Macro Perspective - Technology
An increasing level of concern is rising within the Bond, Equity and Real Estate Complexes or Markets.
I prefer Complex as each "Market" has a number of entities using their control mechanisms.
The Equity Complex has a number of headwinds approaching for Technology (NQ). Yields, specifically the 10Yr Treasury Note
has been a reliable Instrument for an Inverse or Negative Correlation. 10Yr Yields rose Friday 4.6%
In addition, we want to observe the Long End of the Yield Curve flattening - this is a warning sign, one which proceeds corrections.
Technically, the most recent reversal has seen poor breadth within NQ. The majority of the rise have been driven by the usual
narrow Big Cap, heaviest weighted Equities. AAPL, GOOG, AMZN, FB, MSFT - NVDA provided most of the gains for Index.
Unusual option activity has been on the rise as well, favoring large and often extreme positions for downside. One Trade amounted to 40Million in QQQ 340 Puts.
The NQ has repeatedly created a large squeeze prior to a reversal, the last thrust higher pushed up 500 points late in the day only to collapse the following day, giving up all of its gains.
IMHO, something is brewing which will be extremely bad for the NQ. There are a number of vectors for it see a large correction. Earnings will be led by share buy backs, Co2 Credits and a host of other accounting manifestations, but Gross Revenues should be less than optimal for a sustained uptrend.
The "Delta" variant may encourage some traders to position for increasing "growth" initially - this is not March of 2020.
Taiwan is at risk on a number of fronts. This would clearly be a large negative for Semiconductors. I do believe this will play out as there is an increasing number of large entities seeking to follow Apple's lead with their RISC Architecture and begin using their own Chipset Designs and Architecture. MSFT announced this some time ago. Google continues to reduce MSFT Office's market share with Google Docs. Windows 11 is a clear signal MSFT is changing their strategy after having announcing Win 10 was it.
The concentration of Chip/Chipset fabrication in Taiwan presents an imbalance globally and with it the attendant risks.
China is one, Water is another and there are a more. Japan has recently sworn to defend Taiwan as they are wholly dependent on Semiconductors for almost everything they manufacture.
The US has conducted multiple Naval exercises in the South China Sea for years. IS something brewing there? I do not know, but do believe there is an inherent risk well advanced with respect to Taiwan. There is little the US can do to prevent China taking back Taiwan IMHO.
I favor a Geopolitical Event inducing this correction, one that occurs after hours during GLOBEX and not RTH.
Europe is well advanced in declining Economic activity. The pace of Economic growth in China has slowed. The US reopening trade has been one of confusion, mistrust and one foot our the door.
If traders review Samsung in 2019 and their decline in Gross Revenues, we are witnessing the same event spreading once again.
Inflation changes purchasing decisions, substitution effects begin to take place.
There is much more, but I will condense this in now: I expect Tech to see a large correction later this month. I expect a number of Monthly Red Bars for a number of Indices.
I will discuss the ES YM RTY and Bonds in upcoming posts. I do believe the Russell 2000 and tech will lead the Indices down soon.
Perhaps August - November contracts will serve us well. Given the large ranges, using Micro Contracts for Inverse Ladders would be a wise choice.
The VXN should be monitored closely, it has worked well.
We will see how hard this can be pushed prior to a large reversal.
The VIX has not been as correlated to the NQ as the VXN and 10Yr Yields.
Good Trading Everyone - more to follow as we are approaching highs in everything, although the YM won't likely peak until August.
I prefer Complex as each "Market" has a number of entities using their control mechanisms.
The Equity Complex has a number of headwinds approaching for Technology (NQ). Yields, specifically the 10Yr Treasury Note
has been a reliable Instrument for an Inverse or Negative Correlation. 10Yr Yields rose Friday 4.6%
In addition, we want to observe the Long End of the Yield Curve flattening - this is a warning sign, one which proceeds corrections.
Technically, the most recent reversal has seen poor breadth within NQ. The majority of the rise have been driven by the usual
narrow Big Cap, heaviest weighted Equities. AAPL, GOOG, AMZN, FB, MSFT - NVDA provided most of the gains for Index.
Unusual option activity has been on the rise as well, favoring large and often extreme positions for downside. One Trade amounted to 40Million in QQQ 340 Puts.
The NQ has repeatedly created a large squeeze prior to a reversal, the last thrust higher pushed up 500 points late in the day only to collapse the following day, giving up all of its gains.
IMHO, something is brewing which will be extremely bad for the NQ. There are a number of vectors for it see a large correction. Earnings will be led by share buy backs, Co2 Credits and a host of other accounting manifestations, but Gross Revenues should be less than optimal for a sustained uptrend.
The "Delta" variant may encourage some traders to position for increasing "growth" initially - this is not March of 2020.
Taiwan is at risk on a number of fronts. This would clearly be a large negative for Semiconductors. I do believe this will play out as there is an increasing number of large entities seeking to follow Apple's lead with their RISC Architecture and begin using their own Chipset Designs and Architecture. MSFT announced this some time ago. Google continues to reduce MSFT Office's market share with Google Docs. Windows 11 is a clear signal MSFT is changing their strategy after having announcing Win 10 was it.
The concentration of Chip/Chipset fabrication in Taiwan presents an imbalance globally and with it the attendant risks.
China is one, Water is another and there are a more. Japan has recently sworn to defend Taiwan as they are wholly dependent on Semiconductors for almost everything they manufacture.
The US has conducted multiple Naval exercises in the South China Sea for years. IS something brewing there? I do not know, but do believe there is an inherent risk well advanced with respect to Taiwan. There is little the US can do to prevent China taking back Taiwan IMHO.
I favor a Geopolitical Event inducing this correction, one that occurs after hours during GLOBEX and not RTH.
Europe is well advanced in declining Economic activity. The pace of Economic growth in China has slowed. The US reopening trade has been one of confusion, mistrust and one foot our the door.
If traders review Samsung in 2019 and their decline in Gross Revenues, we are witnessing the same event spreading once again.
Inflation changes purchasing decisions, substitution effects begin to take place.
There is much more, but I will condense this in now: I expect Tech to see a large correction later this month. I expect a number of Monthly Red Bars for a number of Indices.
I will discuss the ES YM RTY and Bonds in upcoming posts. I do believe the Russell 2000 and tech will lead the Indices down soon.
Perhaps August - November contracts will serve us well. Given the large ranges, using Micro Contracts for Inverse Ladders would be a wise choice.
The VXN should be monitored closely, it has worked well.
We will see how hard this can be pushed prior to a large reversal.
The VIX has not been as correlated to the NQ as the VXN and 10Yr Yields.
Good Trading Everyone - more to follow as we are approaching highs in everything, although the YM won't likely peak until August.
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