Risk Off: Dollar Up, All Else Falling
CBOT: Micro 10-Year Yield ( CBOT_MINI:10Y1! )
Last Friday, U.S. stocks plunged again as soaring interest rates and FX market turmoil fueled investor fears of a global recession.
The Dow fell below 30,000 and closed at 29,590, down 486 or -1.6%. S&P 500 broke through 3700 and settled at 3,697, down 1.72%. Nasdaq Composite lost nearly 200 points and closed at 10,868, down 1.80%. Russell 2000 finished at 1,679, down 2.48%.
On Wednesday, the Fed raised Fed Funds Rate by 75 basis points to 3.00-3.25% range. Market expected two more rate hikes totaling 125 bps in the November and December FOMC meetings, bringing it to 4.25-4.50% by year end.
U.S. Treasury yields surged this week after the Fed's move, with 2-year rate topping 4.2%, a 15-year high. 10-year Treasury yield is currently quoted at 3.687%.
Meanwhile, US dollar index ( ICEUS:DXY ) exceeded 113 points, its highest level since April 2002. Euro currency fell to 0.9688 against the dollar, a 20-year low. British pound closed at $1.08, a new low in more than three decades.
Global Market in a Risk-Off Mode
On August 29th, I pointed out that global financial markets are in a paradigm shift triggered by runaway inflation and high interest rate. All major assets would undergo “repricing”. The recent US CPI data and Fed rate hike help speed up this process.
The title chart at the top of this analysis shows year-to-date returns from major financial assets:
• US Dollar Index ( ICEUS:DXY ): +17.73%, at 20-year high
• S&P 500 ( SP:SPX ): -22.72%, in a bear market territory
• WTI Crude Oil ( NYMEX:CL1! ): +3.05%. In March, crude oil gained 60% in response to geopolitical crisis. It turned south ever since the Fed began raising interest rate
• Gold ( COMEX:GC1! ): -8.95%. Under a strong dollar, gold has become a risky asset being disposed off by investors.
• Euro ( CME:6E1! ): -14.07%. With geopolitical risk compounding a recession, the economic outlook of the Euro-Zone countries is very gloomy
• High Grade Copper ( COMEX:HG1! ): -23.77%. Copper demand will decline in the event of global recession. Futures market has fully priced this in
• Soybean ( CBOT:ZS1! ): +6.54%. Corn futures was up 25% in June. But the gain was largely given away as the fear of recession outweighed the risk of food crisis
In a “flight to safety”, investors shift their assets out of stocks, bonds and commodities, into US dollars instead. With strong exchange rate and high interest rate, US dollar appears to be the only “safe haven” in market turmoil.
How to Invest in Dollar?
If you are holding financial assets in foreign currency, converting them into US dollar is a logical first step.
A risk-averted investor may put dollars into a flowing rate bank account, or purchase money market fund. In a defensive move, you park money in US dollar account until market stabilizes and new investment opportunities emerge. Don’t tie up your money in long-duration deposit, as interest rate is almost certainly going to rise.
An active investor may consider trading risk-free US treasury bonds. Other dollar bonds such as corporate bond, convertible bond and municipal bond are subject to repricing.
Bond price and bond yield are inversely related. As we expect yield to go up, a trade could be constructed by shorting a cash treasury bond, or shorting CBOT treasury bond futures.
CBOT Micro Yield Futures list for two consecutive months. They are more intuitive to trade. If you hold the view that treasury yield would rise, long the micro yield futures. November contract will begin trading next week.
Why do I prefer 10-Year ( CBOT_MINI:10Y1! ) over 2-Year ( CBOT_MINI:2YY1! )? We are currently in an Inverted Yield Curve environment. October 2-Year Yield (2YYV2) is quoted at 4.196%, but the 10-year contract (10YV2) is quoted at 3.739%, 457 points lower. In my opinion, rate hikes are fully priced in on the 2YY quote, but 10Y may still have some upside potential.
The next FOMC meeting is November 1-2, and the rate decision would be announced at 2PM eastern time on November 2nd. The 10Y November contract may trade till the end of November.
Financial market is extremely volatile this year. Getting an information edge increases your odds of success in managing risk. I suggest leveraging real-time market data for a better gauge of market situation. TradingView users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation.
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.
Ratehike
Dollar about to do something it's only done 2 times since 2009Traders,
A moment of truth has arrived. The dollar is about to do something it has only done 2 times since 2009. This is critical! Let's take a look at our charts together.
Stew
If/Then Rate Hike SceneriosIf 100 bps, then break below support & cont. down.
If 75 bps, then remain above bottom support.
If 75 bps & hints of future pivot, then back into triangle with breakout imminent.
If 50 bps, then To The Moon!
Will the Nasdaq $IXIC bounce on Wednesday (Fed Rate Hike)?On the day of the increase most likely the market will go up which is counter-intuitive because when you think about increasing interest rates money becomes more expensive to borrow. So shouldn't stock go down? Usually, that tends to be true, but when there are High rates of inflation investors want to pay less money for a company. P/E values get compressed because the time value of money means that investors need to use a higher discount rate when valuing a company. (Money today is worth more than it does in the future) But when you have high rates of inflation you have to take that into consideration so that when inflation comes down stocks will eventually go up because there will be this uncompression so that's what happens to the stock market.
For the real estate market, this is much easier to understand. When interest rates go higher, homes become more unaffordable in the short term but in the long term the values go down.
Now, if you take a look at the chart, on the last 4 hikes, we saw 4 big green candles on the day of the hike. Also, the RSI indicator shows that the market is currently oversold. So probability-wise, I think we will have a green day on Wednesday but who knows in the mid/long-term... The mid-term and long-term trends are still bearish.
Federal Funds Rate Hike / Nasdaq on that day:
March 16, 2022: 25 points / +3.77%
May 02, 2022: 50 points / +3.19%
June 15, 2022: 75 points / +2.50%
July 27, 2022: 75 points / + 4.06%
$BTC - O -$BTC Hello my Fellow TraderZ,
We are now coming into the most awaited week where we have FED Rate Hike announcement on SEPT 20/21. So as usual US Equity Markets is reacting to the probable Hawkish action of FED, followed by #CRYPTO as well.
Many of us are expecting the rate hike to be between 0.75bps and 1bps. If we see 0.75bps, it is good and more so like #BITCOIN is pricing in by testing the June lows. Incase we see 1bps, this is a disater then and most probably #BTC would stop at 14k.
But here what I see on DTF is that #BITCOIN is coming to support and probably in the making of DOUBLE BOTTOM pattern which is coupling with the BULLISH DIVERGENCE.
Still hoping for the best. Be cautious and Trade well my Fam. CHEERS!!!
Gold: Inflation Hedge or Not Really?COMEX: Gold Futures ( COMEX:GC1! )
Last Tuesday, September 13th, the Bureau of Labor Statistics reported that U.S. Consumer Price Index rose 0.1% in August to an annual rate of 8.3%. Both were higher than market expectations of -0.1% and 8.1%, respectively.
One tenth of one percent didn’t seem much, but it refuted the mainstream notion that inflation has already peaked, and the Fed would tone down its tightening policy. The Dow dropped 1200 points on the news. Other US stock market indexes declined 3-4%.
On September 15th, gold price fell sharply. COMEX gold futures (GC) plunged below $1670/oz. It closed down $40, or more than -2%, to its lowest level since April 2020.
Gold price runs like a roller coaster this year. It surged to $2070/oz after the Russia-Ukraine conflict in February. Since then, it nose-dived as the Fed began raising interest rates. By September 15th, gold price has shaved off 19.3% from its 52-week high.
We have long held a belief that gold is a good hedge against inflation. Now that US inflation runs at a 40-year high, we would have expected gold price to rise and help investors preserve their purchasing power. But why is gold price falling?
In today’s story, we will explore the potential repricing of gold as a financial asset and a precious metal, in a new investment paradigm marked with rising interest rates and high inflation. (For previous writings on the “Great Wall Street Repricing” series, please follow the links at the end of this report.)
What Caused the Gold Sell-off?
Recent price slump is a direct result of investors liquidating their gold positions. As of September 13th, the world’s largest gold ETF fund SPDR Gold Shares saw its open interest falling by 80 tons to 962.88 tons, the lowest level since March.
Last week, CFTC Commitment of Traders Report shows total open interest (OI) of COMEX gold futures as 463,674. This represents a 27% drop from March 8th OI of 638,502.
The declines in gold open interest suggest that investors are taking money out of gold. This contradicts conventional wisdom that gold is a safe-haven asset.
Historically, gold has been used as currency (gold coins), storage of value (gold bars), and luxury jewelry (gold necklaces). Today, I would focus on two attributes: gold as a financial asset (paper gold), and gold as a precious metal commodity (physical gold).
Paper Gold
Gold ETFs, Gold Futures and Gold Options are financial instruments with gold serving as the underlying commodity. Paper gold does not generate income. Furthermore, if the issuer holds gold as collateral, the monthly storage and insurance costs will be passed on to investors. Therefore, paper gold could be a negative yielding financial asset.
In good times, any yield-generating asset would have more appeal than gold. Stock value is based on a company's future earnings. Bond holders receive periodic coupon payments. Commercial real estate produces rent income. Cash could earn interest while being invested in time deposit or money market fund.
In times of war, natural disaster, economic crisis, and political upheaval, many assets could be destroyed. A building could be wrecked, a business ransacked, and a banking system shut down. In the early days of the Russia-Ukraine conflict, panic investors fled to gold, pushing its price sharply above $2000.
Gold also serves as a hedge against inflation. When high inflation eats up real return, fixed income asset will underperform. Countries like Argentina, Turkey and Venezuela have experienced hyperinflation of triple-digits, rendering local currency worthless.
However, things are very different this time. While inflation is at decades-high, US dollar index, a measure of US dollar against a basket of foreign currencies, is at 109, its 20-year high. Inflation has not resulted in a depreciation of US dollar.
Although the stock market has pulled back significantly, it is still well above its pre-Covid level. US employment is strong, and the economy has not yet entered a recession. If investors are still debating when and if recession will be here, they are in no rush to buy gold now.
Lately, investors are underweighting equity and bond. Hot money is flowing out of riskier foreign markets. However, investors may park money in cash for now. Earning 3% in money market plus the potential of dollar appreciation seem like a better choice than gold.
Physical Gold
As a precious metal commodity, gold is priced in US dollars in global market.
In general, commodity prices have an inverse relationship with the value of US dollar. In the past three months, US Dollar Index rose 4.64%, while GSCI Index lost 18.66%.
If you compare dollar index with gold futures directly, the 3-month returns are +4.6% and -8.2%, respectively. Therefore, while viewing gold as a commodity, one should not be surprised to see its price falls as US dollar gains in value.
What’s behind the inverse relationship between US dollar and commodity?
• Foreign buyers need to convert local currency into US dollar to buy commodities
• When their currency depreciates against the dollar, it would cost more local currency to get the same unit of US dollar
• Commodities become more expensive for them, which results in lower demand
Whether gold is used as a storage of value, or luxury jewelry, it is sensitive to price. Strong dollar raises the cost of gold purchases. This put downward pressure on gold price.
As the Fed continues to raise interest rates, foreign currencies would likely depreciate further against the dollar, which would continue to push gold price down.
Any Investment Opportunity with Gold?
As gold price falls to a two-year low, is this a good time to buy gold?
Not necessarily. Gold is not yet a “safe haven” instrument preferred by investors, as we have not yet entered global economic crisis. As a commodity, gold faces downward price pressures as long as the Fed continues to raise rates.
Recall our Event-driven strategy focusing on global crisis
and strangle options trade targeting binary outcomes?
Each Fed rate-setting meeting is a big event that could impact the global financial markets. For the upcoming September 20-21 meeting, I would define the likely outcomes as:
1) Exceed Expectations (Fed raises at least 100 bps); and
2) Meet Expectations (Fed raises 75 bps or less)
Aggressive rate hike would strengthen the dollar, as it becomes a higher yielding currency. A strong dollar leads commodity prices to fall, which includes gold price.
If you consider 100 bps to be the most likely outcome, a Put Option on COMEX Gold Futures (GC) is a good way to express your view.
What if the Fed raises 75 bps? Just like the rate hike in July, avoiding an otherwise more aggressive rate hikes would be perceived as good news by the market participants. Gold price would rise as a result, in my opinion. A Call Option on COMEX Gold Futures is more appropriate in this case.
Personally, I view a rate hike of 75bps vs. 100bps as equally possible in the upcoming FOMC meeting this week. If you hold the same view, you could consider a strangle strategy to buy a call and a put simultaneously.
Buying options cost money. I would consider out-of-the-money strikes to lower cost. I would also pick a contract month 60-90 days ahead. For example, selecting the December contract, the strategy could apply to the November and December rate hikes in addition to the September Fed meeting.
Financial market is extremely volatile this year. Getting an information edge increases your odds of success in managing risk. I suggest leveraging real-time market data for a better gauge of market situation. Tradingview users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation.
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.
FED rate hike will push the market to the upsideDuring a quantitative tightening interest rates act as a bullish sign in the stock market. So, a 75bps or 100 bps hike will push the stock price up. And then it creates a bull trap. That's when everything will go down to hell.
Gold at critical support ( Marginally breached it)Gold levels breached its support zone today, and if it doesn't recover from here quickly, then it could lead to a potential downward move ahead :(
This Chart is ScaryTraders,
As you know, EuroDollar Futures has been one of the lead indicators regarding Fed rate hike action. As the futures drop, the inverse occurs with the U.S. dollar (DXY). It goes up. Likewise, the Fed tends to respond with a rate hike in accordance with the gravity of the EuroDollar's move down. Yesterday, the drop was huge after the CPI report was released! Is this chart possibly projecting a 100 bps rate hike? I, myself, am skeptical but this is what the data may be telling us. Thoughts?
Stew
Taf's Gun to the HeadSell USOil at Market!
Looking to play the bigger medium term bearish trend on the back of a doji daily candle showing the correction higher is stalling.
Entry: 86.24
TP: 81.37
SL: 88.29
RR: 2.41
Disclaimer – Signal Centre. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
EURJPY: Dips keep getting bought!EURJPY
Intraday - We look to Buy at 142.80 (stop at 141.80)
Although the bulls are in control, the stalling positive momentum indicates a turnaround is possible. A lower correction is expected. The bias is still for higher levels and we look for any dips to be limited. We therefore, prefer to fade into the dip with a tight stop in anticipation of a move back higher.
Our profit targets will be 145.80 and 147.25
Resistance: 147.25 / 151.00 / 155.00
Support: 144.30 / 141.70 / 138.85
Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’) . Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
Inflation is coming down. Will the markets now go up?Traders, talk about disinflation and a bull market seems contradictory. But is it? I'll explain why disinflationary indicators may mean we see the S&P at previous or even new highs going forward before we recede once again into a true bear market.
Gold amid rising yields and dollar strengtheningSince we last covered gold , most of our views have played out, as real yields rose and dollar strengthened significantly.
As central banks remain committed to fighting the greatest inflation seen in decades, we see continued headwind for the yellow metal. Going back to our real-yield and dollar analysis framework, we see 2 key points.
Firstly, real yields have increased significantly as US Interest rates rise at unprecedented levels due to back-to-back rate hikes. Central bankers have continued to pre-empt the markets on the rates hiking path, and we see no reason for the US Federal Reserve to change its stance anytime soon. Thus, we think that real rates are likely to continue upwards.
Secondly, the dollar is now trading at a 20-year high. With no major resistance until the 120 level, we see a clear path upwards as the backdrop of higher yield continues to favor the dollar.
Looking at the charts we see a potential double top chart pattern, for gold. With the first peak slightly higher than the second and current prices trading near the neckline, we think the bearish set-up is almost complete for gold and prices are likely to decline from here.
Barring any surprise data points from now till the next FOMC meeting in 2 weeks’ time, it is highly likely for the Fed to continue its hiking path which will drive real rates & the dollar higher. This presents a strong headwind to gold which could tip lower if we see a clear break of the neckline. As such we think gold is caught between a rock (higher yields) and a hard place (stronger dollar).
Entry at 1723, stop at 1830. Target at 1530 and 1360.
The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. 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
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
What If Ukraine Wins?When the Russia-Ukraine conflict first broke out, world markets were in a complete shock. Equities fell and commodities rose as geopolitical tension became the dominant price driver.
As fighting dragged on from weeks to months, other important factors took over. Besides the traditional supply and demand variables, we have witnessed a record shattering inflation rate, aggressive rate hikes by the Fed and ECB, and growing worry of a global recession.
While geopolitical risk has been put in the back burner, it never went away. In recent days, Ukrainian forces launched a military offensive and retook Kharkiv, a Russia-occupied stronghold in eastern Ukraine.
Would this be a breakthrough in the 200-day war? How would it impact world markets? Should we adjust previously employed strategies given this new development? To answer these questions, let’s first revisit our Three-factor Asset Pricing Model:
Asset Price = Intrinsic Value + Market Sentiment + Crisis Premium
Where,
• Asset Price – Expected Price of an asset at time t,
• Intrinsic Value – Trader defined fair value. It could be estimated by fundamental supply and demand factors or technical indicators. If you don’t have one, simply use the market price. This is our baseline price.
• Market Sentiment – Bullish or Bearish sentiment. This can be considered the supply and demand of investor money. More buying pulls the price up above the intrinsic value. More selling pushes the price down.
• Crisis Premium – When a crisis breaks out, it could introduce an “Event shock” to the market. It is a dummy variable, with 1 denoting a crisis, and 0 indicating the lack of it.
In our exploration of event-driven strategies on binary outcomes on June 16th ( ), we defined the Russia-Ukraine Conflict by two possible outcomes: War and Peace .
War includes all scenarios that the Ukraine conflict would continue or intensify.
For the second outcome, how could peace be restored? It could come as a Russian victory (Win), a peace deal between Russia and Ukraine (Draw) or a Russian defeat (Loss). The recent Ukrainian military advances raise the possibility of an armistice.
Would we see a reversal of the initial crisis shock if peace is in reach? Let’s examine the following commodities.
Wheat CBOT:ZW1!
In 2021, Russia accounted for 17% of global wheat export, while Ukraine had a 11% share. CBOT Wheat Futures shot up 75% two weeks after the conflict started. The price shock was a market response to “perceived” loss of 28% of global wheat supply in a worst-case scenario. Market panic tends to over-shoot. Irrational price movement could be totally out of proportion of the actual supply loss.
As the conflict continued, Russian wheat found new markets in China and Iran, despite an international sanction in place. In August, Ukrainian grains resumed shipping through the Black Sea thanks to a Russia-Ukraine deal brokered by Turkey.
Wheat price pulled back to below $8 a bushel as investor realized that this big portion of wheat supply is not totally wiped out even the fighting never stopped.
CBOT Wheat is quoted at $8.69 a bushel last Friday, almost at the same price level when the conflict started. Where will it go next?
• If fighting intensifies (War), wheat price could possibly go higher on the back of high energy price and high interest rate.
• However, if a peace deal is struck (Peace), release of huge supply from both Russia and Ukraine could send wheat price sharply down.
We employed a Strangle Option Strategy on CBOT Wheat Futures in June, which carried an out-of-the-money (OTM) Call option and an OTM put option. We expected a big price move as imminent, but its direction uncertain. It appears that we are in a similar situation again.
Natural Gas NYMEX:HH1!
NYMEX Henry Hub Natural Gas Futures was trading at approximately $4.50 per MMBtu before the conflict. It went up 70% in the following two months and was more than doubled to $9.2 by early June.
After recession fear sent natural gas price down to $5.5, it has come back up above $8.00 as Russia cut off natural gas supply from the Nord Stream 1 pipeline. This triggered a major energy crisis across Europe.
What would happen next?
• War: Natural gas price will surge higher. Liquified natural gas from the US is more expensive, and not adequate to replace the Russian supply. Europe will be looking at an extremely cold winter.
• Peace: Sanctions will be ended. The huge oil and gas supply from Russia would flow back to global market, sending energy price sharply down.
Similar to CBOT Wheat, we may consider a Strangle Option Strategy on NYMEX Henry Hub Natural Gas Futures, and to buy OTM call option and OTM put option simultaneously. This trade is based on our expectation that a big price move is imminent, but its direction is uncertain.
Euro-USD Exchange Rate CME:6E1!
Interest rate parity (IRP) states that the interest rate differential between two markets is equal to the differential between the forward exchange rate and the spot exchange rate. As Federal Reserve started raising interest rates in March, Euro has seen the biggest depreciation against the dollar in 20 years.
The battle between USD and Euro may also be viewed as a game of relative strength.
• US could raise interest rates faster than Europe;
• US could control inflation better than Europe;
• US unemployment could be lower than Europe;
• US economy could perform better than Europe, soft landing vs. hard landing;
• Energy crisis could worsen in Europe as winter approaches.
A peace deal could change everything. It would validate the strength of European nations in support of Ukraine. Market confidence and bullish investor sentiment would be powerful enough to reverse the steady decline of Euro currency.
Peace, Euro up. War, Euro down. It looks like a Strangle option strategy to me again.
The Equity Market CME_MINI:ES1!
Up to this point, I have been fairly bearish about US Equity Indexes. Based on the Discounted Cash Flow (DCF) asset pricing model, I expect Fed Rate Hikes and High Inflation to suppress stock valuation.
• High interest rate increases the discount factor WACC (Weighted Average Cost of Capital), the denominator of the DCF equation
• High inflation increases production cost and reduces sales volume, which results in smaller free cash flow (CF), the numerator of the same equation
• The combined effect is a lower stock valuation
Small-cap stock indexes such as the Russell 2000 could be in a dire situation when the fear of recession becomes a real one. Smaller companies tend to have higher cost of capital and could suffer bigger profit loss compared to the Blue Chips.
New developments in Ukraine could mean an end of the war. In our three-factor model, the crisis premium could go to zero.
Typically, only one factor dominates the market at any given time. In this case, a bullish sentiment could take over. It could drive stock price higher. Investors in a celebratory mood simply discount all the bad news for a while.
Geopolitical dynamics is a game changer that investor can’t afford to ignore. Recent development in Ukraine has put a new layer to the series of discussions around “The Great Wall Street Repricing”. If you have made directional bets, this may be a good time to take cover.
Financial market is extremely volatile this year. Getting an information edge increases your odds of success in managing risk. I suggest leveraging real-time market data for a better gauge of market situation. Tradingview users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation.
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.
Sept 13th's CPI Data will show inflation down! Feds move next?Today we're going to cover disinflationary data that I am seeing more and more, what it means for the CPI data and future macro-economic picture, and we'll speculate a bit as to how the Fed is going to handle and respond to the data.
Flattening the CurveDon't think that's what they meant by flattening the curve
www.ustreasuryyieldcurve.com
TVC:US02Y
TVC:US30Y
FED Pivot?This chart suggest a FED pivot arriving much sooner than some may suspect. Compared to 2016 - 2019, the fast & big drop that usually follows a euphoric peak, came much quicker for this year. Given how much money printing went on during the pandemic, it's worth considering that this might be simply the first and second Elliott Waves for commodities, but there will be big corrections along the way, and since inflation is the rate of rising prices, not the price change itself, it would not be surprising for the FED to declare victory sooner than later. As for the fact that recessions often coincided with rates dropping, today is not comparable because the FED only started raising rates recently. It is arguable that the FED actually raised rates roughly around the right time, not "too late" as some would argue.
HPQ: Charts dnt lie?!HP Inc
Intraday - We look to Buy at 28.99 (stop at 26.49)
Short term momentum is bearish. Price action continues to gravitate towards crucial support levels with aggressive selling interest. Support could prove difficult to breakdown. Dip buying offers good risk/reward. Although the anticipated move higher is corrective, it does offer ample risk/reward today.
Our profit targets will be 35.19 and 38.00
Resistance: 36.00 / 41.00 / 46.00
Support: 27.00 / 23.00 / 15.00
Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Signal Centre’) . Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Signal Centre.
SPX, Rate hikes and market rally !! lets share ideas.FED started rate hikes this year and so far has increased interest rate up to 2.25 %. When there was just some news about starting rate hikes market showed a sever bearish sentiment and huge decline started. Now and after 2.25 rate hike market sees 8.5 % inflation as a positive sign !!.
8.5 % is much much higher than 2 % target of FED and implies for continuation of the rate hikes. At least we know that FED will increase at minimum another 0.5 on 21th Sep . Today there were some statements by Charles Evans Chicago FED president that interest rate will be 4% at the end of next year and still market is green.
Inflation data and FED decisions are interpreted to be the market drivers since start of this year but is this true?
Numbers shown on the chart are cumulative interest rate after FED decisions. As we can see SPX today and after 2.25 interest rate is just about 2.5 % down from the day FED raised rates to 0.75 !. Strange !. Can we see higher SPX on 21th Sep ? Is it rational?
Some take this as a positive sign for the market : (( FED finally stops rate hikes next year )). OK but rate was not supposed to go higher and higher forever. It was known from the first day that FED will stop rate hikes some day.
In terms of macroeconomics, Russia -Ukraine war continues, China may invade Taiwan, Iran's nuclear deal result is unknown. Add some giants like NVDA, AMD and MU warnings to this economical climate and please let me know if you can find any positive sign.
What is actual driving force of market? It seems taking interest rates and FED actions into consideration leads to contradictory results. So, what is behind all these market moves?
What do you think about recent market rally? is it just a bear market rally or real bull run has been started from last major low?
What is your idea? Lest share our ideas and boost our knowledge.
Eager to hearing your thoughts.
A look at the market's reaction to JPOW and fomc co. Traders,
Let's talk about today's FOMC press release, the market's current reaction, and where we can expect this will lead us into next week as well as what today's FED vs. BIDEN admin tug-o-war means for future macroeconomic conditions.
NZD Breaks Out After NZ Rate HikeAs announced 2pm NZT, the Reserve Bank of New Zealand had a 50 basis-point rate hike. This has caused a rally in the NZD. See our technical analysis on RSI and expected resistance levels.
NZD Breaks Out After NZ Rate HikeAs announced 2pm NZT, the Reserve Bank of New Zealand had a 50 basis-point rate hike. This has caused a rally in the NZD. See our technical analysis on RSI and expected resistance levels.
