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The 200 Daily SMA was struck again... Full short using QQQSAssuming with a high degree of certainty, that positive traditional market sentiment is waning. As we enter the first acknowledged year of this Great Inflationary Central Bank Recession, caused by a combination of negative interest rates and a supply chain bullwhip effect even the Russian military's logistic department might have been able to spot. We are going to lose the last bit of positive buying sentiment, likely leading to the S&P 500's next strong rejection lower. From a macro point of view, Central banks are all engaging on further tightening measures. While Inflation is running rampant and significantly raising prices for all goods, particularly in terms of rental properties, food and living expenses. Aspects that are not proportionally represented in official government reports. Combined with this is wave of lowering company earnings and a swathe of high paying lay offs in the financial, tech and manufacturing sectors. These factors have not been factored into price yet and the likelihood of the Central bankers holding higher rates for these next two years, has not be accounted for. The final aspect of this analysis is the slow selling that has occurred. With each rally against the downtrend, each sideways accumulation is being held up by a "Buy the Dip" mentality. Retail is buying the dip the same way as in every bear cycle, accompanied by all the bull market funds that are buying the dip, when a likely larger 15% sell off is coming down the river to Niagara Falls. This is just one Investor's opinion, best of luck out there.
SP:SPXShort
by FortunaAlgoAnalytics
5
Fundamental and Technical Analysis | January week 2, 2023Table of Content: 1. The World Bank 2. Jerome Powell 3. Mass Layoffs 4. Corporate Headline 5. Technical 1. The World Bank The World Bank has recently announced a slash in the forecast for global growth. This year's global growth forecast is reduced by nearly half, to just 1.7%, from its previous projection of 3%. It would be the third-weakest annual expansion in three decades, behind only the deep recessions that resulted from the 2008 global financial crisis and the coronavirus pandemic in 2020. “For most of the world economy, this is going to be a tough year, tougher than the year we leave behind,” Georgieva said. “Why? Because the three big economies — U.S., EU, China — are all slowing down simultaneously.” Furthermore, The World Bank projects that the European Union’s economy won’t grow at all next year after having expanded by 3.3 percent in 2022. It foresees China growing 4.3 percent, nearly a percentage point lower than it had previously forecast and about half the pace that Beijing posted in 2021. 2. Jerome Powell In a recent statement led by Jerome Powell, he expressed his highest level of hawkish sentiment towards the economy. He noted that inflation is the foundation of a healthy economy and can require the central bank to take actions that are not necessary, but popular. Price stability is the bedrock of a healthy economy and provides the public with measurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy.” He wants to resolve the issue he initially created, previously, he was insistent that inflation was going to be transitory and now there is a clear indication that it is not and will require major efforts to bring it down. Why was Powell hawkish? Financial conditions are unintentionally loosening and he does not want to see it because that will increase the probability of a rebound in markets which could mean a rebound in inflation. - Some of the world’s largest asset managers such as BlackRock Inc., Fidelity Investments and Carmignac are warning markets are underestimating both inflation and the ultimate peak of US rates, just like a year ago. (Bloomberg) - “Central banks are unlikely to come to the rescue with rapid rate cuts in recessions they engineered to bring down inflation to policy targets. If anything, policy rates may stay higher for longer than the market is expecting,” a team of analysts including Jean Boivin, the head of the Institute, wrote last week. BlackRock is underweight developed market equities and it prefers investment-grade credit to long-term government bonds. - JP Morgan CEO, Jamie Dimon said Tuesday that the Federal Reserve may need to raise interest rates to 6% to fight inflation, which would be higher than most are expecting this year. 3. Mass Layoffs In order to bring down inflation, the Federal Reserve needs to slow down the economy. It is common sense to see that an economy will not go down until consumers stop spending which results in loss of employment. - One of Wall Street's biggest banks plans to lay off up to 3,200 employees this week, as it faces a challenging economy, a downturn in investment banking, and struggles in retail banking. It is one of the biggest rounds of layoffs at Goldman since the 2008 Global Financial Crisis. Goldman Sachs is having difficulties in the stock market, underperforming. - Bed Bath & Beyond reported a net loss for the quarter ending Nov. 26, 2022, of $393 million. That's a widening of 29.7% from the $276.4 million loss in the comparable quarter of 2021. Furthermore, the Q3 loss is worse than the retailer's projection last week of a $385.8 million loss. These inadequate results will lay off hundreds or thousands of employees in the company. On the other hand, the stock rallied by double digits, emphasizing again that the stock market likes when employees get fired to increase profit margins. - Coinbase announced Tuesday that it was laying off 950 people, about 20% of its staff. The job cuts come only a few months after another major round of layoffs. The crypto brokerage firm let 1,100 people go in June, about 18% of its headcount at the time. Again, the stock still rallied by double digits. It is notable to mention that the brother of the former Coinbase product manager, Nikhil Wahi, was sentenced Tuesday to 10 months for his role in a scheme to trade on confidential information about when the cryptocurrency exchange was going to list new tokens. A comparable phenomenon I start to visualize from these and recent layoffs is the 2021 stock splits. When firms announced stock splits in 2021, their stock would surge. In 2023, when a company announces layoffs, the stock surges higher (until they run out of liquidity). 4. Corporate Headline - The cyclical growth rebound, possibly triggered by the Chinese reopening, is being priced in or could go higher (major resistance at SPX $4,250). Macau sees deserted streets and Casinos after reopening (Reuters). - Taiwan Semiconductor Manufacturing Co. recorded its first quarterly revenue miss in two years, signaling the global decline in electronics demand is starting to catch up with the chip giant (Bloomberg). This issue will take months to recover as it has to adapt to the oversupplied market. - Apple is Broadcom’s largest customer and accounted for about 20% of the chipmaker’s revenue in the last fiscal year, amounting to almost $7 billion to stop buying key components, and instead, produce pieces themselves. - Blackstone Inc. lost a bid to end rent stabilization at Manhattan's largest apartment complex after a judge ruled in favor of tenants at Stuyvesant Town-Peter Cooper Village. - Wells Fargo, once the No. 1 player in mortgages, is stepping back from the housing market. This is a negative signal for the housing market, prices are too high and few can afford these houses. Once homeowners realize the Fed is not going to ease interest rates anytime soon, the housing market is going to slow down dramatically and individuals are going to lose their homes. Renters and Airbnb will slow down real estate further as they will not be able to pay their mortgages and will be forced to get rid of the houses, greatly increasing the supply. 5. Technical Analysis - Momentum indicators: RSI and MACD moving toward positive momentum and volume remains below average (bullish). - If S&P500 breaks the sloping resistance (channel), prices will rise significantly as individuals will assume the market is already priced-in, plus, showing: a break in pattern resistance; higher-low; and bear market sentiment reducing. - This is a similar pattern to the 2000 market crash where SPX broke a major trend and resistance, then followed to fall 34%. I point out the negative indication in most of my recent analyses, this is because the negative indications are far greater than any positive singular indication in this market environment. Overall, I have not changed my outlook and I am keeping my government bonds. I will take the opportunity of a rise in equity markets to short BTC at higher levels.
CME_MINI:ES1!Short
by ssavi
S&P500, was Friday (06 Jan 23) really Bull move?As we close out the first trading week of 2023, all 3 US indices close on Friday with a 2+% gain. What a great start to 2023! Is it really, though? If you think the market rallied on higher than expected NFP and lower unemployment rates, this is your first mistake. For most of 2022, the market had considered any economic strength is bad for stocks because it would mean higher inflation and a lower chance of a Fed Pivot. We saw this time and time again in 2022 when the market dropped on lower unemployment rates, higher wages, and higher retail sales. Even Jerome Powell has stated countless times in FOMC that the tight labor market is terrible for bringing down inflation. What caused the market rally, then? The ISM Non-Manufacturing Report. What you see here is the 1-hour chart of the S&P500. The market did rally on the NFP report, but it came back down immediately. However, at 11 pm, when ISM Non-Manufacturing numbers came out, it gave the market confidence to rally. What is the ISM Non-Manufacturing Report? It measures the business activity in the non-manufacturing sector, mainly the service sector. The service sector accounts for 80% of US business activities, and manufacturing accounts for the remaining 20%. After 30 consecutive months of activity growth (Since May 2020), the Service sector has contracted. Before last Friday, the last time Service Sector went into contraction was during the Covid19 crash and the Housing Crisis. So this is a piece of terrible news, then? Why did the market rally? The market believes that a weakening economic condition will trigger Federal Reserve to cut the rate. The market still believes in this delusional Fed Pivot narrative. Time and time again, Jerom Powell will come out during FOMC and kill the rally. During Dec 2022 press conference, Powell explicitly stated, "No Pivot in 2023" (go see the conference for yourself). The market is still fighting the Fed. The 10 Year Yield and 2 Year Yield diving 4% also proves this delusional "Fed Pivot" mindset. The Fed is raising FFR to keep the rate high to discourage cheap money. But if the 10Year and 2 Year rates are crashing on the backdrop of a delusional scenario, it will make the Fed's job even harder. They even stated that in the December meeting minutes. "Unwarranted easing in financial condition, ESPECIALLY IF DRIVEN BY A MISPERCEPTION BY THE PUBLIC or the committee's reaction function, would complicate the committee's effort to restore price stability." Once again, this market rally has no legs to stand on. When the FOMC decision arrives on 31 Jan 2023, Powell will stop this rally dead on its track again. Or maybe the CPI number coming this Thursday may slap some sense into the market. Do not get tricked (again). This is not the first time. Both July 2022 and October 2022 rallies were also based on a Pivot delusion. And it did not end well. If you are long-biased, do not overstay your welcome. I will be heading to these two key event with a short bias portfolio. NOTE: Banks and Big Techs earnings are coming up!
OANDA:SPX500USDShort
by NimbusCapital
Long USD short AUD due to long term growth constraint Long USD Governor: Jerome H. Powell Monetary Policy: Monetary policy in the United States comprises the Federal Reserve's actions and communications to promote maximum employment, stable prices, and moderate long-term interest rates--the economic goals the Congress has instructed the Federal Reserve to pursue. o Sentiment: Bullish o Rate Decision: 1% o Current Rate: 0.33% o Rate Differential: 1.67% o Inflation Target: 1% o Current Inflation Rate: 8.54% o Statement Summarized: The US Fed will make MoM interest rate adjustments if inflation continues to persist, Unemployment maybe down however certain labor participates refuse to work in supply, logistics and or overall labor primarily due to the pay and work conditions o Short Term Bias: U.S. Retail Sales will provide a adequate entry due to the higher the average volatility that will take place on that day due to the consensus that sales will be down, Indicating a temporally deprecation of the USD dollar. o The Average Daily Range (ADR): 20 Pip o Possible Opportunities 1: Although overall economic activity edged down in the first quarter, household spending (Consumer Staples) and business fixed investment (Bonds) remained strong. Job gains have been robust in recent months, and the unemployment rate has declined substantially (Indicator 1- Interest Rate Hike). Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures (Labor Constraints and wage increases). o Possible Opportunities 2: The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain (Fear, reserve currency). The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions (Labor Constraints and Zero Covid Policy). The Committee is highly attentive to inflation risks o Possible Opportunities 3: The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will consider a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Short AUD o Governor: Philip Lowe o Monetary: In determining monetary policy, the Bank has a duty to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people. To achieve these statutory objectives, the Bank has an ‘inflation target’ and seeks to keep Consumer Price Inflation in the economy to 2–3 per cent, on average, over the medium term. Controlling inflation preserves the value of money and encourages strong and sustainable growth in the economy over the longer term. o Sentiment: Neutral o Rate Decision: RBA is primarily concerned with CPI o Current Rate: 0.35% o Rate Differential: % o Inflation Target: 2-3% Average o Current Inflation Rate: 5.1% o Rate Differential: 2-3% o Statement Summarized: RBA is primarily concerned with bringing down inflation however it will not add to its QE policy nor will it reverse its holdings of bonds on their Balance Sheet o Balance Sheet activity: Will not sell current QE assets not are they reinvesting earnings. (Holding) o Market Sentiment: (Two weeks of charts from the start date after Fed meeting) o Short Term Bias: (Last for 1 day great for entry and exit) o The Average Daily Range (ADR): o Possible Opportunities 1: The outlook for economic growth in Australia also remains positive, although there are ongoing uncertainties about the global economy arising from: the ongoing disruptions from COVID-19, especially in China; the war in Ukraine; and declining consumer purchasing power from higher inflation. The central forecast is for Australian GDP to grow by 4¼ per cent over 2022 and 2 per cent over 2023. Household and business balance sheets are generally in good shape, an upswing in business investment is underway and there is a large pipeline of construction work to be completed. Macroeconomic policy settings remain supportive of growth and national income is being boosted by higher commodity prices.
Short
by TyrusL
1
AUDUSD: Bearish 5-0 on Quarterly Timeframe Seaking 50% DeclineAUDUSD has this strange Inverse Cup with Handle / Bearish Head And Shoulders sorta look to it, but more clearly, it has formed a very real Massive Bearish 5-0 that has been in the making for many years and it has recently tested the PCZ as resistance at the 50% retrace and confirmed it with huge amounts of MACD Hidden Bearish Divergence. If this plays out fully, then we can expect that the Australian Dollar to lose well over 50% of its value from here out.
Short
by RizeSenpai
1
Equity market outlook - January 2023Purpose This analysis is meant to provide a long-term outlook for equity markets. I also use this to support my data-driven, long-term investment decisions. Sharing this with the public helps me avoid one of the most common mistakes investors make in the market - missing the forest for the trees. Table of contents Central banks policy Economic growth outlook Earnings growth outlook Liquidity in the financial system Summary Central banks policy Central banks around the world are still tightening monetary policy which is a headwind for economic growth - see the section below. Tight monetary policy means there will be potentially more pressure on 10Y real yields - if inflation will be persistent. There has been a strong correlation between 10Y RE and S&P 500 Forward P/E since 2018. Tight monetary policy + persistent inflation = lower Forward P/E = higher pressure on S&P 500. What has already been embedded into the price? Eurodollar futures term structure can help answer this question. The market expects rate cuts in September 2023. This would support a higher P/E, but it would also mean that something has been broken on the market. The shape of the curve suggests that the market expects rather hard landing than soft landing. No one knows for sure what FED will do in the future, but if they follow the path outlined by the eurodollar futures market then we are near the bottom of forward P/E. In that context, the cheapest stocks are in the S&P 600 index = small cap index. Forward P/E is 12.5. Their lowest value was during the GFC - just below 10. The most expensive is S&P 500, with a forward P/E of 16.7. Economic growth Central banks' policy leads economic growth / contraction that can be measured by CLI Diffusion Index: The index suggests we should not expect positive stock indices YoY growth yet. What's more important, it says a high volatility period might be around the corner. However, the National Financial Condition Index has already been elevated, so lots of depression fears have already been discounted. Earnings growth outlook I use the Nominal Broad U.S. Dollar Index, BBB US Corporate Yield, WTI price, and ISM New Orders less ISM Customer Inventories to measure the impact of current conditions on future corporate earnings. As a result, I get an indicator that tends to lead stock indices YoY changes, especially Russell 2000 - because it is the index that is the most sensitive to real economy changes. We should not expect earnings to grow in that kind of environment. Liquidity in the financial system I use three indicators to measure liquidity. I normalized the readings to z-scores - just to look at them from the same perspective. 1. FED Balance sheet less Reverse Repo (Overnight Reverse Repurchase Agreements) less TGA (U.S. Treasury General Account): there is still plenty of money flowing in the financial markets despite ongoing QT 2. Top of the ES futures order book (the number of contracts in buy orders and sell orders): despite the end of the year period, the liquidity (on average) is just fine. No need to worry about air pockets right now. 3. Finra margin debt - the deleveraging is ongoing. $292B has been removed from investors' margin accounts so far, but there is still plenty of money borrowed from brokers - we're at levels last seen in 2018. Summary Forward P/E trough might be just around the corner, but central banks policy still does not support growth. It can be seen on the CLI Diffusion Index. On the other hand, tight financial conditions should soon impact corporate earnings. In that kind of environment - where EPS should not be rising and P/E not falling - selling the rip and buying the dip strategy might benefit more than just buy&hold. I'll wait with my long-term investments.
CME_MINI:RTY1!
by sl-wk
Observing Historical Top to Bottom to Top CyclesThis is more of a observation or thought experiment than any kind of technical analysis. The starting point of all data points is the SPX ATH. All other historical ATH values begin at the most recent ATH (January 22), and end whenever price returned to its respective ATH. Time and Change is more important than Time and Price. It's easier to see this from a logarithmic view. Historical data is color coded. Vertical lines represent lows. Happy Holidays and may you be a part of the next cycle. Maybe the start is now? Maybe next year? Nobody can be sure.
SP:SPX
by turdcannon
2023 macro scenario and the ways to use it for the portfolio manTo set a dollar investment strategy for the year ahead, we need to be aware of the macro context. The current situation resembles the beginning of two stagflations in the early 1970s and 1980s which were characterized by accelerating inflation after reaching its bottom due to record-low unemployment, and the Fed’s rate hike to combat the inflation surge. Now we see real GDP falling while nominal value is increasing, but unemployment is still at its lows. We see similarities in the sharp rise in inflation that led to the Fed’s rate hike, but the 2021-2022 inflation surge is different in speed: before the 1970s and 1980s the stagflation rates increased gradually over 3-4 years, but now after low covid base and record amount of money printed the rate is more rapid. We believe the end of 1969 is similar to the current situation. We see two consecutive quarters of declining real GDP, several quarters of persistently high inflation, which was 1-2% before the acceleration, and the unemployment at the same low level of 3.5%. The Fed’s rate continues to peak, in 1969 it was at its highest level. The consumer also was strong, income increased before and during the stagflation. Given the experience of the 1970s, the rate exceeded inflation and it resulted in a slowdown, but there was no sharp fall in inflation, it was only 1 percent below its peak for almost a year. That makes sense as strong consumer and gradually weakening but still strong labor market kept inflation from sharp drop. The same factors are in place now, so we expect inflation to be 7-8% in 2023. The most important factor is rent, which affects inflation with a 6-month lag, it gives + 0.2% MoM. We expect this effect to persist at least till May. Food and other gives +0.3 MoM as most conservative case for 2022. This will lead to core inflation of at least 5% YoY. In addition, higher gasoline prices will result in 5-6% of inflation. Given the situation in housing and oil markets, cumulative inflation could be around 7% by March 2023 and around 5% by May. Accordingly, the Fed’s rate could reach its peak at 5.75-6.0%. THE FED'S ACTIONS DURING RECESSION Given the increase of 0.5% after each subsequent meeting, the rate will peak in June 2023 at 6.25-6.5%. In the 1970s, the Fed’s rate peaked in August 1969, stayed near the peak over six months, and started to sharply decline in February. Now the rate’s peak is still to come. We should understand that the Fed does not necessarily stop raising rates if the economy falls into recession. The abovementioned example shows that in 1974 8 months passed from the start of the recession to the rate peaks, and the graph below shows that in 1980 3 months passed from the start of the recession until rates peaked. LET'S FOCUS ON WHAT A RECESSION IS Contrary to what many people believe, it is not the GDP decline alone but a combination of factors that have been underway over several months : Falling real GDP Increase in unemployment Lower retail sales Declining real income and spending of the population Drop in production volume So, even if real GDP declines, while employment is record-breaking, it is not yet a recession (as we observe in 2022). The NBER is the official source of the start and end dates of recessions in the US. It provides the following definition: “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” More details of how and why the NBER identifies the beginning and the end of recessions are available here . Also, there is a very handy dashboard that displays online all the indicators the NBER looks at when determining a recession– here . Most indicators do not show the recession yet, and probably it will not appear in the next few months. THE RECESSION TRAJECTORY EXPECTED IN 2023 There was a big collapse in global bond markets, especially in longs. As a result, those who had savings in bonds lost in nominal terms, and even more in real terms, i.e., adjusted for inflation. What causes the loss of purchasing power: Losses on investment accounts (stocks, bonds, and mixed funds) Higher energy and utility costs in Europe due to multiple increases in gas prices Gasoline prices growth in the US Rising interest rates on loans, including housing mortgages The economy's big surge in 2021 was driven by record liquidity and low rates, shaped by the actions of Central Banks almost worldwide. As there was a gap between consumption and production capacity, inventories slumped and the inflationary spiral began to accelerate: high demand spurs expansion of production and full capacity utilization, which requires more labor. The labor market becomes "tight", employers must increase wages, so commodity prices rise, the demand keeps increasing through income growth and consumers buy at higher prices. The credit impulse has shifted from stimulating the economy to restraining it. Based on the correlation with the US corporate EPS, from March 2023 it will begin to decline. Banks in Japan, England and some European countries are forced to buy bonds on the balance sheet (Quantitative easing), while there is high inflation in the country. If they do not do this, the local financial market (the largest bondholders - pension funds) will be jeopardized. As a result, rates in these countries cannot exceed inflation until it remains so high (~10%). And raising the rate above inflation used to be an effective way to combat it. It turns out that banks have no strategy other than to keep inflation high and rates relatively low by boosting their own balance sheets. This is likely to cause a quick reversal of the credit impulse to stimulate the economy, so the recession will not be prolonged, but inflation will remain at elevated levels. MACRO FORECAST FOR 2023 7% of inflation by March and 5% by May Fed rate peaks at 5.75-6.0% in June 2023 Beginning and depth of recession from Q2 2023. The depth and duration of the recession depends on the speed with which global central bank policy shifts from containment to support. It is reasonable to expect the first signs of support in late summer/early fall, then the exit from the recession could be as early as in Q4 2023. Based on this development and the historical analogies to the crises in the 1970s and 1980s, it is reasonable to expect the stock and bond market bottom to be reached within 2-3 months after the end of the rate hike, which means August-September 2023 would be the optimal time to buy. It is important to follow when the Fed shifts from tight monetary policy to support of the economy, we should expect the markets to bottom within 2 to 3 months. If that happens earlier or later than June, there will be a corresponding shift in timing guidance for buying. To use this analytics effectively, you need to monthly update the timings to move earlier or later the timing of the rate hike end and the market bottom formation.
SP:SPXShort
by InvestHeroesGlobal
I Smell a Santa Claus RallyWith inflationary expectations low, a decrease in CPI and Core CPI, a likely slowing in interest rate hikes, there's too much positive news in the short term to ignore the likelihood of a near-term rally. Still, some hinges on Jerome Powell's outlook tomorrow, but I expect him to keep language as soft as his last speech. Last month, he was still very domineering in his tone on inflation, but the last FOMC meeting was much softer. I expect that again with inflation ticking down as proof of low inflationary expectations. I mean, you can hear people freaking out about the economy everywhere. I don't think inflationary expectations are high lol. Listen to his last speech and you can hear a dramatic tone shift. Here's last FOMC Press Meeting After rate hike in mid November: www.brookings.edu HARD LANGUAGE Here's his "Inflation and the Labor Market" speech on 11/30: www.youtube.com SOFT LANGUAGE Long term? You'll have to look at my first post to see that. Enjoy, and you can find a link to an Economic Release calendar down below for you to save. InTheMoney
TVC:NDQLong
by InTheMoneyAdam
5
S&P in EUR present Wyckoff distributionS&P (in this chart ES futures) divided by EURUSD (in this chart Euro futures): The whole of 2022 could be Wyckoff distribution, now entering Phase C, the shortest phase. To confirm the pattern and continuation to phase D, look for: Fed hike less aggressively in 2023 ECB hike more aggressively in 2023 A move up in EUR (a move down in DXY) A move down in ES/SPY/SPX ideally no later than the end of December. Motivation: European investors are likely overweight US stocks in 2022. It is important to understand the price of S&P 500 in EURO as it is the cheaper currency to borrow. Macroeconomic trends suggest distribution rather than accumulation.
CME_MINI:ES1!
by Smitty61
Are we in a financial crisis?We are all asking ourselves the same question, are we in the next big financial crash or is the worst already over? To answer this question, let's look at the S&P 500 since the beginning. The S&P has only seen one really big/long correction in its history and that was triggered by the Great Recession in the 1930s and the following Second World War. Since then, the S&P 500 has only seen one strong uptrend. If we take a closer look at this uptrend since WWII, we can see very clearly the subordinate waves 12345. 1. impulse wave: recovery after WWII and start of globalisation. 2. correction wave: 1970 recession and oil crisis 3. impulse wave: digitalisation and increased globalisation (EU, China, etc.) 4. Correction wave: dot.com bubble and 2008 financial crisis 5. impulse wave: digitalisation and automation of value chains The two correction waves were each triggered by major negative economic events. The individual phases are shown in time in the chart below. A certain temporal correlation can be seen. The upward trends lasted approx. 8700 to 9100 days and the downward trends approx. 3300 days. Current situation Currently we are in a strong uptrend that has lasted since 2008 and purely in terms of time has lasted only half the time than the two previous uptrends. But the economic situation is worse than in 2008 and worse than in the 1970s. Economic situation - Extremely high energy costs and production costs weigh on businesses and households - Interest rate hikes put additional strain on the economy - The higher interest rates are to remain for the time being in the medium term - Higher costs mean lower profits - Lower profits and higher capital costs mean less investments - Unstable housing market in the USA, Europe and China - Industry and trade under massive pressure - Stock market still largely overvalued - China - Taiwan conflict - Ukraine - Russia conflict - Unstable society - Etc. All these individual events are having a negative impact on the global economy and together form a perfect foundation for a deeper recession. Many negative effects will only become apparent in the coming months, especially in the companies' key figures. In previous crises, even minor problems have led to crashes. Therefore, we are preparing for a falling/stagnating economy in the coming months, even years, which will also have a corresponding impact on the financial markets. In the current economic situation, to assume that the correction is now over and that we are now testing one high after another again can be very dangerous. We do not assume that the next few months will only be downward. Every overriding downward trend also has its (major) counter-corrections to the upside. Therefore, we may also experience months of euphoria and months of stagnation. Moreover, we do not expect such a strong and prolonged correction as in the 1930s, as sentiment was much worse then than now. The correction course shown in the chart is only symbolic of a correction. Pessimism - Realism We do not represent pessimism here, we represent realism. We want to encourage you to think about this realistically. In the current crisis landscape we are in, can you imagine that the correction is now over and we will test one high after the other and see an all-time high again in a few months? Especially considering the previous crises, what triggered them and how long they lasted. We no longer ask ourselves whether the crisis will come, but only how long it will last and how it will proceed in order to use the movements profitably. Price target of the correction? The previous corrections (1970s) & (2000 + 2008) were each able to form a bottom between the 0.5 and 0.618 FIB level and start the next uptrend from there. Projecting this onto the current correction, the price target of the correction would be around $2,500, which can also be confirmed very well on the chart with resistances, trendlines and many other indicators. However, this is still very difficult to judge in the current situation, as it depends on an enormous number of factors, which are not yet meaningful enough, after all, we are only at the beginning of the correction. We hope that this article was helpful for you and that you may now look at the current situation from a different perspective.
SP:SPX
by Consyder
4
The Inflation of the 1980s Tells the Same Story: Pivot=DeclineI have heard both sides: 1) Historically, the Fed pivot will result in a decline in equities because they are pivoting in response to negative economic data which drags on equities, and 2) this time is different, negative economic data is positive for equites because it means inflation is on its way down. When people reference the former, for whatever reason, they don't take a look at the effective Fed Funds Rate in the high inflationary period of the late 1970's and early 80's and compare the Fed's pivot to equities. In the chart shown, you can see that once Volcker, the Chairman of the Fed, finally took a steadfast position against inflation and rose rates violently, inflation began to cool. Both in part of this raise in rates and the public's belief that Volcker had no intention of letting up, ridding the public of inflationary expectations. If you look at the charts, you can see that as inflation rose so did the markets. But as Volcker stamped his foot and pushed rates up, inflation began to cool. USIRRY, the third chart down, shows this. Equities began to decline due to this restrictive economic environment and belief the Volcker would not let up. Notice that, as a result, unemployment (bottom chart) began to rise. This had no positive impact on equities, contrary to what some might think because it would indicate inflation was being taken care of. Instead, the U.S. entered a recession and equities continued to decline. It was only once the Fed stopped lowering rates, unemployment peaked, and inflation neared their target rate did equities bottom. It is not fair to compare equities and pivots to the Great Recession or the .com Bubble, yet even in historical inflationary periods the same story plays out: the markets bottom well after the Fed pivots However, this time could be different in that Powell showed no hesitation in attacking inflation and destroying inflationary expectations. He has taken a direct lesson from history. As a result, unemployment could potentially peak faster than expected, inflation could decrease faster than expected, and equities could bottom faster than expected. I believe today's outcome will be similar to that of the early 80's, but that outcome will happen much, much faster. The markets have not bottomed in my opinion, but I expect them to in mid-late 2023. It's always best to keep equity exposure to avoid missing the bottom. Because you never know . InTheMoney
SP:SPXShort
by InTheMoneyAdam
6
GBPUSD: How to read the fundamentals?GBPUSD is ahead of an important week of CPI meeting in Tuesday and FOMC on Wednesday. if inflation remains under control we can expect fed to slow down the rate hikes more likely 50 bps the coming week and 25 bps early next year which should trigger USD bears and that's what we expect as well based on the last CPI data. Otherwise if CPI is above expectations we can expect the opposite Scenario and more of a strong Dollar and a hawkish FOMC. when Good fundamentals meet good technicals then there is a good probability for your trade to go in your direction but always keep in mind that trading is a field of probabilities and since everything could happen a proper risk management should be taken in consideration. my recommendation is to risk 1% per trade so that will allow you to stay in the market the longest possible and will help you to compound your account as well. Otherwise if you risk 20% per trade then 5 losing trades in a row will knock you out of the market. And you don't want that to happen so you should stick to proper risk management of always risking small and aiming high. if you have any question please don't hesitate to ask in the comment section. i'm happy to interact and answer to all!
Long
by JoeChampion
40
FOMC Meeting Next Week: Bank of America Expects 50bp Rate Hike The Federal Open Market Committee (FOMC) is set to meet next week, and investors are eagerly anticipating the outcome of the meeting. Bank of America Global Research has discussed its expectations for the meeting, saying that it expects the Fed to raise its target range for the federal funds rate by 50bp in December to 4.25-4.5%. According to Bank of America, the Fed has telegraphed this move over the last few weeks through its communications. However, the more important question is where the Fed will go next. Bank of America expects the median forecast for 2023 to move up by 50bp to 5.125%, which is consistent with its terminal rate. The bank also expects the dot plot to show 100bp of cuts each in 2024 and 2025. In addition, Bank of America expects the macro projections in the Statement of Economic Projections (SEP) to be revised to show lower GDP growth and inflation than in September, and higher unemployment. At the press conference following the FOMC meeting, Bank of America expects Chair Powell to push back against easing in financial conditions and remind investors that a slower pace of hikes does not mean a lower terminal rate. The bank believes that Powell will stress that the Fed's job is far from done. Overall, Bank of America expects the FOMC meeting next week to be consistent with the Fed's previous communications and for there to be no major surprises or shifts in policy. Some Jargon Explained The Dot Plot The dot plot, also known as the Summary of Economic Projections (SEP), is a visual representation of Federal Reserve policymakers' individual forecasts for where they think key interest rates will be in the coming years. The dot plot shows the central tendency, or the middle of the range, of the individual forecasts for the federal funds rate. Each participant in the FOMC meeting provides their own individual forecast for the federal funds rate at the end of each calendar year, as well as over the longer run. These forecasts are then plotted on a chart, with the dots representing the individual forecasts and the lines connecting the dots indicating the median of the group's forecasts. The dot plot is released four times per year, along with the FOMC's policy statement, and provides insight into the collective thinking of FOMC members about the future path of interest rates. It is an important tool for investors to gauge the future direction of monetary policy. The Terminal Rate The terminal rate, also known as the long-run federal funds rate or the equilibrium real interest rate, is the interest rate that the Federal Reserve believes is consistent with the long-run health of the economy. It represents the level of the federal funds rate that is neither expansionary nor contractionary and is expected to prevail in the long run, once the economy has reached its full employment and price stability goals. The terminal rate is not a fixed number, and can change over time depending on a variety of factors such as changes in the underlying productivity and demographic trends of the economy. The Federal Reserve uses the terminal rate as a reference point when setting its short-term interest rate targets. In general, the terminal rate is expected to be lower than the current federal funds rate, as the Fed typically raises interest rates in the short run to prevent the economy from overheating and then lowers them in the long run to support economic growth. This means that the terminal rate can provide important information about the future direction of monetary policy.
TVC:US10YEducation
by JoelWarby
BTC cycle based Wave CountsThis is our macro view on BTC based on cycle based wave counts. --> BTC is in the final leg down of a full macro corrective wave 4, nobody knows what the excact low would be. Based on wavecounts, Fibonacci extension + retracement targets the most confluence is founded in the 13-11.5k zone (also the launchepad of the previous bullrun) with an potential overshoot towards 10k We dont want to try buy the exact bottem, we always waiting to get conformation on a bottem formation or we buying at prices where we feel comfort with to hold for the next wave up. --> BTC never was able to make new ATH's before the halving date. The next logical top should be in 2025 This is just one of the many scenario's we could think of, along the way with having more chart data our vieuw on this TA could change. On wich prices are you feeling comfort to buy in without having any regret over the next years? What is your trade plan? Cheers, Team Quantistic
BITSTAMP:BTCUSD
by Quantistic
8
The West Takes Aim at Russian Oil MarketsAs tensions continue to escalate between the West and Russia, a new development has emerged in the ongoing struggle over oil shipments. The West has been using shipping insurance as a tool to put pressure on Russia, but this strategy has had limited success so far. Insurance is only available for shipments valued at less than $60 a barrel, and as it happens, Russian oil already trades just below this cap. As a result, it's not yet clear how much of an impact this will have on oil prices. But this raises an interesting question: why would the West set the cap at this level? The answer, it seems, is that they've calculated it in such a way that it provides just enough incentive for Putin to keep pumping oil. This is because the West is understandably concerned that Putin might choose to remove Russian oil from the international market, causing prices to rise significantly. And if global oil prices do rise much above where they currently are, the situation could become much more heated. This is just one example of the complex dance that goes on between petronations and the West. On the one hand, the West has the ability to put pressure on petronations by limiting their access to the global market. But on the other hand, petronations have the power to put significant pressure on the West via energy prices. So it's a delicate balancing act, and it's not always clear who has the upper hand. But what does this mean for the future? Well, it's difficult to say for certain, but it's clear that the West is trying to find a way to put pressure on Russia without causing a major disruption in the global oil market. And if they're successful, it could have significant implications for the ongoing struggle between the West and Russia. Of course, there are many other factors at play here, and it's impossible to predict exactly how things will unfold. But one thing is clear: the discussion around this issue is only going to become more heated as global oil prices continue to fluctuate. So it's definitely a topic worth keeping an eye on in the coming months and years.
FX:USOIL
by JoelWarby
2