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A traders’ week ahead playbook – a slave to price action After a brutal week/month for risky assets, we turn the page and look to trade all the grenades that are thrown at us in the new week – the dynamic remains one of further fundamental downside risk, amid technically oversold conditions, which suggests any resemblance of good/less bad news should see pronounced upside moves. That said, much will need to go right for risk hedges to be partly unwound and risky assets to bounce – better growth-focused economic data, inflation expectations headed lower but also US real rates will need to turn lower and promote a deeper sell-off in the USD - after the moves in US 5yr real rates last week (+37bp to 1.97%), this is a big ask. Rates volatility did pull back a touch on Thursday and Friday and we will need to see that follow through to cause a real turn in risky assets. One trading consideration I see is that mean reversion may work better this week across asset classes, and we’re already seeing signs of that in FX markets – In equity indices, we see the US500 is tracking over 10% from its 50-day MA (see the middle pane) – take out the ferocious moves in March 2020 and this is over 3 standard deviations from the long-run average. Market internals is shot to pieces with 1.7% of S&P500 co’s above their 20-day MA, 32% of co’s with an RSI below 30, and 35% of co’s at new 4-week lows. This ultra-bearish sentiment plays into the risk v reward trade-off, and it suggests if we hear something remotely positive, and we see better flow, the result will be a pronounced equity counter-rally, and this may incentives funds to reduce USD longs as the default equity hedge. Conversely, it could also be another brutal week, and one suspects if it is it will get truly ugly and see market chatter around coordinated policy response increase – liquidity remains a core consideration that exacerbates moves as funds try and get out of positions – spreads in the underlying market have widened in response and the cost to trade for institutional funds has increased. In this backdrop it pays to take the timeframe down, understand that markets can turn on a dime and on little news and quite often these moves make little sense – nail your position size, have an open mind, and react with intent – this will serve you well and keep you in the game. While we watch the USD, US real rates, the Fed’s balance sheet dynamics and measures of volatility, we assess the key known event risks traders need to navigate portfolio through this week. The week ahead: Aussie home loan values (Tuesday 11:30 AEDT) – the data is unlikely to be too impactful on the AUS200 or AUD, but the cooling in lending is a big macro consideration – this is not just indicative of a slowdown in the demand for loans for residential property, but also business loans – The market expects home loan values to fall 3% in August, with owner-occupier loans seeing the bigger falls -3.5%. RBA meeting (Tuesday 14:30 AEDT) – the market prices a hike of 44bp, with 16/21 economists calling for the 50bp hike, so a 50bp is largely priced – We look at pricing for the November RBA meeting and see this is finely balanced at 35bp, where I lean towards a 25bp hike - we see that expectations are that the RBA cash rate pushes to 4.10% by June ‘23 – this is the ‘terminal’ pricing. AUDUSD 1-week implied volatility is close to 52-week highs, so the market looks for movement and this suggests reduced position size. Given the sky-high correlation between the AUD and equities, where the S&P500 futures trade, AUDUSD will follow. RBNZ meeting – (Wed 12:00 AEDT) – the market prices 52bp of hikes for the meeting, with the economist’s consensus firmly aligned – NZDUSD was destroyed on Friday (-2.3%), closing below 0.5600 – similar to the AUDUSD, NZDUSD will just track the US500 – keeping an open mind on the direction of play in the US500, with sentiment shot to pieces, but it can easily get worse. UK Tory party conference (2-5 Oct) – all eyes on chancellor Kwarteng’s speech on Monday (16:00 BST / 02:00 AEDT) – the situation in UK politics is fluid and the inability of the Truss govt to connect with the capital markets is telling – GBPUSD traded an 884-pip range last week, and the reversal from <1.0500 caught a lot of momentum driven accounts off guard. Moves from the BoE to temporarily buy 20yr+ gilts and portray a monster rate hike in Nov have reduced cable vol, but we also know the bond-buying program is supposedly a stop-gap measure – there is no easy trade here – fundamentally, the bear case in GBP looks strongest, but technically there’s a two-way risk. OPEC meeting (Wed) – the first in-person meeting since March 2020, it could be lively and one for crude trade to put on the radar - talk of output cuts to the tune of 0.5-1.0 million BPD is making waves, with Russia pushing for a 1m barrel cut – as always we react to news flow here – I like a re-test of the Sept lows of $76.22, but the bigger the output cut, the less likely the lows will be hit. US ISM manufacturing (Tue 01:00 AEDT) – the market looks for the diffusion index to print 52.1 (from 52.8), where we look into the sub-components for real context, notably the ‘prices paid’ and ‘supplier delivery’ sub-surveys – however, unless we see the headline index below 50.0 it shouldn’t cause any major ripples, but with sentiment so shot the unexpected can easily rip. US JOLTS report (Wed 01:00 AEDT) – with the US labour market such a hot topic, we go into the labour report expecting 11.075M jobs openings. This would be a modest decline from the 11.239m job openings we saw in July – risky assets would find relief buying/short covering on a below consensus number, although we’d need a dramatic downside miss to really get the party started. A hotter number would be a USD positive and see fresh lows in the US500/NAS100. ISM services – not typically a market mover, but we are watching to see if the service sector shows any clearer signs of fragility – the consensus expects a read of 56.0 in September (from 56.9), which if comes to fruition is still solid expansion and supportive of risky assets. US Non-farm payrolls (Fri 23:30 AEDT) – the marquee (known) event risk of the week – the consensus expects 250k jobs to be created, with the economists forecast range seen between +389k to 200k – perversely, a number below 200k would likely be taken as a positive for risky assets and would pull the USD lower. We also consider the unemployment rate with the consensus expecting this to remain at 3.7% - with inflation still top of mind, average hourly wages are expected at 5.1% (from 5.2%), so ahead of the Sept CPI print (13 Oct – expecting headline CPI to print 8.1%), the wage data could be influential. Risky assets (like equities) would find buyers on a sub-5% print. 14 Fed speakers – hard to see too much change from the recent Fed chatter but there has been some cooling of inflation expectations, amid the tighter financial conditions, so any acknowledgement of these moves could be positive for risk. Rates markets are signaling we are closer to a top if rate hikes. ECB president Lagarde speaks (Tue 2 am) – we price 70bp of hikes for the ECB’s Oct meeting, so we question if Christine Lagarde alters this pricing. Good luck to all
PEPPERSTONE:US500
by Pepperstone
2
SPY - Larger ContextLet's dispense with the Master O' Obvious stuff straight away. Pick an Adjective - it won't rhyme with Bullish. It may, however, be cringeworthy. NQ below 200 W SMA. What lay ahead remains up to 3588 for the ES Futures, *Note the 200SMA Weekly is just below this most important of level @ 3585.55. Powell - simple... NO CHANGE. ____________________________________________________________________________________ There has been a very orderly decline since The Terrible Tetons. The Monthly Gaps below remain wide open for Business, but - the Gaps above, not so much. It would take an extraordinary/non-binary Event to Fill those for now. We will see what further Fiscal attempts at remedy appear as we approach the Mid-Term Elections. I have November 7th as an important Pivot in Time, unsure as to why. It is however extremely significant as it keeps making appearances in Time on a great many studies. ____________________________________________________________________________________ Risks remain to the downside Short Term. Intermediate-Term will depend on an October Communique from the Market Overlords aka "Behnchods". The Chart is self-explanatory / it illustrates the Risk / Reward clearly. What was most interesting this week was how Wall Street was extremely agile in positioning. Options positioning was done with extreme Velocity / Scope / Scale. Executed perfectly to cause maximum confusion until it was too late for the boat to right itself. They capsized small Specs, repeatedly by loading the woodshed on the Sell in record time. And then, proceeded to close out Open Interest as quickly as it appeared once Payment was secured. Unfortunately, the House continued to press the SELL once they'd squared @ 365.06 on the SPY. The VIX and SPX, ES, NQ, YM - Inverse Gamma Hedging was NOT unwound but pressed quite hard. Gold - Lower for the nearer term, it is a broken trade, it can RT, but it will fail. ____________________________________________________________________________________ Here was the Implied Skew and Range I calculated Thursday for the Friday Dance Mix: Call Skew ATM $ 53,140,489.00 384.94 43.41% 365.06 Range 19.88 IV% Gamma Dependent PUT Skew ATM $ 122,410,005.00 384.94 230.35% 365.06 Range 19.88 IV% Gamma Dependent The Close came off the Pivot after dipping in ever so slightly with 368 for the SPY Close based upon the collapse of Open Interest - closing at 367.95. Wall Street ran the implied range @ 19.88 by 1.79 - a small expansion to 21.67. Close enough, MaxPain had the SPY pinned @ 387... their data sets were off by a very wide margin - an absurd failure on their effort. Here is the Open Data Set: Calls O/I $ Multiple Notional $ 375 179749 2.23 100 $ 40,084,027.00 376 155605 1.77 100 $ 27,542,085.00 377 115204 1.37 100 $ 15,782,948.00 380 175276 0.56 100 $ 9,815,456.00 $ 93,224,516.00 Puts O/I $ Multiple Notional $ 370 218394 0.89 100 $ 19,437,066.00 372 110857 1.43 100 $ 15,852,551.00 373 116496 1.77 100 $ 20,619,792.00 374 165461 2.18 100 $ 36,070,498.00 375 247727 2.64 100 $ 65,399,928.00 376 95994 3.17 100 $ 30,430,098.00 $ 187,809,933.00 In Sum, do not ever trust MaxPain, do your own work. It is garbage. ____________________________________________________________________________________ The important points in the Chart: Notice where the 55 EMA resides. Observe the Shorter duration of EMA crosses. EMA slopes and ST Fib Levels as both are Neodymium Magnets. Gap Fill Extension Range to and from recent Gap Highs to Implied Price Objective. ____________________________________________________________________________________ On to the Fundamentals: AAII Sentiment has crossed 60% Fear Greed is now 24 breaking into the Extreme Fear base camp The Dollar has its sights set on the 121 / 125 region, please observe the EuroDollar Chart. As well, consider the Dollar's response to BOJ interventions. Bonds are showing immense stress in the system. UST Settlement Failures are a disturbing account of reality. Defaults are mounting Globally, (See UK $500B recent Default last week). Yield Inversion simply continues to accelerate in fits and starts. Forwards for 1, 2, 3, 5, and 7's are heading to 5%. A 40-Year Freak Out as Yield Inversion has exceeded 50%. FX - Default dislocations throughout the Markets can lead to a near Instant Spike in the Dollar contrary to those who are Bearish on the DXY. Yes, it will indeed collapse - your timing... it's off is all. Bitcoin - SUB 10K IMHO with ease - see Trendline. It is important to remember with EPS ahead - the Mega Caps breaking down... after 3 reductions to lower guidance since August... Sellers are piling into Apple once again, with good reason, it looks horrific. Weakness is everywhere in MegaCaps. Breadth - collapsing TRIN - Horror Show TRIX - Ditto Market Internals - No Nieno ____________________________________________________________________________________________ Contrarian Traders are likely early, hopefully, we see a small RT Monday for Wall Street to reposition. Have a great weekend. if you enjoyed this and found it of value, please give it a thumbs up and do share your thoughts - it is appreciated.
AMEX:SPY
by HK_L61
13
Effective Fed Fuds 2023 - Powell's War on You Growth, Employment, Inflation - aka what's left of the Economy. 1. Employment - seeking roughly a reduction of 12 Million Jobs. 2. Growth - reduction of 50% for S&P 500 from Highs. 3. Inflation - Leads until Rate Lag breaks everything. _________________________________________________________________________________ Capital Stocks Powell - Bonds are going to see a Yield Curve Inversion, larger than usual. There is no single condition, what is the term premium on Longer Rates is what matters most. Powell - Housing will see a significant correction, we want the housing market back on a sustainable path. Powell - Equities are overvalued, period, the end. We're committed to "Price Stability" Powell - The US should not return to a Gold Standard - Digital Currency is the path. Powell - We flooded the System with Money (Digitally) by buying Bonds now we are selling them. _________________________________________________________________________________ Forward Rates are indicating he is very serious. I've warned about this for well over a year now - safe to say its come to pass.
CBOT:ZQU2023
by HK_L61
2
Short Spain/Ibex 35So... the Spanish market has actually OUTPERFORMED all the other european indiced in the past year and actually YTD: www.investing.com --> "Performance" that makes no sense... a country/economy which were on the edge of bankrupcy in the last financial crisis. Why has this economy outperformed all the other eonomies? it makes no sense . IMO a short position for the rest of the year (if needed) should be in order. As soon as the ECB raises the interest rates, just watch Spain (and Italy for that matter) it will go down and struggle like all the southern european countries has done for ages. Nothing has changed - it will happen.
SShort
by Hvalp
SPY/SPX - $8 Billion Press to Downside Protection - 4X Expiry Institutional Protection (Hedging) reached an All-Time High on the September 16th Quad Witch Expiration. This position dwarfs prior hedging Highs by 103% and is rising by an additional $8 Billion added to the hoard of Puts Friday. Not only are the positions outsized - it was 308% of 2008's Hedging. _________________________________________________________________________________ Intense Volatility will return in September. Of Note, with the declining Volatility Complex, VX Hedging has not dropped within a concurrent Cost Correlation. Options Writers are set for 3.19% IV for September... which may portend significantly Higher VX on any significant change in arrangements. _________________________________________________________________________________ On to the SPX/SPY and what is ahead. Of Note, I am Using the SPX as Large traders and Institutions are most heavily positioned here. Levels for the SPY are contained below. Trader Sentiment began the Week at 18.1% Bullish & 53.3% Bearish for the next 180 Days. ISM Price Paid Component declined 34.6% on the latest print as Commodity Intermediate Inputs have declined significantly. Interest Rate Forwards are indicating the FOMC will be @ 4% by January. The short end of the Curve continues to confirm the Fed Fund Futures. The DX took a breather on the Effective Rate Tussle between the EU and US. Powell will not do anything less than 75Bps and should the CPI be above 8.1 - 8.2, odds favor Powell stepping up the odds of 100 BPS, anything below 8 and 75Bps will be the LIS. The Fed is "data dependent" - ie. they bought themselves time and have already indicated it will be, at minimum, several months of observing the Data and not one nor two. Market Internals were solid with 90% Up, 10 :1 Advance peaking at 17 : 1 Intraday. Breadth improved as well, not significantly, but an improvement pushing the Closing Basis above the 10-Week Moving Average. Friday's rally was broad as was Wednesday's. NQ's Up/Down was higher as well, with a slight broadening after coming very close to putting in a lower low. The Put/Call ratio fell from 1.01 on Tuesday to .80 on close Friday - a 3-day decline. The ViX has 19.46 wide open again as we move into Roll through Settle, expect a surprise soon. It is ahead. The VVIX came up to its Pivot and failed badly. Extreme awareness of the UST Curve and Futures is vital to success as we are seeing 4% come into our view. DX, same considerations, the Ball is in Powell's court now that LeGarde has made her tit for tat. FX Disruptions were not considered not all that long ago. I pointed out they would be arriving shortly back in August of 2021. Very large disruptions were promised and delivered. 100% Ditto Bonds and their impending implosions. Dung was Flung then, not so much now and it is quite far from over for Bonds. As for the Levels in Trade this week, they can be observed on the Weekly Chart in a larger context. For Sunday Globex / Monday, here are the levels: NQ - Range Expands from 12,438 to 12,866 with 12508 as the Pivot. SPY - Range Expands from 405.44 to 415.22 with 406.17 as the Pivot. The 407.37 Gap is filled. _________________________________________________________________________________ *Options have continued to play an important role in Price over the past decade. Presently, they drive prices significantly. I will produce a thorough explanation, in detail, in the next few days. It will include: 1. The 5 Greeks and how they function - Delta, Gamma, Theta, Vega & Rho. 2. Alpha and Beta relations from the Underlying to the Derivative. 3. The Yield Correlations. Have a great weekend, Good Luck on the Open - Trade Safe.
SP:SPX
by HK_L61
4
SPY / SPX / ES - $USD Smacked / 6E breaks Par - the LIFT The USD pulled back overnight on the ECB's 75 BPS Hike, until the October 21st FOMC Rate decision is announced the DXY can easily see downside pressure. Traders began to move against the Dollar as Major Asian Markets opened and again - ahead of the EU Session open @ 3 AM EST, by 3:30 AM EST. The Inversion lift was provided to the ES NQ YM RTY GC & SI @ 3 AM ET - straight up 20 Handles for the ES. Boom went the Stimulus in FX. Even Crude managed to lift over the 85.02 Pivot. Financials - XLF / NQBANK / KRE etc. are going to have a Stick Save day ahead. 1 & 2Yr Bills will see some much-needed consolidation after the short end has gone parabolic over since Wyoming Powell. __________________________________________________________________________________________ Yesterday's increase in Put activity provided the required Globex Squeeze and extension as upon the NYSE open there will be continued closing of Trades which have gone sideways. Sentiment and Positioning had swung to a sell-side weighting. Lael Brainard provided a pivotal comment - "The FED is aware of over-tightening." - this was all the Bid required to infer further "Pivot" chatter with respect to the Policy Cushion of overdoing tightening. 2.53% Fed Funds - 8.5% Inflation... overtightening? You do the Math. - it was all the Bulls needed to gain confidence in the Build Back Better Rally. __________________________________________________________________________________________ SPY Pivots are as follows for Friday: Trendline Support - 391.88 Baseline Supports - 395.22 / 396.44 / 397.61 Pivot for Higher - 401.56 provides a Throw over to 405.04 to 407.11 OR the .382 Fib of the recent High to Lows - it should remain overhead Resistance for today. 400.25 is the over / under into the open. Will late chasers see a hammer... not until the Puts are run off. Friday's Gap Fills come in at 77.22% - having been surpassed by Thursday @ 80.13%. Today may be quite different, the Gap does not need to fill today until after 11 AM EST, IF at all. Bots adore Gaps. __________________________________________________________________________________________ Are Institutions bidding Markets? No, they are not - Large Traders are, however. Above 400 on Friday and holding into the Close will provide "continuation thinking." There is just enough Liquidity returning to provide interest and Organic Buying. The Next Gen Squeeze awaits at 407.22 to 407.41. __________________________________________________________________________________________ This can run further as expectations have been set for a weaker CPI next Tuesday. Bullhorns have been blaring into the Bears Camp - they hear confirmation bias only to be dropped into the Dunk Tank time and again - a pattern that frankly repeats itself over and over. Bloomberg begins chortling on about "New Lows, 3400, Breaking 3600, Hawkish this/that" and it gains mindshare traction... quickly. Many traders are swing for the Triple when they would be far safer loading the bases with Singles, Balks, Walks, and chalk. Low Volume - let's leave it as Volumes are building. On Balance, Market Internals were improving off very low levels in the OSC's reaching Sub 300 with 388 and 475 being the Crash outliers from prior events. Summations held the Zero Line and turned in a clear Divergence. It remains a Bear Market IMHO until we see the 50 retake the 200. And speaking of EMA's/SMA's... they are very potent attractors - in particular defending 50/100 crosses. __________________________________________________________________________________________ Trade Safe through early September - it's not as many believed, 11/19 has been Higher over the last 20 years - will this be 12 or 9... we'll see - Magic 8 Balls aside, expect Higher VX @ 1.5 to 3% on either side of the Tape. Never discount the Effects of VOX ROLL?SETTLE timing. Good Luck to you. HK
AMEX:SPY
by HK_L61
9
LYV: The music just stopped!Live Nation Entertainment Short Term - We look to Sell at 90.13 (stop at 93.80) The medium term bias remains bearish. A bearish Head and Shoulders is forming. The measured move target is 81.00. Further downside is expected although we prefer to sell into rallies close to the 91.00 level. Our profit targets will be 81.20 and 79.00 Resistance: 93.00 / 99.50 / 127.00 Support: 81.00 / 74.00 / 60.00 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.
NYSE:LYV
by VantageMarkets
Consolidation/reversal area for the S&P 500?The S&P 500 sold off until June, when expectations of monetary tightening peaked. Since then, the index has powered off the June lows as the growing likelihood of recession makes it less tenable for the Fed to keep raising rates. I suspect that interest rate expectations will continue to "drive the ship," and that stock prices will peak or consolidate whenever market expectations for a "dovish pivot" peak or consolidate. Currently, FOMC FedWatch futures are pricing a 75% chance that the Fed will hike 50 bps in September, and a 25% chance that the Fed will hike 75 bps: www.cmegroup.com In November, the market is expecting a target rate of either 3% (75% chance) or 3.25% (25% chance), and in December, the market's placing about even odds that we end the year at either 3% or 3.25%. So in all, the market expects the Fed target rate to be either 75 bps or 100 bps higher than the current level by year end. This is slightly more dovish than the Fed's own projections. The current Fed dot plot indicates that the median forecast by FOMC members is that they will raise the target to 3.25% by year end. So, I think market expectations are now about where they should be. That suggests to me that most of the big gains in stocks are now behind us, and that the S&P 500's price may be entering a zone of consolidation as it approaches the 200-day EMA. We definitely could see market expectations get even more dovish if economic data stay soft. For instance, maybe the consensus for September will move to a 25 or 50 bps hike. But if the economic data looks that bad, then the stock market may find other reasons for pessimism. A strong dovish pivot could also cause inflation expectations and commodities prices to rise again, which could throw a wet blanket on the stock market rally as well. I wouldn't expect ES to be able to get much father than 4320 without causing inflation to heat up and the Fed to flip hawkish again. Bottom line: I think there's still some runway for stocks to move higher toward that 200-day EMA, but I wouldn't expect them to immediately go soaring off into a new bull market. More likely, they get a little more tentative here and consolidate for a while in this range.
CME_MINI:ES1!
by ChristopherCarrollSmith
13
DXY D1 - Bullish Break ExpectedDXY D1 With the above being said... 'key global topics' and other comments, we have to understand the market correlation and timeframes... We can take yesterdays D1 close with a pinch of salt, due to inconsistent volume, but lets see where we close after today (hoping support holds). US based FX and commodities look like they want to be correcting somewhat. Which might see DXY dip below support. US stock space is slower paced and a little delayed. So correlation isn't going to be 100% inverted.
TVC:DXYLong
by Trade_Simple_FX
Forget All Other ChartsIgnore all the other charts right now. They are based on DOLLARS. The dollar is permanently unstable and your imperialist overlords are here to take away your spending power. We're due to see bearish action similar to April 5th (pink dot). The question is, will we see a lower high in relative yields, or will we set a higher low and possibly become uninverted, and return above 1.0 once again? Consider that we just set a higher high in the S&P medium term and it could have simply been a move to fool the crowd. On the other hand, debt is at all time highs, and rates even at this level mean systemic insolvency. Raising rates further means quicker insolvency. I say just get it over with or don't do it at all. Inflation year over year is, realistically, 20-40%, each year since 2020. Key interest rates aren't even 10% of that. There is no way they will be able to control this in any way, shape or form, or manufacture a so called "soft landing". Rates rise >1.0 = total collapse, then easing Rates bounce <1.0 = unrealistic rally blow off top, more tightening to trigger the crash I think I used too many arrows but hopefully it makes sense. Good luck and don't forget to hedge your bets.
TVC:US10Y
by fringe_chartist
11
A Bearish Call On Financial Markets and The Global Economy China/Europe/EM: The UK and the entirety of Europe are in trouble. The UK now experiencing double-digit inflation and to make matters worse they are facing extreme weather and an energy shortage going into the winter. All the while Putin's war is complicating European energy supply and political ties even further. China is experiencing civil unrest, mostly thanks to an ugly property crisis. China also is experiencing lower-than-expected GDP growth. China's economy slowing has large implications given its massive presence in global trade. Emerging markets are struggling partly due to an incredibly strong dollar as well as a tight global food/energy supply. US: The US housing market is in a recession with 6 straight months of declining sales and more importantly a monthly decrease in median home prices for the first time in years (the housing market gets hit first by rising rates… remember 08?). US consumer credit I.e., debt levels, are through the roof. Signaling that the consumer might not be as strong as market commentators are saying. Layoffs are increasing steadily, while inflation is staying high. I am bothered to see the number of peak inflation calls after just ONE MONTH of zero gains in headline inflation. The FED is now in a lose-lose scenario where they can continue to aggressively tighten and bring down this wildly levered up global economy or back out and try to save the issue for a later date. The latter would cause additions to the size of their already immense balance sheet and create an ultra-severe recession later down the line. Either way, the recent rate hikes have not at all been fully felt by markets, and add on the possibility that the FED truly commits to QT, then a few quarters down the line we will start to see a serious weakening of market conditions across the board (equities, bonds, real estate, you name it). Forecast: Risk assets globally are going to get decimated during the next several months of trading, especially low-quality speculative names. Crypto investors should prepare to see some nasty losses, BTC to 9800, and ETH to 575 seem attainable in the medium-term. S&P 500 will NOT make any substantial or sustainable gains over the 4300 mark, 3500 is my next low target. Nasdaq 100, like crypto, is in for a large selloff, next target: 10,200. VIX will rise substantially, and could easily double from current levels. The dollar will stay higher as US rates rally upward, likely well higher than markets currently have priced in. Some commodities will make new highs- nat gas- while others like oil are poised to depreciate modestly but remain historically high. Low/non-profitable, high debt companies- Wingstop and its zombie cohorts - are at high risk of bankruptcy in the coming quarters. Widespread bankruptcies are on the horizon. Things look a little too good to be true right now in financial markets… well that's because they are. On the bright side, this bear market bounce of the past 60ish days has provided a good opportunity to exit risk assets, load up on cash and begin to add on to short positions. As always this is not financial advice. Good luck!
ECONOMICS:USCCR
by Gooby_Trades
3
Nice Location for Short EURUSDThe EURUSD chart still looks rather bearish, with the only real bullish angle being that the huge gamma pocket and round number at 1.00 held right at the peak of EUR bearishness. Here is the daily chart, with the 60 and 120-day moving averages. A close above 1.04 would take out the 60-day moving average and would clear the pivot marked by the thin red line. The thin red lines show that each broken support has held as strong resistance with just one tiny overshoot on the one in early April. Good trends tend to hold resistance at prior support and this has been a good trend. Selling at the red line and the 60-day with a stop above the 120-day has been a good expression of the trend. A daily close above 1.04 is bullish. 1.0613 is big daddy but that moving average was only tested once (in February 2022) and the 60-day has been way more actionable. Rate differentials offer nothing bullish in EURUSD, and relative equity performance has been in line with the currency. On the bullish side, BTPs are back to 200bps after twice testing 250bps vs. Germany so you can argue the much-hated TPI (the antifragmentation tool) has worked, to some extent. Then again, BTPs are mostly just a risky asset and they have performed worse than SPX on the massive recovery in risky asset sentiment since mid-June. SPX is making new 3-month highs while BTP spreads are nowhere near the tights printed in May. To me, this all still points to EUR softness, but as I described in my newsletter yesterday I’ve abandoned the USD side and switched to EURAUD. And if you are bearish USD, that means long AUD, or long carry are the better trades as we enter a two-week period of low vol, out of office emails, early departures, and family tripping. And the UK you still have plenty to worry about, considering today's Bloomberg piece discussing how Liz Truss may be a threat to the pound and UK bonds. The chart looks particularly nice, location-wise as you only have to risk 70 pips from here. Short EURUSD here at 1.0346 with a stop loss at 1.0416. Take profit at 1.0166. good luck ⇅ be nimble bd
Short
by brentdonnelly_spectramarkets
1
DXY ShortDXY is technically overbought and the market seems to agree. We had a several fair chances to break out above 108 in the past week, but it did not come to fruition. Technical dollar bearish headwinds SEEM to outweigh fundamental bullish dollar tailwinds for the moment. Lately, every time the 0.5 month (100 x 4 hours = 16 days) log-returns is positive and reaches zero, the price responds with a stronger bearish reaction and reverts back to the "trendline" (personally I'm not a fan of straight lines, but there it is). Short Dollar, long equities for a week, see what happens? This has been my plan for the past few days but it seemed foolish to publicly suggest either direction until the FED meeting, which timed with this pivot perfectly. The market was poised to easily move either direction; not a coincidence. Parameters: If we break above 107.5 or 108, the idea should be considered invalidated. Close the short position around 105 unless it breaks below. If it breaks below the "trendline", we have a clear symmetry violation and we should add a lot more until proven otherwise. What do you think? Thanks for taking a look, good luck, and don't forget to hedge your bets!
TVC:DXYShort
by fringe_chartist
51
Fiber Push higherThe pair is trading in a sideways triangular area, that doesn't mean it is a golden opportunity to buy , but this is the scenario in which i prefer to go long and target 100% Fibonacci expansion. excluding Job reports some bad figures are showing up in the United states when it comes to industrial and services growth... thus meaning same/slower pace of tightening. Euro pair might benefit from any US rate hike that is already discounted in the market. ( 76bps or less).!!
Long
by josephdahrieh
IF the 30 year bond stays above the trend line, stocks lose.The three decade + trend for bond rates has been downward. In June, we witnessed the first rise above that trend line in recent history, followed by a return to the trendline last week. This is a pivotal point for both bonds and stocks. If stocks drop back down below the trendline, we can see the market go higher in the near term. If the 30 year bond rates rise this, we can expect a downturn in the stock market. Prediction: Bonds will trade sideways before going up. Stocks, already with substantial momentum, will continue higher, until bonds resume an upward momentum, confirming that the stock bullmarket is over. This may last up until the Fed raises rates in September.
TVC:US30Y
by ericklee64
Fed Funds RateThe chart above shows the Rate of Change (over a rolling 5-period) in the Fed Funds Rate. The parabolic Rate of Change is unprecedented, yet the Federal Reserve is just getting underway with quantitative tightening as it pledges to do whatever it takes to squash high inflation. It's hard to imagine the Fed can pull off a soft landing. Ironically, this looks like a chart of the amount of CO2 in the atmosphere over the past 800,000 years. We don't see any climate scientists saying not to worry because we can engineer a soft landing.
FRED:FEDFUNDS
by SpyMasterTrades
5
US Recession? We will Sink at least 50% For a Recession.Between the 2008 great financial housing crisis, the end of the dotcom bubble in the year 2000, the 1970s stagflation recession, and the great depression of 1929 all have one thing in common. The market retraced at least 50% from it's peak. I personally believe the US economy is in conditions for a recession that will at least sink 50% or more if we were to compare to past indicators and technical conditions of a recession. Just my opinion take it with a grain of salt. At the end of the day past is no indicator of the future. However history doesn't repeat itself it often rhymes. There's been a lot of rhymes I'm seeing. Much peace, love, health, and wealth!
SP:SPX
by peacefuljustin
5