ridethepig | Getting Itchy Fingers in US Equities...Getting our bearings...
If a retrace swing is checked in its advance only by opposing forces, waiting for sentiment to improve will mean you have missed out on a lot of the bounce. There is the recognition that when a crash like this happens, we must sacrifice a part of our own effectiveness just to help keep an eye on it, outguessing the lows is an advanced game, you will need to keep tracking continuously over the coming days/weeks.
When we remember another signpost, name that the 2s5s was screaming recession last year in that it is a born defender, we will gradually get to the point where selling exhausts in Equities and is worthy of our respect.
We need to ask ourselves...what is the best price to outguess an ambitious swing low? What is the most secure defence of our own portfolios? What is the cheapest stop cluster on the board to load into? e.g The lows at +/- 15,500 are once more open for a sweep, because new cycles are not suited to long-term populated ladder inactivities. This is much less the case when a swing is employed in such a chapter.
Let us now take a look at some of the underlying factors that are weighing heavy right now, firstly the " Consumer Staples " chart of the previous chapter. In this connection, I must first mention the majority. At the start of the turn the low hanging fruit was there to be taken, but after the 2008 crisis it was one way traffic.
As the game continues, Covid-19 is now marking the highs in this cycle, and then the majority of SMEs are under severe pressure against liquidity. Every day, uncompromised jobs are being lost with Jobless Claims exploding through the roof:
A rule which is dictated not only by strategic necessity but much deeper, as I am sure you will admit, by sheer "good manners". The rule can be described with scientific precision as follows:
=> The knee-jerk lows of the decline is the candidate we are considering, as there is support at 15,500 I will look to fade dips into this area and then play a swing towards 35,000.
With Oil on the $20 lows, sellers are looking to cripple Russia and Saudi. How simple! And yet, how often does one see weaker players advance the move, then comes the majority of retailers which is no value to us. We are approaching the final few chapters in the Oil decline too, the explanation is simple, they are undecided whether to start on the supply side cuts, so being unable to make up their minds (and killing US Shale in the meantime) markets do what all solid players do: they stick the knife in and cause maximum pain.
In this position, sellers have a passed swing, but it can be seen more clearly in Monthly:
This stopping is achieved by US placing one's focus on Gold and directly increasing the price of XAUUSD. But here, as in all other cases, the question arises: is Gold:Oil ratio (XAUUSD & XAUCNY | USOIL & CNYOIL contracts) not an unnecessary use of energy? Actually China managed to devalue the CNY right in-front of our eyes via Oil. The only way the US can now keep a healthy petrodollar market is by keeping a low gold:oil ratio which is either via low Gold and high Oil or High Gold and low Oil, you get the point.
Two options are in play right now... either widespread defaults or I am glad to offer you what I believe is an exhaustive solution to the problem I have raised and inflate assets away. Nominal GDP will need to grow and your mediocre critic would sum up the problem in a short comment: write off student debts, or more helicopter money. But to my mind this betrays a poverty of thought! The why and wherefore are extraordinarily important. It would be ridiculous to write a piece here without a psychological element. In my books, its just as ridiculous to write a manual about swing strategy without immersing oneself in the innermost being of the participating drivers of flows.
No matter how unusual the following scenario may seem, I can only insist on the fact that models show confidence collapsing in public assets which will trigger inflows towards private sector in the coming years. They too have desires that slumber unrecognised within them, and fears of which they are scarcely aware. But quite removed from that, a detailed case for the need to outguess the turn is more practical use than those who seek theory. Of course, I do not consider the presence of a practical plan as an extenuating development, for what have I do do with extenuating developments!!
Take care everyone and thanks for keeping the support coming with likes, comments, charts and etc!
