to the monthly chart to highlight the narrow range over the past two years. That’s indicative of a managed market which is exactly what OPEC has been doing. At the same time, it’s a reminder that OPEC hasn’t been great at managing the market over the past 25 years.

It’s also a reminder that brent is where it was in 2006. However when you adjust for inflation, $71 in 2006 is $109.50 today.

Even going back to just December 2021, the total inflation has been 20.25%, which makes $71 equal to $85.

That highlights just how much the price of a barrel has fallen in real terms, something that’s largely due to the US shale revolution but also underscores that it will be tough to make money in conventional oil from here against a backdrop of 3-6% annual global decline rates.

Further, adjusting the July 2008 all-time high of $147.50 to current dollars would yield $210.92 — an unfathomable sum.

The trouble for oil bulls right now is that any further selling opens up an ugly technical picture that could pave the way back to $60 and some uncomfortable decisions for producers.

This article was written by Adam Button at www.forexlive.com.

There aren’t many charts more technical than bitcoin and with today’s 4.5% decline, it’s sending all the wrong signals.

It’s only been below these levels for a few hours over the past six months and the last time it was here it was flushed down to $50,000 in something of a flash crash.

At the same time, the series of lower highs from $72K down to 65K over the past six months sends the wrong signal.

Moreover, there is a strong correlation between bitcoin and tech stocks, particularly semiconductors. That space is suddenly struggling as the market cools on its enthusiasm for AI. Broadcom reported results yesterday and is down nearly 10% today while Nvidia is down 4.5%.

This article was written by Adam Button at www.forexlive.com.