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Inflation

Interest rate up to at least 6.5% in 2023, why?The Fed chairman has given the market a very important clue on 13 Dec 22. At what level will he consider an interest rate cut? He said “I wouldn't see us considering rate cuts until the committee is confident that inflation is moving down to 2% in a sustained way,” meaning only if CPI is heading nearing 2% then it is hopeful to see a rate cut. Market consensus for CPI to range between 5% to 8..9% for this year. If this is true, the Fed is likely to continue to hike the rate moderately at 0.25% in each meeting just to bring inflation down. I am seeing this as the best case scenario. Today’s content: Strategy in an inflationary environment: i. Commodity – Buy them ii. Stock market – Trade them Can inflation be hedged and can we trade into the interest rate uptrend? CME Micro 30 Year Yield Futures Minimum fluctuation 0.001 point = $1 0.01 point = $10 0.1 point = $100 1 point = $1,000 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
TVC:US30YLong
by konhow
14
Interest rate up to at least 6.5% in 2023, why?The Fed chairman has given the market a very important clue on 13 Dec 22. At what level will he consider an interest rate cut? He said “I wouldn't see us considering rate cuts until the committee is confident that inflation is moving down to 2% in a sustained way,” meaning only if CPI is heading nearing 2% then it is hopeful to see a rate cut. Market consensus for CPI to range between 5% to 8% for this year. If this is the case in 2023, the Fed is likely to continue to hike the rate moderately at 0.25% in each meeting just to bring inflation down. I am seeing this as the best case scenario. We can participate in hedging the market and trading the interest rate in this example. CME Micro 30 Year Yield Futures Minimum fluctuation 0.001 point = $1 0.01 point = $10 0.1 point = $100 1 point = $1,000 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com I hope this tutorial will be helpful, in enabling you to read into the market with greater clarity. Stay-tune for the video version shortly, we will do more in-depth study.
TVC:US30YLong
by konhow
1
WTI Lowered demandWe are finally seeing the afterburn effects of Bidens inflations situation start to implode on itself and so pricing has dropped massively due to lowered rates. THE WORST IS YET TO COME! There's a real chance that we may see a dramatic bearish move to below 50 potentially 45 for a brief time as we do not have the foundation or the backing to support the increases occurring. and with the increase of used cars on the market people are going to start buying again just not for a few more months maybe late summer 23. Refineries are allocating capital to do maintenance work so that they can make money around that same time. Either way, you can short this all week and get your money and wait.
TVC:USOILShort
by MANUELRUGGER91
2022 EOY Letter to SubscribersWhat’s up traders! As we close out 2022 I wanted to continue my tradition for the second year with a letter to subscribers. In this letter I want to look back on my 2022 speculations to see what I got wrong, what I got right, and what fell down the middle. I will recap the themes of the year and present my outlook and speculation for 2023 to come. Thank you all for reading and being a subscriber. It has been interesting to watch the decline in activity and engagement on financial social media over the last year as the optimism has waned with the price of all things. This is the cycle of human emotion when it comes to trading and investing. Ironically, this in itself is an indicator. The lowest point of interest is often “the bottom.” If you are still following the markets and looking for opportunities you will be a step ahead of the masses that only chase once jumping in seems "safe." As a personal milestone, 2023 marks the start of my 10th year as a dedicated full time trader. I remember the first trading day of 2013. I had quit my job in IT and the new year would be my first as a professional trader working with a group of Ichimoku traders. Our office was in Buckhead which is widely considered the “Financial Center” of Atlanta. I was filled with excitement as I drove down the darkened Highway 400 before sunrise. I saw the lit towers of Buckhead come into view and I was happy to be on this journey of mastering markets. Through the years since I have seen ups and downs with the market but I can say that the fascination with this line of work has never abated. What I got wrong "The SPY will close 2022 higher than 2021…" That did not age well. This statement was based on the almanac of stock market returns across history. Generally speaking it is best to assume that any given year will be an up year. 2022 ended up not being an up year. What I got kinda right: "…but has a high probability of a -10% to -20% correction. Avoid being YOLO long at all points during the year and keep some dry powder ready." Remember that 2021 was unique in that every month saw a new All-Time High in the S&P 500. This had never happened before and may not happen again for a long time. Up and to the right was certainly not going to be the order of the market for 2022. What I did not foresee was the influence of rising interest rates having such a profound negative effect on risk asset valuations. I hindsight, like everything, it was obvious. During the pandemic, the Fed took actions such as buying corporate bonds to prop up the stock market. I took this to mean that they had expanded their mandate to keep stock valuations high. It seems more likely the Fed took this action to stave off a crash but they were less willing to go all the way in keeping portfolios up forever. This is a good thing to let markets sort themselves out organically. What I got right "I will expect the bearish trend to go on through 2022 and possibly into 2024 with a long term target of $17k Bitcoin" This statement was very controversial but one in which I had the most confidence. I thought it might take a bit longer but I knew in November of 2021 when Bitcoin failed to break higher with momentum that the bull cycle was done. "I am bullish neutral on the price of oil for 2022." Oil ended up being the breakout trend of early 2022. Now as 2022 closes out oil is up a modest +6% on the year so I ended up being correct on both accounts. The year of busted narratives 2022 was truly a year of failed narratives. From “cash is trash” to “cryptocurrency is the future” just about everyone’s surety of the future was demolished by price action. What I found most astounding was the narrative around the US Dollar. It was true that inflation would be a major theme of 2022 but almost everyone assumed this meant the US Dollar would lose value. That was not the case because by mid 2022 the US Dollar, measured by the DXY (US Dollar Index) was one of the best performing asset classes of the year. This was due to the somewhat forgotten fundamental tenet of forex that interest rates and differentials drive relative valuations. I say forgotten because no one has really focused on forex trading in a decade because interest rates across the world have been close to zero which allows for no real trends and because cryptocurrency has satisfied that 24/7 degenerate trading mindset. Even though when I would point out to people that the US Dollar was one of the best performing asset classes they would cite inflation at 8%+ the reality was if one had held cash that cash would presently buy more of All The Things than it did at the beginning of the year. It was ironic that the narrative “cash is trash” was utterly incorrect. The pandemic trades completely unwound with Peloton, Docusign, Zoom, and Netflix. These are quite obvious in hindsight but can serve as lessons on not chasing the big thing once “everyone” acknowledges how it is the big thing. How low can it go? One of the common dangerous tropes of investing is, “it can’t possibly go lower.” The corollary to this dangerous statement is “how much lower can it go?” In 2022 we got the answer to that question from several instruments. I have developed a canned response for when someone asks this question again, “-50% lower”. Back in late 2018, following the former last All Time High, the price of Bitcoin stalled and consolidated for many months. Investors assumed that the low was in after Bitcoin had falled from 19k down to 6k. Then came November 13th and with leveraged long positions at all time highs the bottom fell out and Bitcoin descended to the 3k range. When many assumed “Bitcoin could not go lower” it still had another -50% to go. Throughout 2022 as the dream of cryptocurrency replacing the TradFi system faded as did the prices many bought the dip of cryptocurrencies assuming that they could not go lower. Lower they all did. A pivotal moment in this meme was the earnings announcement of Facebook in February. The stock gapped down -24% overnight making it a record market capitalization devaluation of a blue chip stock. Across social media I saw people saying “it can’t possibly go lower” and people bought the dip. As a consistent contrarian this gave me a rock solid bias that it would, in fact, go much lower. From the opening price of that earnings drop down to where it closed 2022 was -51%. So what is coming in 2023? Inflation I think the rumors of the financial system’s demise are greatly exaggerated. By published economic indicators inflation has peaked. Real estate agents have very little business because interest rate hikes have killed people’s desires to take out mortgages. Prices of goods have noticeably increased but wages have not yet caught up. We will likely get a few more rate increases in 2023 but I reject the extreme cases that the Fed will have to go full Volker to double digits to get it under control. People have been worried about the current inflation cycle for all of 2022. The real problems that shock a market come from unexpected vectors. I tend to not focus too much on what most people are fearing. Most of the time if market participants are worried about something they are busy hedging against it. For regular folks that do not see their paychecks increase inflation is a big problem. Companies that are able to raise their prices with inflation for the goods and services they produce will be fine. Investors with their money in those companies will benefit. Stock Market I expect a market recovery; a return to “normal” albeit slowly as emotions take a while to shift. The rampant “Buy all the things” of 2020 onward into the turn of 2022 will not be fast to recur. If and when we do see a recovery look for people to doubt it and insist this is just a bear market pullback. I would assume, statistically, that 2023’s stock market will close higher than it began. A 23% recovery back to the all-time high is not unrealistic but it is also not statistically guaranteed as the velocity of money coming into stocks is reduced. The price action of the last quarter of 2022 for the S&P 500 has been very interesting to me within my method of analysis. The October 13, 2022 CPI news signaled a spike reversal to go bullish. This spike reversal happened right at the 50% Retracement of the COVID low to All-Time High. This bullish trend from October lasted until the December 13, 2022 CPI news which signaled a spike reversal to go bearish. This spike reversal happened right at the 50% Retracement of the All-Time High to the October low. As we closed 2022 the price of the S&P 500 stubbornly moved to and held the 50% Retracement of the October low to December high. It’s a 50% into a 50% into a 50%. It is a fascinating confirmation to the most prominent method of price action analysis I have developed. I will presume that the December spike reversal signals a retest of the October low. From there we will see if the low is broken and the bear market continues. Should the October low hold I will then be looking for the market to retest the All-Time High through 2023. Cryptocurrency Currently the cryptocurrency market is in a state of cope. I found it amusing that following the collapse of FTX in November the “Rainbow Chart” of Bitcoin had to retire their first version and redraw the model to fit the permabull trajectory. This is the fifth bear market cycle I have witnessed and traded. I was able to call the top of Bitcoin back in November 2021 and projected the down move to at least -75%. Now I think “the bottom” is a matter of time more than price. Investors still hold onto a shred of hope that this bear market will be short lived. I do not think this will be the case. I expect the bear market to persist for another year or two. It is also worth noting that Bitcoin, having been invented in 2009, has never existed through a true recessionary environment nor rising interest rates. At some point in the next year perhaps we will see a bear market rally that will encourage a great deal of FOMO. These happen when something has fallen from bubble territory. There will be a sharp and active rally but it will not come close to recovering the full bear cycle. It is important to trade this wisely with stops and profit targets rather than buy and hold the narrative “here we go again!” Bonds Bonds have been hit hard as nearly two decades of low interest rates are being unwound and long term debt issued at nearly any point is priced lower. However, I see an upside to this trend. As interest rates rise certain low-risk savings options will become viable again. You might just get a non-zero interest rate on a saving account. You might be able to find 30 year municipal bonds from 5-7%. The Fed still has a target rate of 2% for inflation and while many think the Fed may need to raise this target to 4% there may come a time this year or next when the average investor can lock in a truly decent rate on long term, low risk products. Opportunities I am always looking for the next meme. Every market seems to have one. 2021 began with the “most shorted stocks” meme and then just continued the winning of tech and other pandemic trades. 2022 the meme was “being short the hype” and also rejecting the “cash is trash” narrative to remain patient for opportunities to deploy capital. Cryptocurrencies With the anger over everyone’s dreams of crypto richest not coming true many newcomers will seek to save their egos by blaming others for losses rather than their own personal risk tolerance. Expect to see more calls for “justice” and regulation in 2023. I believe this will reinforce the use case for privacy in cryptocurrency. I continue to watch the price action of Monero BITFINEX:XMRUSD , a privacy coin, and its relationship to Bitcoin BITFINEX:XMRBTC . At the close of 2022 the price of XMRBTC was just shy of 0.009. I have noticed and tried to raise awareness of the privacy use case of cryptocurrency becoming more apparent. My favorite quote of the year was, "if you are not buying Monero under $200… you would not have bought Bitcoin under $200." Bank Stocks I like the prospect of higher interest rates for banks and lending organizations. The classic business model of a bank is to borrow money at one rate, loan it out higher, and pocket the difference. That model has not existed for many years but with broadly higher rates it should again. Healthcare Stocks Healthcare seemed to be the only sector that had broad gains in 2022. I think it remains the prospective winner for the next two decades. Baby Boomers as a generation are the wealthiest in history and will want to stick around as long as they can. I expect them to put this massive nest egg they have saved into prolonging their lives and so health care will be one of the primary recipients of this wealth transfer. Inflation Stocks Companies that are able to raise their prices for goods and services that people want to buy will do well if inflation persists. The price of something is just a measurement of the value people are willing to pay. The value itself is what matters. Consumer discretionary would be the sector I would watch as the market begins to rebound. Forex Forex has been ignored by traders for nearly a decade. I think the reason for this is that every central bank has kept rates at or near 0% which has not allowed any real trends to develop in exchange rates. I would expect other countries to follow suit with the United States and raise rates in the near future. This should create real movement in the forex market and thus opportunities. Remember that higher rates should equal a currency increasing in value versus lower rates. 2023 I am committing myself to following rules of proper setups and risk management going into the New Year. 2022 gave me the opportunity to refine my skills and tactics. 2022 also gave me many reminders about why you have to cut losses short, ignore mainstream narratives, and focus on the BEST setups. Keep your mind open and question the mainstream narratives. Focus on doing more of what works and less of what does not. As always, trade wisely!
AMEX:SPY
by norok
4
EUR/USD slides to three-week lowThe US dollar is showing strong gains against the majors on Tuesday, with the exception of the Japanese yen. EUR/USD has tumbled by 1.27% and is trading at 1.0528 in Europe. EUR/USD is sharply lower today, despite a very light economic calendar. The only release of note is German CPI, which will be released later today. Despite the lack of fundamentals, the US dollar is taking advantage of risk aversion in the markets. There are headwinds everywhere you look. The war in Ukraine, the threat of recession in the US and the eurozone and China's slowdown all make for a gloomy outlook as we start the new year. Germany's inflation has been falling, and the downtrend is expected to continue. The consensus for December CPI is 9.0%, compared to 10.0% in November. If the consensus proves accurate, it could put further pressure on the euro, as the ECB may have to reconsider its hawkish stance on rate policy. The International Monetary Fund didn't bring any festive cheer with its pessimistic message on Monday. The IMF warned that 2023 would be tougher than 2022, as the US, EU and China would all see a decline in growth. Adding to the gloom, the IMF said that it expected one-third of the global economy to be in recession this year. In October, the IMF cut its growth outlook from 2.9% to 2.7%, due to the war in Ukraine as well as central banks around the world raising interest rates. After the Christmas and New Year's holidays, the markets are easing back in, as the data calendar gets busier as of Wednesday. We'll get a look at the Fed minutes from the December meeting, which was a hawkish affair that surprised investors and gave the US dollar a boost. On Friday, the US releases the employment report, which always plays an important factor in the Federal Reserve's rate policy. EUR/USD is testing support at 1.0528. Below, there is support at 1.0469 There is resistance at 1.0566 and 1.0636
by OANDA
OIl up, not just because of inflation...Concerns about the global economic growth and covid-related lockdowns in China (which caused oil demand to crumble on their part), caused the price declines that were observed over the past year. It's probable that these vital global conditions are baked into the cake by now. Looking ahead we could see a longer term continued climb in OIL as inflation will render the US dollar effectively worthless as time progresses. Volatility in 2023 could be caused by the (escalating) conflict in east europe, China going through their covid wave cycles and the FED cutting and raising rates to navigate the economy into and through a recession. But the big denominator are the sanctions that are put on the trade for Russian oil, some of which have not even gone into effect yet. The International Energy Agency estimated that Russia’s oil production could drop by 1.4 million barrels per day in 2023 as a result of the sanctions. That means we are still consuming 1.4 million barrels per day, so the full effect of the sanctions have not yet been felt by the economy. It will take time before we can be fully dependend on alterative sources and methods to deal with the lack of this resource. Which means we should expect a horrendous winter or a multiple of winters to come somewhere in the coming years where mainly the poor will both economically and physically suffer even more than they already have from the ever rising oil prices caused by these sanctions all in the name of a so called moral virtue. But hey, there is to many people on this planet anyway... (Said the rich)
TVC:USOILLong
by dab1rd
US10Y 🇺🇸 U.S. 10-Year Interest Rate History (1913 - 2022) One of the biggest "shocks" in the 22' financial markets is the breaking of the long-term (weekly) trend in Interest Rates — specifically the U.S. 10-Year Treasury (US10Y), which has gone through now two long-term trend cycles since it’s history dating back to 1913. Given the inflation fight that the Federal Reserve is currently waging, while at the same time keeping in mind the structural debt-load that the U.S. 🇺🇸 is current burdened with, this begs the question can rates actually go higher from here? While we do not know the answer as to the actual trajectory of interest rates into 23’ and beyond — what we do know is that given the structural debt load, we can speculate that at some point rates will likely be forced lower as a proxy of stabilizing inflation and also total debt servicing obligations of the U.S. Government. 
Also keep in mind comments by J. Powell and the Federal Reserve as they have been preparing investors for a new macro regime of “higher for longer” . Should this actually play out and not just be the "hawkish tone" of the Federal Reserve that is helping to push interest rates higher, investors must consider the ramifications that could come IF we have truly entered a new (rising) interest rate regime that includes structurally higher rates as part of the next 40+ year historical cycles. Here is the same chart of the (US10Y) paired against the backdrop of other macro indicators including Federal Reserve Balance Sheet, as they give us insight as to both the bull and bear thesis for yields moving forward: U.S. 10-Year (US10Y) vs. Fed Funds Rate (FEDFUNDS) 📊 U.S. 10-Year (US10Y) vs. U.S. Inflation Rate YoY (USIRYY) 📊 U.S. 10-Year (US10Y) vs. U.S. Federal Debt Total Public (GFDEBTN) 📊 U.S. 10-Year (US10Y) vs. U.S. Federal Reserve Central Bank Balance Sheet (USCBBS) 📊 U.S. 10-Year (US10Y) vs. U.S. Liabilities & Capital (WRESBAL) 📊 U.S. 10-Year (US10Y) vs. S&P 500 (SPX, SPY) 📊 U.S. 10-Year (US10Y) vs. Dow Jones Industrial Average (DJIA, DIA) 📊 What is your take on the forward trajectory of interest rates? Have we officially broken the 40+ year downtrend on structurally low interest rates, given the potential for entrenched inflationary pressures within the U.S. economy? Or, will rates be forced lower as structural debt obligations of the U.S. are far too great to support the notion of "higher yields for longer"? Let us know your thoughts in the comments below! 👇🏼
TVC:US10Y
by kylemusserco
2
Number of Sunspots and Inflation CYCLESHi friends Today im going to explain about the relationship between Sunspot Numbers and Inflation rate from 1960 to now. so lets start with inventor of this theory : William Stanley Jevons's In 1875 and 1878 Jevons read two papers before the British Association which expounded his famous "sunspot theory" of the business cycle. Digging through mountains of statistics of economic and meteorological data, Jevons argued that there was a connection between the timing of commercial crises and the solar cycle. it called 5.31-Year Cycle too. In the stock market and in the economy, there are both natural frequencies and artificial excitation frequencies. The four-year presidential election cycle is a great example of an excitation frequency, and it has demonstrable effects on stock prices. The schedule of FOMC meetings 8x per year is another possible example of an artificial excitation frequency. When a demonstrable cycle period appears that one cannot tie to some manmade excitation frequency, then the supposition is that it is a "natural" frequency of the economic system. Something about the economy or the market results in an oscillation on a certain frequency which may not have a good outside explanation. Perhaps it is in how money flows. Perhaps it is in how human brains make decisions about surplus and scarcity. It is hard to know. This 5.31-year frequency in the CPIs cycle seems to fall into that category as a natural cycle, because the 5.31-year period does not match any known excitation frequency related to human activity nor the economic calendar. So that makes it probably a natural frequency. In above chart , there does seem to be a relationship between sunspots and the inflation rate. We see lots of instances when the peak of the sunspot cycle coincided with the peak of the inflation rate. There have been spikes in the inflation rate not tied to the sunspot cycle, such as the spike during the Arab Oil Embargo of 1973-74. this examples did, interestingly, come at the halfway point of the sunspot cycle, fitting the half-period harmonic principle(5.31 year cycle). The current rise in inflation fits both the longstanding 5.31-year cycle and the upswing in the sunspot cycle. Solar researchers expect the current sunspot cycle rise to end in July 2025, which is 3 years from now. But the 5.31-year cycle says a top in the inflation rate is expected right now. That would mean seeing the inflation rate bottoming around 2025 just as the sunspot cycle is peaking. Sometimes cycles present us with conflicts that are hard to reconcile. The point of the 5.31-year cycle that we can take away for right now is that the inflation rate should be falling for the next ~2.2 years. But that does not mean we get to zero percent inflation right away. The drops take a while to unfold. Inflation is likely with us for a while, and we have to get used to that idea.
ECONOMICS:USIRYYEducation
by TraderAmin-KZ
2
USD/JPY extends losses after BOJ SummaryThe Japanese yen continues to lose ground this week and is in negative territory on Wednesday. In the European session, USD/JPY is trading at 134.11, up 0.49%. Post-Christmas holiday trading remains thin, but USD/JPY has made steady gains and climbed 1% this week. The US dollar has recovered somewhat after last Tuesday's slide when it fell a staggering 3.8% after the BoJ widened its yield curve band. The move blindsided the markets, which had not expected any major policy moves prior to the end of Governor Kuroda's term in April. Investors were all ears as the BoJ released today the summary of opinions from last week's dramatic meeting. The summary of opinions showed that several of the nine board members said that the tweak to yield control was aimed at enhancing the current stimulus programme rather than ending it. This reiterated what Governor Kuroda stated in a press conference after the meeting. Still, speculation remains high that the BoJ could take further steps that tighten policy, and even exit the Bank's ultra-loose policy, especially with inflation running at a 40-year high. The summary of opinions indicated that members discussed rising inflation and the possibility that higher wages would remove the risk of a return to deflation. The BoJ has been focused on wages, arguing that strong wage growth will ensure that inflation is sustainable, as opposed to inflation that is driven by higher costs for energy and raw materials. The government is also making wages a top priority, and there are indications that major companies and labour unions will negotiate higher wages in the spring. If the BoJ sees that wages are rising it could raise its yield curve control target, which is currently around 0% for 10-year bonds. The BoJ will likely be back in the headlines shortly, with its next meeting on Jan. 17th and 18th. USD/JPY is testing resistance at 134.12. Above, there is resistance at 134.82 There is support at 133.25 and 132.29
by OANDA
Yen edges lower, Kuroda says no exit plannedWith most financial markets closed on Monday, trading will be thin. Japanese markets are open and USD/JPY has edged higher, trading at 132.82, up 0.34%. The Bank of Japan announced a policy change last week, and the ramifications were massive for the Japanese yen, as USD/JPY jumped as much as 4.8% following the move. The BoJ widened the yield curve on long-term bonds from 0.25% to 0.50% but maintained the yield target at 0%. The tweak to the yield curve caught the markets napping, and the shocking move now has the markets buzzing as to whether the BoJ is planning further policy changes to its ultra-low monetary policy. Investors heard from the man himself earlier today, as BoJ Governor Kuroda gave a speech where he stated that last week's move was not a prelude to withdrawing its massive stimulus programme. In fact, he said the widening of the yield curve would enhance the Bank's ultra-easy policy. Kuroda reiterated his well-worn theme that the BoJ wants to see wages rise in order to hit its 2% inflation target in a "sustainable and stable manner" and plans to continue monetary easing through yield curve control. The key question is whether the markets are buying what Kuroda is selling. Prior to last week, the markets were expecting an uneventful end to Kuroda's decade at the helm of the BoJ, which ends in April. That view has been turned upside down after the yield curve tweak, and I would expect the markets will be on guard for additional tightening moves, despite Kuroda's insistence that it is business as usual at the BoJ. Last week wrapped up with further signs that inflation is falling in the US. The Fed's preferred inflation gauge, the PCE Price Index for November dropped to 5.5% y/y, down from 6.1%. As well, UoM inflation expectations slowed to 4.4% y/y in December, down from 4.6% a month earlier. UoM Consumer Sentiment rose to 59.7, up from 59.1, as consumers are more confident about the economy.  Although there is evidence that inflation is easing, strong wage growth and a robust labour market likely mean that the Fed is unlikely to change its view that interest rates will rise above 5% before peaking. USD/JPY is testing resistance at 132.70. Above, there is resistance at 133.62 There is support at 131.72 and 130.15
by OANDA
All major bottoms have repeating elements (2008, covid, now)Pt.3All these major crashes within these last 2 decades, as well as the one we are experiencing now, deemed the "Great Inflationary Crash" all have the same repeating factors when price is close to a bottoming price, it is nothing for certain but it is just a repeating factor that may very well repeat again at the bottom of this downtrend. I think this specific crash will be much different from the others as we are in an inflationary bear market, which is the worst type of bear market. Apart from that the SPX has not drawn down as much as it should've by now so we will definitely go really low to one of those two targets I outlined which will mark the bottom. The only question is... which level will be the bottom? In the end, only time will tell so let's submit to time and let it take its course, will update.
CME_MINI:ES1!Long
by Trader_SAW
2
Using FOMC as trade confluence!TECHNICAL REASON: Price was within the zone of interest and the 4H candle has no lower wick which means everyone is priced one way; could see some profit taking ahead of FOMC FUNDAMENTAL REASON: It is worth noting that to the Fed, to gage inflation and how sticky it is or isn't, they are looking at jobs (more than CPI, PPI etc). Since the job market isn't cracking, it's a little premature to think that tomorrow they're going to come in as dovish as the market is expecting. Powell doesn't even have to necessarily come in Hawkish tomorrow for these moves to reverse. As long as he is less dovish than the average joe on Wall Street is expecting, USD is likely to have a strong reversal upward. Short idea proved to be valid on the back of inflation print, which I believe is not that relevant. The Fed is focused on Jobs more than CPI, PPI etc. If price stabilizes today (likely will), expecting the market to offer 1825 again as a wick hunt and then for XAU to roll over. HOW TO TRADE FOMC I've taken partial profits in anticipation of getting "wicked out" and if this occurs, I will re-enter short around 1825 CROSS ASSET: Everyone seems to be booking profits right now (see chart). The question is whether they will add once they're doing taking profits, open shorts or wait for tomorrow to make up their mind. The next 2.5 hrs are very important. 1. USD is stabilizing within lower boundary of wedge pattern 2. Bond yields haven't broken the low and are holding 3. NASDAQ (most forward looking index) is pulling back from the highs
OANDA:XAUUSDShort
by XAUSpeculator
6
EUR/USD Corrective ShortAfter last weeks FED and ECB markets were left adjusting to Powell and Lagarde's comments. FED will have to continue on with rate hikes well into Q2 '23 when they can start a pivot of no hikes, but certainly not making any cuts either. Rates will be held until they feel they have things 'under control'. While Lagarde sounded 'hawkish' it doesn't change high inflation is here to stay and global growth concerns are starting to take headlines, weighing on sentiment. I scalped the range last week but focused on shorts after fibonacci extension target was reached at 1.07350. I took short from 1.07250 closing at the end of the week at 1.06050. This week I took entry short back at that same level, 1.06050 **If SL gets hit, it’s only 10 pips and I’ll hop in on a long scalp into 1.06500 - 1.06800 Market can range with end of year low volume so its best to cut it quick when you know a key level is failing and get in at a better entry. At the end of the day, trade you own levels..but I hope you found to be decent
Short
by Krecioch
2
Takeaways from the Fed Chair SpeechCBOT: Micro E-Mini Dow Futures ( CBOT_MINI:MYM1! ) The Fed’s 2022 Rate Decisions While we reflect on 2022, an eventful year full of “the unexpected”, rate hikes have undoubtedly dominated the headlines. In eight rate-setting Federal Open Market Committee (FOMC) meetings, the US central bank hiked the Fed Funds rate seven times, taking it up from 0.25% to 4.50%. The US Consumer Price Index (CPI) was 7.0% in December 2021. After a quick runup to 9.1% in the first half of the year, it came back down to 7.1% in November 2022. If the trend continues, we may end the year with an inflation below our starting point. However, current level is well above the 2% policy target. While the Fed emphasizes the need for on-going tightening, it expects inflation to be above 3% at year-end 2023. The Fed is on the right track, but there might be more to do. How did the Dow Jones Industrial Index React to Fed rate hikes? The Dow (DJIA) reached all-time high of 36,952.65 on January 5th. It pulled back 22% to 28,852 by September 30th on the back of three consecutive 75-bp rate hikes. DJIA closed at 32,920.46 on December 16th, down 10.9% year-to-date (YTD). The Dow’s Price/Earnings (P/E) was 20.49 on last Friday, down 6.9% from 22.01 year-over-year (YOY), according to Birinyi Associates/Dow Jones Market Data. For a comparison, S&P 500 hit 4,766 at year-end 2021 and closed at 3,852 last Friday, down 19.2% YTD. The P/E ratio for S&P was 18.91 now, down 35.1% YOY (28.69). Nasdaq 100 closed at 15,645 at year-end 2021 and settled at 11,244 last Friday, down 28.1% YTD. The P/E ratio for Nasdaq was 23.52 now, down 32.2% YOY (34.71). What do the datasets tell us? The Dow experienced a smaller correction (-10.9%) this year, compared to the S&P (-19.2%) and the Nasdaq (-28.1%). Its valuation, as measured by P/E ratio, is in line with the S&P and Nasdaq, all in the range of 19-24. However, the Dow’s P/E declined less than 7% from its top, vs. over -30% drop for both the S&P and the Nasdaq. Any trading opportunities? On December 14th, DJIA opened flat at 9:30AM. It began to fall after the Fed released its rate decision at 2:00PM. The index nosedived when Fed Chair Powell delivered his speech at 2:30PM Eastern Time. By the end of the following trade day, as investors fully digested the Fed’s policy, DJIA lost 884 points, or -2.6%. I put together a cheat-sheet to decode how DJIA anticipated and reacted to Fed Chair speeches throughout 2022. I denote T as FOMC date and T+1 the next trade date; Market Open at 9:30am, Market Close at 4:00pm; Rate decision release at 2:00pm, and Fed Chair Speech starts at 2:30pm; all the above in eastern time zone. Market reactions are represented by Up and Down. From Market Open (T) to Market Close (T+1), the changes in DJIA value were January -342, March +829, May -174, June -643, July +665, September -743, November -575, and December -884. All market data on DJIA is from Yahoo! Finance. Market anticipation and reaction were mixed in the early stage of this rate hike cycle. However, more recently, investors tended to have a rosy picture going into the FOMC, trading on the assumption of Fed Pivot. Each time, the Fed Chair speech brought them back to the reality of continued monetary tightening. DJIA declined six out of eight times. Average two-day change for DJIA during the last three FOMC meetings is -734 points. If we were to place a Short Futures order for Micro Dow Futures (MYM) for two days, we would have made a very nice Christmas bonus. MYM contract notional value is $0.50 per index point. Initial margin is $750 per contract. Hypothetically, if we captured 400 points, our 2-day payoff would be $200, or +27%. What’s the takeaway? Trading opportunities exist because the market is not aligned with the Fed. While Chair Powell made the point of fighting inflation forcefully over and over, investors did not take him seriously and kept dreaming of reasons for the Fed to end monetary tightening. While the Fed moderates rate hike to 50 bp, Chair Powell states that 4.25-4.50% Fed Funds is not restrictive enough. He emphasizes the “on-going” need for tightening. Policy target for inflation is 2% and there was never a discussion to raise it. It’s very clear that the Fed’s overarching goal is to bring inflation down to 2%. Pausing is premature. Next Fed meeting is on Jan. 31st - Feb. 1st. If DJIA repeats itself and moves up ahead of the rate decision, we may explore day-trading opportunities. In addition to the DJIA futures, similar strategies can be applied to Micro S&P 500 Futures (MES). MYM traded 285,803 lots with an open interest of 48,564 last Friday. Micro S&P is even more liquid, with daily trade volume exceeding 2 million lots. An alternative to the futures strategy is Options on futures. Put options on the March MES contract is currently quoted at $24.00. Options have bigger upside potentials if your market forecast is correct. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trade set-ups and express my market views. If you have futures in your trading portfolio, check out on CME Group data plans in TradingView that suit your trading needs www.tradingview.com
CBOT_MINI:MYM1!Short
by JimHuangChicago
10
Hard to be bullish... SP500 🥶📉Taking a look at the Daily chart for the SP500. We can see a near perfect downward channel filled with dumps and scam pumps. Last week we saw a big rejection off of the 4100 resistance that we pumped up to back in September (yellow line). Then the subsequent FOMC rate hikes and CPI numbers pushed us lower. We'd expect to see a bit of a relief rally back up to the top of the channel, but at this point the move down looks basically locked in. A bottom of around 3200 would put us right in line with the 2020 crash levels. This remains our "bottom", at least in for now barring any crazy black swan event. Which is quite likely with the current geopolitical climate. We'll see how the rest of 2022 plays out. Eyes peeled. -TucciNomics Chief Overlord, AlgoBuddy
SP:SPX
by QuantVue
XAUUSD Plan for CPI and Interest Rate Decision Week**Repost from Dec 11th 2022 since the original post disappeared** Regardless of the results from announcement of economic numbers, it would not be surprising to see gold price drop since the current price is standing near significant resistance area around 1810 USD. However, it would not be wise to open a short position until the break of uptrend structure is broken either from smaller time frame such as 15 min is making lower lows or the price closes below the uptrend regression channel in 1H time frame. There are two support levels to stop the bearish momentum at 1781 USD and 1765 USD. If the price does not break below 1781 USD, it has a chance of testing at 1823
OANDA:XAUUSD
by ChartTrail
ECONOMIC CYCLE & INTEREST RATESHello traders and future traders! The state of an economy can be either growing or shrinking. When an economy is growing, it typically leads to improved conditions for individuals and businesses. Conversely, when an economy is shrinking or experiencing a recession, it can have negative consequences. The central bank works to maintain a stable level of inflation and support moderate economic growth through the management of interest rates. What is an economic cycle? An economic cycle refers to the fluctuations or ups and downs in economic activity over a period of time. These cycles are typically characterized by periods of economic growth and expansion, followed by periods of contraction or recession. Economic cycles are often measured by changes in gross domestic product (GDP) and other economic indicators, such as employment, consumer spending, and business investment. Economic cycles can be caused by a variety of factors, including changes in monetary and fiscal policy, shifts in consumer and business confidence, and changes in global economic conditions. Economic cycles can also be influenced by external events, such as natural disasters or political instability. Understanding economic cycles is important for businesses, governments, and individuals, as it helps them anticipate and prepare for changes in the economy and make informed decisions about investment, hiring, and other economic activities. How is an economic cycle related to interest rates? Interest rates can be an important factor in the economic cycle . During a period of economic expansion, demand for credit typically increases, as businesses and consumers borrow money to make investments and purchases. As a result, interest rates may rise to control the demand for credit and prevent the economy from overheating. Higher interest rates can also encourage saving, which can help to balance out the increased spending that often occurs during an economic expansion. On the other hand, during a period of economic contraction or recession, demand for credit tends to decline, as businesses and consumers become more cautious about borrowing and spending. In response, central banks may lower interest rates to stimulate demand for credit and encourage economic activity. Lower interest rates can also make borrowing cheaper and more attractive, which can help to boost spending and support economic growth. Overall, the relationship between interest rates and the economic cycle can be complex and dynamic, and the direction and magnitude of changes in interest rates can depend on a variety of factors, including economic conditions, inflation expectations, and the goals and objectives of central banks and other policy makers. I hope you leant something new today!
Education
by m_maia14
No secret‼️👀😉🔴inflation🔵rate⚫️marketsNo secret‼️👀😉 🔴inflation up⬆️ 🔵rate hikes⬆️ ⚫️markets down⬇️ 🔴inflation down⬇️ 🔵rate cuts⬇️ ⚫️markets up⬆️ Bitcoin and Crypto equal markets like DowJones NASDAQ and Co Chart 1 1972 - 1986 Chart 2 current situation - see update What do YOU expect in points of inflation? Let me know your thoughts in the comments🤗 ⬇️⬇️⬇️ Likes and Follow for updates appreciated🤗 Disclaimer: Not financial advice Do your own research before investing The content shared is for educational purposes only and is my personal opinion
TVC:DJI
by Crypto4Everybody
1