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Trading Lessons

SPX Gapping Down Hard

Stock-Markets / Stock Markets 2016 Jan 06, 2016 - 03:20 PM GMT

By: Anthony_Cherniawski

Stock-Markets

Good Morning!

The SPX is set for a massive gap down. The Premarket is -36.00 as I write.

The key may have been the Chinese “surprise” devaluation. ZeroHedge writes, “Less than a month ago, and just days after the Yuan was finally inducted into the IMF's hall of reserve currency fame, the Chinese Foreign Exchange Trade System, a part of the PBOC, made it very clear that what was about to happen would not be pretty, when it announced - in a statement which clearly everyone ignored - that going forward it would index the relative strength of the CNY not to the USD but the a basket of currencies (against which the USD to which it is pegged has been soaring).“


To make matters worse, ADP payrolls soared to their highest since 2014. ZH comments, “Great news right? For those hoping for some "bad news is good news to slow The Fed down" data, ADP is a disappointment. The December monthly change was a rise of 257k - hugely better than the expected 198k and th ebiggest rise since December 2014. Most importantly the goods-producing sector added a shocking 23,000 jobs - despite every single manufacturing indicator deep in recession. Service-sector jobs added 234k.

Best jobs gains in a year (does that sound right?)”

TNX responded to the news with a 2.5% gap down.

ADP’s seasonally adjusted numbers have a lot to prove. ZeroHedge observes, “If Mark Zandi and his "whatever it takes" seasonal-adjusters at ADP are to be believed, the US manufacturing sector added the most jobs in 11 months in December. Our question is simple - with ISM Manufacturing Employment at post-recession lows and US Manufacturing PMIs at post-recesssion lows, and inventories-to-sales ratios at post-recession highs, why are goods-producers hiring at such a frantic pace?”

WTIC hit a low of 34.60 this morning, breaking the Head & Shoulders neckline, but not a new breakdown yet. That may come momentarily, however. This sets up crude for the nastiest fall, yet.

Good luck! I will be reporting later on the progress of the decline.

Regards,

Tony

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As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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