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The Fed's Pivot - What to Expect in the Months Ahead In this video, I explain what to expect in the months ahead, following the Fed's pivot back to monetary easing. Also, I wanted to make several notes: When I said that it's almost never better to own derivatives than holding an asset outright, I do realize the importance that derivatives can play with leverage and risk management. When I said that fear is always highest at the +2 standard deviation of the log-linear regression channel, this was confusing because typically fear is highest when price reaches the -2 standard deviation. In this particular ratio chart, fear over the Grayscale Bitcoin Trust was highest when Bitcoin outperformed it enough for the BTC/GBTC ratio to reach the +2 standard deviation. When I said that the log-linear regression channel is one of the best indicators, I do realize that compared to other statistical methods, this indicator is quite rudimentary. Nonetheless, I find it to be quite useful. I apologize for the poor audio, this seems to be a matter of how TradingView is uploading my audio. On my end, my audio is very clear. Important Disclaimer Nothing in this post should be considered financial advice. Trading and investing always involve risks and one should carefully review all such risks before making a trade or investment decision. Do not buy or sell any security based on anything in this post. Please consult with a financial advisor before making any financial decisions. This post is for educational purposes only.
FRED:WALCL
by SpyMasterTrades
38
Analyzing Bank Liquidity: Key Charts to WatchThere is a lot of fear and uncertainty about bank runs right now, but fortunately, TradingView's charts give us objective and unbiased insight into the actual state of U.S. bank liquidity. In this video, I explain some key charts that you can use to analyze banking liquidity. You can add these charts to your Watchlist so you're always able to get a pulse on the current state of the U.S. banking system. Important Disclaimer Nothing in this post should be considered financial advice. Trading and investing always involve risks and one should carefully review all such risks before making a trade or investment decision. Do not buy or sell any security based on anything in this post. Please consult with a financial advisor before making any financial decisions. This post is for educational purposes only.
COINBASE:BTCUSD
by SpyMasterTrades
17
The Pure Short Interest Rate Play: /GEThe long interest rate play may have been one of the most productive plays of, oh, the last five years or so (maybe more) with shorts in (pick your poison) SHY (1-3 year maturity paper), IEF (7-10), TLT (20+), EMB (emerging market), HYG (junk) being the rage, particularly with the Fed giving the market a fairly good idea of the when. Unfortunately, the point at which the Fed starts considering easing is -- at least at this point -- more fuzzy both in terms of timing and the terminal rate at which we end similarly covered in fur. That being said, it's good to be prepared and to look at the who's, what's, when's, and where's of where you might take the purest form of a bet that rates ease from that point forward and that (at least in my little noggin) is with /GE. Pictured here is /GE, where you can see how fabulous the short was from basically ZIRP to where we are today, with the box wrapped around a potential terminal rate of between 5.25% and 5.75%. My basic notion here is to long /GE in some fashion in this area or ultimately where the terminal rate ends up, particularly when the Fed gives us some sense of the "when" of a potential cut. Chairman Powell has indicated a lack of likelihood for a 2023 cut with the CME Fed Watch Tool reflecting that to some minor extent,* but -- as we've seen repeatedly -- the landscape (inflation, unemployment, yada yada) can change, so the terminal rate may end up slightly (or not so slightly) different from current expectations of 500-550 bps and the timing of any eventual cuts slightly (or not so slightly) different from the markets thoughts on the matter. * -- Currently, the Tool indicates that the market is leaning (but somewhat equivocally) toward a small potential cut in June, but is looking more toward the end of the year toward potential cuts at the moment (i.e., at the November and December meetings) which are similarly equivocal.
GLong
by NaughtyPines
Bearish Bull FlagsBull flags are found in charts with strong uptrends and are considered continuation patterns. They form when price barely subsides as the oscillators revert downward, such that when the oscillators are ready to move up again, rapid increases in price recur. Below are some bull flags with bearish implications that suggest perhaps more economic pain is to come in the years ahead. 1. Eurodollar Futures (pictured in the chart above and below) Eurodollars are dollar-denominated accounts at foreign banks or overseas branches of American banks. Eurodollar futures lead the Fed Funds Rate. Overnight, the Eurodollar Futures broke out of a months-long consolidation pattern. This has occurred because we are in quadruple witching season. Unfortunately, the scope of this gap up is a bearish sign for risk assets and the economy more generally. If my calculation is correct, this chart suggests that the Federal Reserve must now raise rates to at least 5.5%. 2. Japanese Yen to Gold Ratio This chart shows a 20-year bull flag that formed between the Japanese Yen and gold. Decades of monetary easing have caused a profound weakening of the Japanese Yen. If this logarithmic bull flag plays out fully, it may cost millions of Yen for a single ounce of gold in the years to come. A major problem will occur if its populace begins to believe that it is no longer worth converting their labor into Yen. 3. Overnight Reverse Repurchase Agreements This chart shows what appears to be a bull pennant forming in the amount of securities that the Federal Reserve has sold via overnight reverse repurchase agreements (also known as the "repo facility", technically reverse repo in this context). To put simply, the Federal Reserve has been proliferating its use of the repo facility to try to contain inflation. This chart, which once provided little technical analysis value in the past, now seems to show a bull pennant forming. If a breakout occurs then this could suggest that inflation is continuing to spiral out of control, as they Fed is forced to vacuum more and more dollars out of the system. 4. S&P 500 vs. Nasdaq This chart shows that, after decades of the Nasdaq 100 stocks (QQQ) outperforming the broader market (S&P 500 ETF - SPY), a bull flag is now forming in the chart of their relative performance. If this bull flag pans out and SPY breaks out relative to QQQ, this would be quite bearish, especially since SPY itself is beginning to oscillate down on the higher timeframes. This could mean that as monetary tightening deflates the everything bubble , tech will remain at the forefront of the declines. 5. Commodity Prices This chart plots the Commodity Index Tracking Fund (DBC) relative to the U.S. money supply (M2SL). If commodity inflation was solely due to excessive money printing then commodity prices would generally move in a flat horizontal line relative to the money supply. However, commodity prices are moving up much higher than the money supply, which suggests that other commodity supply issues are more to blame than simply increased money supply. One can only speculate what these extraneous factors may be: War, pandemic shutdowns, deglobalization, climate change, aging and less productive population, etc. What we know for sure is that the Fed is trying to fight this inflation battle solely through monetary tightening. But can the Fed solve these larger-scale inflationary issues through monetary policy? If so, it's hard to envision its success without a major economic downturn. 6. Dollar Index Perhaps the most alarming bull flag with bearish implications is that of the dollar index. The dollar index (DXY) measures the strength of the U.S. dollar relative to certain other currencies. It appears to be forming a bull flag on its yearly chart. Bull flags that form at this high of a timeframe often signal a new supercycle or prolonged period in which the context has changed and will remain changed for years or decades to come. In this case, the context of lower and lower interest rates over the past several decades has ended. As the U.S. economy remains strong relative to much of the rest of the world, and as monetary tightening occurs in the US while less tightening or even loosening occurs in much of the rest of the world, the value of the dollar will continue to climb higher. The implications of this are profound since a highly indebted global economy may not be able to afford to service its dollar-denominated debt if the dollar rapidly strengthens. If this bull flag pans out, it may inevitably lead to a financial crisis. To learn more, you can watch this video about the Dollar Milkshake Theory : www.youtube.com If you've identified any bull flags with bearish implications please share your chart below! Feel free to leave your thoughts in the comments below, as well. If I've made an error in my analysis leave a note below.
G
by SpyMasterTrades
9
Call for Economist Comments: Eurodollar At all Time HighThis is post 10 on the Eurodollar and the effect on the market. This is a monumental event. The eurodollar is the largest and most important market that one can understand to begin to make conclusions on all other markets. When it moves sideways then it is basically a "new normal" and things can move as we think they should when it comes to inflation, interest rates (real and nominal of course) and so on. When the eurodollar begins to impulse either up or down we find ourselves in a complete different environment. We had the a crisis as the "plumbing" of the financial/banks got clogged up earlier this year and I believe that was due to moves in the eurodollar. Not becauce I have access to any data from inside the banks but because I don't think most bankers have the vision to understand the eurodollar market and how it forces the hands of the central bankers. Economist and conspiracy theorist alike, please comment on that. I have been using and updating this chart for over a year. It is one of the main reasons I have been named a perma-bear and it is a very real cause of me being deeply unable to hold my longs for too long. We had a bump and run bottom, one of the most reliable formations in all of technical analysis and we see that it performed beautifully. The only Bump and Run Bottom that comes anywhere near as close to the technical beauty of this bottom is the one that formed on bitcoin. The targets on the main chart are pretty simple. The purple target cones from the Hight of the top in March to the automatic reaction of the rejection at the BARR target (the Hight of the lead in trend line) added to the neckline of what appears to be an ascending triangle with the smallest of second and third lows. That would take us to negative interest rates on the Eurodollar and therefor the LIBOR, or London Interbank Offer Rate. The question remains who is the dog, who is the tail, and who wags who. A very complicated metaphor for my belief that the the various interest rates of the world are controlled more by the free market interactions in the Eurodollar than most central banks chairs (mouthpieces) would publicly admit. It appears that this is a clear flagpole and so I have shown the full performance target on the flagpole. I would not be surprised if we get 60-70% performance of this flagpole or even some over-performance on the candle wick. This leads to lots of questions of economic fundamentals with the free market dictating negative interest rates, with inflation, and the response of the central banks. Once again, Economist and conspiracy theorist alike, please comment on that. My main hypothesis is that during any impulsive uptrend in the eurodollar futures we will see damn near every other market take a stropping to the downside. Equities, Anti-fiats, all will be slammed by the credit crunch or new clog in the market. My secondary hypothesis is that Consolidation 3 will cause anti-fiats to go absolutely crazy and explode to the upside. Negative interest rates and inflation should practically guarantee that, as much as one can guarantee anything in this world Final hypothesis: The wedge shown below will ultimately perform. It would be very very painful for the world if it performs to the upside. Even more so if then it snaps to the downside. This would be in keeping for the Maximum Pain Theory, which is often reserved for options trading but appears to be very real, given all the bites it has taken out of me in other non-option markets. Even more than normal comments would be greatly appreciated. We should find out very shortly, days to weeks, if I am right. It will require the eurodollar to continue to impulse upward after this break out. Please see the linked ideas for top ideas in this series. The last idea is when I called the bottom of the SPX dump.
GLong
by This_Guhy
2