Not really, those terms only apply to instruments that are actually traded, where chart memory comes into play: "When I get to breakeven I'll get out" and all that. But his is what the floor becoming the ceiling looks like:
If you see that set-up in an individual currency or perhaps more profitably in an equity, you'll have that flash of pattern recognition that makes you think: "I should look into this."
And with a more rational focus, for today at any rate, Marc Chandler from Brown Brothers Harriman with his personal blog Marc to Market:
All Eyes on Equities
The dramatic reversal of US shares yesterday in the last hour of trading has once again pulled the proverbial rug beneath the feet of investors. The turn down, moreover, occurred near important technical levels, seemingly adding to the significance.
Global equities have followed suit. The MSCI Asia Pacific Index fell 0.8%, despite a 2% rally in Chinese markets re-opening after the holiday celebration. European bourses have been market down and the Dow Jones Stoxx 600 is off by little less than 1% in late morning turnover. That said, European shares opened lower still but have stabilized, perhaps waiting for fresh cues from the US markets. The S&P 500 is straddling unchanged levels.
The S&P 500 traded on both sides of Tuesday's range yesterday and closed below its low. The outside down day is bearish price action. The S&P 500 was unable to take out Monday's high and it just nicked the 2743-level we have identified as key. The S&P 500 had bounced from 2532.7 to 2754.4 since February 9. Before anticipating a return to the lows, there are some mile markers on the way that will be watched. First, the 2669.7 area is a 38.2% retracement of the bounce and 2643.5 is 50%. Similar levels for the Dow Industrials are found at 24640.8 and 24396.3 respectively.
The VIX actually closed a little lower yesterday (20.02 vs. 20.60). It is slightly firmer today but it is below the 21.6 high seen at the start of the week or even the 21.0 seen yesterday. Meanwhile, the Treasury market has steadied. Yields are off 1-3 bp through coupon curve. It has a great deal of new supply to digest, and there is another $29 bln (seven-year notes) that will be raised today. When looking at the price action closely, it as if the S&P 500 made its highs about 25 minutes after the FOMC minutes were released, and did not slip to new lows for a little more than half an hour. The 10-year yield initially slipped a basis point, but then climbed. Yields peaked a little before the S&P 500 made new lows for the day.
We do not see much new news in the FOMC minutes. The January meeting was seen in real time as a hawkish hold and the statement reflected an upgraded economic assessment and greater confidence that inflation would move toward target. It seems clear that the fiscal stimulus helped boost the near-term confidence. While much attention has been devoted to debating whether the March dot plots will point to four hikes this year instead of three, which was the case in December, seems, the fact is that the Fed funds futures are not fully pricing in three hikes this year. That gap between the market and the Fed is closing gradually, but remains and it is that adjustment that seems key for the investment climate.
We have argued that there is an accumulation of evidence that the US economy is showing some classic sign of being late in the expansion cycle. These included, metrics like the 12-month moving average of non-farm payrolls, auto sales, credit card delinquencies, and financial speculation (cyber-currencies?). The eurozone economy in contrast was seemingly accelerating. However, after softer PMIs, Germany reported softer ZEW and weaker IFO survey, and France reported all its February business confidence readings decline in February. Of note, the German IFO expectations component fell the most in two years (105.4 from 108.3) and is at its lowest level in five months. ....MORE...