Well, let's change the sidesUsually, I really don't like shorting stocks. But this time I couldn't resist in placing a sell stop underneath the current floor. At least till the earnings I could be short in DLTR.
Seasonaltendencies
NQ Seasonality is pushing us higherWe have to keep seasonality and mainly Higher Time Frame in mind and we should trade with it.
one of many reasons is usually there will be LRLR (low resistance liquidity run) when we are with HTF Orderflow and Seasonality.
Implementing SEASONAL TENDENCIESHi guys,
In this video I go through what are "seasonal tendencies", and how you can implement it into your analysis and strategy(ies).
Seasonal tendencies in the context of financial markets are basically what the particular market or asset has historically done throughout the years in terms of bullish or bearish movement. For example, in April-May the US Dollar is usually bearish, and from May-June it is usually bullish. This is useful information because it can add confluence to your bias/analysis. However, you do not want to solely use this information as a reason to get into a trade. The data is based on the past, and is not indicative to the present/future and also does not represent how much a market or asset can move because the data is only measured relative to what it has previously done. The best approach is to use this as an additional thumbs up if it coincides with your analysis, and if it does, then it allows you to be a bit more cautious or risk averse.
A simple analogy is the weather. If you were planning a holiday to Thailand for a sunny getaway, the best times would be from March to July. Most likely you are not going to book a holiday in November during the monsoon season, unless you actually wanted it to rain every day. However, some years have had very little to no rain during the monsoon season. That being said, you would most likely choose to go during a time that seasonally has hot and sunny weather. This is how you can use seasonal tendencies to add an additional layer to your analysis.
I hope that was insightful and gave you some ideas to test if you've never heard of seasonal tendencies. You can implement this both as a technical or fundamental analyst (or both).
Til next time, happy trading.
- R2F
Short term trade Idea USD/JPY (LONG)Using ICT concepts, I believe we are about to see an expansion on Dollar pairs.
I am getting in sync with this short term USD/JPY, aiming for my weekly short term liquidity objective.
I believe we are making a Tuesday low of the week and after reacting off that daily level, I think we are due to for some expansion.
Entry was on the high of the 15m BPR.
Stops will be moved to break even above Asia's High, 148.556
Partials will be taken @ 148.807.
Any questions, drop me a message!
SYMPHONY: SEASONAL STOCKNSE:SYMPHONY is a seasonal stock which means it has its lows in the months of Oct-Dec and highs in the months of march-May. One can buy and hold for 6 months for the given target and with a strict stop loss to be followed.
Seeking Shelter in Gold on Rising Geopolitical RisksShining bright and sizzling hot, gold has surged 8% over the past two weeks. Ample supply of geopolitical shocks from violence in the Middle East to ongoing Russia-Ukraine conflict has been driving gold high.
This paper examines the drivers supporting the gold rally and prevailing bullish & bearish factors. It posits two hypothetical trades to astutely position portfolios amid a raft of geopolitical and economic shocks.
GOLD IS A HAVEN WHEN GEOPOLITICS DELIVER SHOCKS
In a previous paper , Mint Finance highlighted that gold is a resilient store of wealth as it outperforms in times of extreme volatility. Geopolitical tensions remain intense amid ongoing armed conflicts in Russia-Ukraine and Palestine-Israel which underpins gold as an investor haven.
Gold responds to elevated geopolitical risks as reported by the World Gold Council . A 100 unit increase in the Geopolitical Risk Index ( GPR ) has a 2.5% positive impact on gold returns as measured by the Gold Return Attribution Model ( GRAM ).
GOLD IS TRADING AT KEY PSYCHOLOGICAL PRICE LEVEL
Gold prices have catapulted more than 8% since the rapid escalation in violence in the middle east over the last two weeks. Gold now trades just below USD 2,000/oz.
The USD 2,000/oz mark is clearly an important psychological level. A more crucial level is USD 2,100/oz. Gold prices have failed to breach 2,100 three times over the last three years.
Gold prices are exhibiting a solid bullish momentum. It has surpassed two resistance levels (1,902.9 and 1,943.4). Price action is close to forming a golden cross between 9-day and 100-day simple moving average.
Gold is likely to surpass the USD 2,000/oz over the next few days. However, passing the sticky USD 2,100/oz levels might be more challenging.
The continuous rally over the past two weeks may be due for a correction if the momentum fails to hold. RSI has already raced past its upper bound. Large upward moves are known to be followed by sharp price pullbacks.
SEASONAL DEMAND FROM GOLD MAJORS POSITIVELY AFFECTS GOLD PRICES
The top two largest gold consumers are China and India. Combined, they represent ~50% of total global demand. Both paint a positive picture for gold demand.
1. Shrinking Premiums in China to bolster demand
China represents 25% of global gold demand. China’s domestic gold availability has been strained over the past few months while demand has remained high leading to an all-time-high premium on domestic gold prices over international gold prices.
These premiums have eased sharply over the past few days as supply conditions improve after China’s golden week holidays. Lower premium on domestic gold makes it an attractive buy.
Furthermore, wholesale gold demand in China is showing signs of improvement. Gold ETFs are attracting notable inflows. The PBoC is building its gold reserves at a brisk pace.
2. Strong Monsoon cements solid demand for Gold in India
India represents 24% of global gold demand. Monsoon and festivals have a major impact on Indian gold demand.
Indian consumers buy gold as wedding gifts or as investments during festivals. Demand is expected to spike during the upcoming festival and wedding season.
This year, India witnessed a wet monsoon which bodes well for farmers. Consequently, that is good for gold demand too. Rural India represents 60% of the country’s gold demand.
As highlighted by Debbie Carlson in CME OpenMarkets , a wet monsoon leads to better harvests and higher earnings for farmers driving a positive effect on gold demand.
GOLD PRICES ARE SIZZLING HOT
Despite the bullish drivers, a major headwind to the gold demand is its high prices. Gold prices remain elevated. Higher prices lead to guarded consumers.
With prices 9% higher YTD and 20% higher over the past one-year, the rally in prices until now has been rapid, making consumers wary of overinvesting in the yellow metal.
Gold does not generate yields. It pays no dividends or interest. When risk free rates remain high, investing in gold is not lucrative. As the 10Y US Treasury yield stubbornly stays around 5%, investors opt for treasuries over gold.
Gold prices are at record high in several non-USD currencies. That makes gold even more expensive. Weaker Indian Rupee and the Chinese Renminbi crushes domestic demand down.
INSIGHTS FROM COMMITMENT OF TRADERS AND OPTIONS MARKET
Asset managers had been building up net short positioning in CME Gold Futures until recently. Bearish sentiment in gold began in July, when investors started to anticipate further Fed rate hikes.
Against the backdrop of rising geopolitical tensions, these asset managers are shifting away from net short to net long positioning over the last one week.
Implied volatility on gold options has shot up to levels last seen during the banking crisis in March, but historical volatility remains far lower in comparison. This suggests potential for rising volatility ahead.
Source: CVOL
Skew on gold options have surged with call premiums having risen faster than put premiums.
Source: CME Quikstrike
Options traders are far more bullish than those trading Gold futures. Put/Call ratio for gold options is 0.52 implying two calls (bullish bets) for every put (bearish bet).
Source: CME Quikstrike
HYPOTHETICAL TRADE SETUP
A hypothetical long position in CME Micro Gold Futures can be used to harness gains from the overwhelmingly bullish sentiment in gold.
CME Micro Gold Futures expiring in December (MCGZ23) provides exposure to 10 oz of gold. It requires an initial maintenance margin of USD 780 (as of 23rd Oct 2023). These micro contracts can be used to secure granular exposure in a capital efficient manner.
Still, given the uncertainty and the risk for sharp reversal, a tight stop loss is appropriate to protect from a sharp price correction.
Entry: USD 1,994
Target: USD 2,090
Stop Loss: USD 1,945
Profit at Target: USD 960 ((2090-1994) x 10)
Loss at Stop: USD 490 ((1994-1945) x 10)
Reward to Risk: 2.1x
Alternatively, investors can deploy bull call spread on CME Gold Options expiring in December (OGF4) to express the view that gold may retest USD 2,100/oz but not rise beyond.
A Bull Call Spread consists of a long call position at a lower strike (USD 2,020) and a short call position at a higher strike (USD 2,100). The position requires net premium of USD 2,400 (USD 4,970 - USD 2,570).
The payoff for the hypothetical position is provided below. Both upside and downside for the position are fixed. Hypothetically, the position breaks even when prices reach USD 2,044/oz and has a maximum payoff of USD 5,600.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. 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
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Navigating Rocky Oct After a Crushing Sept in US EquitiesSeasonality is pervasive in financial markets. Some are benign while others are not. The “September Effect” refers to a month when equity returns gets crushed. Typically, this is followed by a volatile October.
Other well-established pattern in equity markets is the "Santa Claus Rally" which is known to occur during December. Equities go bullish with increased optimism, holiday spending, and portfolio rebalancing before the end of the year. Then, there is also the "January Effect" where small-caps tend to outperform large-caps in the early part of the year.
Essential to remember that historical trends do not guarantee future performance. This paper delves into the September Effect followed by the volatility which tends to be witnessed during the month of October.
Portfolio managers can prudently position their portfolios to gain from rising volatility and sharp price moves in October and the rest of the final quarter.
WHAT EXPLAINS POOR EQUITY RETURNS IN SEPTEMBER?
There is no exact rationale explaining why September is historically the worst month of the year for equities. Over the last 94 years, September is the only individual month that has declined at least 50% of the time.
Scott Bauer, CEO of Prosper Trading Academy surmises in an opinion note that three drivers plausibly explains this:
1. Post Summer Vacation: In the lead up to summer in Europe, average trading volumes grind lower resulting in lower volatility from June to August. When portfolio managers and investors return in September, their collective rebalancing of portfolios cause panicked exits as they create space for new holdings. This mass-exodus of selling shares pushes prices lower making September the worst month for stocks.
2. Year-end for Mutual Funds: Many mutual funds close their fiscal year in September. These funds purge their portfolios during this ill-fated month.
3. New Bond Issuances: Like equity trading activity, bond issuances ease during summer and return with vengeance and spikes in September. New issuances channel existing money into bonds forcing investors to rotate out of equities and into bonds.
SEPTEMBER US EQUITY MARKET PERFORMANCE IN THIS MILLENNIUM
Does the September effect prevail in the current millennium? Since start of 2000, September indeed is the worst month for S&P 500 stocks with average returns of -1.8%.
Surprisingly, the months with the highest occurrence of negative returns is not September but January. Over the last 23 years, January had 13 months of negative returns. June along with September rank second with 12 occurrences of negative returns during the same period.
The chart below summarises average monthly returns of S&P 500 index. Clearly, on average, September stands out as a poor performer while April is the best .
Interestingly, the S&P 500 shares tend to deliver positive returns with average upside performance of 3.22% in the fourth and final quarter of the year.
Likewise for Nasdaq 100, the September Effect is even more pronounced with index plunging 2.61% on average.
Unlike S&P 500, February (14 of 23) has the highest number of months with occurrence of negative returns. The month with the second highest occurrences of negative returns are September, June, and December with 12 of 23 years marking a negative return.
The chart below summarises average monthly returns on the Nasdaq 100 index. While September crushes Nasdaq stocks, October is the best month thus far this millennium.
October and November deliver positive returns with a pullback in December. On average, Nasdaq 100 upside performance stands at +2.44% in the fourth quarter.
A CRUSHING SEPTEMBER IS FOLLOWED BY A ROCKY OCTOBER
While September is the king of worst month for stock returns, October claims the crown for being the most volatile.
Over the last 23 years, the S&P 500 equity returns show the largest exaggeration in October. Range as used below is defined as the high minus the low of the month and then expressed as a percentage as month’s opening level.
Analysis shows that equity returns move by 9.1% in October compared to 6.9% on average for the rest of the months in the year.
Similarly, observations in Nasdaq-100 also point to exaggerated range of returns during the month of October.
Range in Nasdaq monthly returns stand at 11% in October compared to 9.2% on average for the rest of the months in the year.
Based on expected returns and volatility, investors in S&P 500 can expect large swings in returns in October as evident from the chart below.
Likewise, Nasdaq 100 investors can expect large swings in October returns based on observations over the last 23 years.
OUTLOOK FOR FINAL QUARTER OF 2023
Twenty-three years of historical observations point to a positive upward bias in equity returns for the last three months of the year. This time however, the outlook going into the final quarter is beset with head winds. Not one but five of them approaching in parallel. Risk lurks in many places.
Strong dollar. Oil skirting near $100/barrel. Resumption of student loan repayments. Record high mortgage rates driven by higher for longer policy stance. Automotive workers striking at multiple plants potentially leading to higher labour costs and automotive inflation.
Dollar is trading at 10-month highs. The US 30-year mortgage rates at record high levels unseen in 23-years. The 10-year US yield are at levels last observed during 2007.
Gathering of these dark clouds are starting to show up in the University of Michigan’s US Consumer Confidence index. Since June, American exceptionalism boosted the index to 71.73 clocking a 52-week high. However, with a raft of concerns weighing on the consumers, the index has started to drop the last two months.
HARVESTING VOLATILITY EXPANSION USING CME MICRO OPTIONS ON S&P 500 AND NASDAQ 100 INDEX
In times of uncertainty, where seasonality leans towards a bullish rally but fundamentals signal a bearish grind, portfolio managers can position to gain from volatility expansion and sharp index moves in either direction.
Options can be used to engineer a convex portfolio. Convexity in finance refers to portfolio strategies which enjoy outsized and solid gains while limiting downside risks. Convex strategies deliver non-linear returns with substantially higher gain for every unit of pain.
LONG STRADDLE USING OPTIONS ON CME MICRO E-MINI S&P 500 FUTURES
Long straddles involve holding a simultaneous long call and long put position at the same strike price for the same expiration period.
Let’s look at a hypothetic long straddle using Micro E-Mini S&P 500 Options expiring on 29th December 2023 at a strike price of 4400. The straddle pay-off is visualised in the chart below.
This trade will generate positive returns when (a) index rises above 4655, or (b) index falls below 4145, or (c) volatility expands .
The premium required for this trade (as of 2nd October 2023): (Premium for Call Option + Premium for Put Option) = (USD 631.7 + USD 636.65) = USD 1268.35.
If index rises 10% to 4840: Call option would pay out ~USD 1568 = ((4840 – 4400) x 5 – Premium for Call Option) = (440 x 5 – 126.34) while the put option would expire worthless, so, net profit would be: (Net PnL from Call leg – Net PnL from Put Leg) = (1568 – 636.65) = ~USD 932
By the same measure, the long straddle will suffer losses if the index remains flat or its moves are muted. It also loses money if volatility remains flat or contracts.
If index remains at 4400: Both options would expire worthless, so, the position would lead to a net loss of the premium paid = Loss of USD 1268.35.
LONG STRADDLE USING OPTIONS ON MICRO E-MINI NASDAQ 100 FUTURES
Let’s look at another hypothetic long straddle using Micro E-Mini Nasdaq 100 options expiring on 29th December 2023 at a strike price of 15250. The straddle pay-off is visualised in the chart below.
This trade will generate positive returns when (a) index rises above 16416, or (b) index falls below 14084, or (c) volatility expands.
The long straddle will endure losses if the index remains flat or its moves within a narrow range. It will also lose if volatility remains flat or shrinks.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. 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
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
BTC Long, bottom or another bear trap?28.5k is the invalidation line for continued bull momo. Close below it on the dailv and I think BTC either sees another bear trap/ deviation to 26k followed by a bull reversal to 37k. If the bear trap is set it is extremely risky to play. If it fails, BTC could hit at least 23k for AUG and 20k to 18.8k for SEP because both are statistically red months during the recovery phase of previous bull runs.
However, there is a minor bull case for the bulls considering we are at the bottom end of a linear regression trend from the bottom at 16k to the current price.
Nonetheless, I do expect volatility soon.
Trades:
Trade 1
Long 28650, sl 28000, tp 30500, 32000, 36500, 40000
Conviction moderate. High chance of getting stopped out if 28.5k keeps getting tested and removing liquidity from that region.
Trade 2
Long 26300, sl 24000, tp 30500, 32000, 36500, 40000
Conviction high. Lowered chance of getting stopped out and if a bear trap were to occur, this is the ideal entry.
Trade 3
Short 30500, sl 32000, tp 28500, 26500 (close here if there's bull volume), 24500, 21000, 19500
Conviction moderate. Might get front runned ~29.5k. but use this trade as a hedge against another false rally that leads into a bear trap ~26k, or even worse at 20k if theres no bullish volume for the expected trap.
Long August Feeder Cattle: GFQ2023Seasonally supported for Buys May/June >> into July. Typical seasonal Low mid-late June (agreement across 5yr, 15yr, 40yr data).
I like how this has retraced down to old Aug'15 high and rejected that dynamically (see the GF1! W graphic). I very much like the perfectly 'clean' equal highs from 2015-2023 (see GF1! weekly graphic).
I prefer not to see price return back below the island reversal gap; though stop is set a wee bit deeper still just in case.
Looking to hold this until completion or stop out. But if we make some progress up and we get into Mid-July =>> i may consider exiting early.
DXY Seasonal Tendency Shorts July - Aug Before engaging in any trade idea, it is essential to understand and carefully consider the associated risks. The following risk disclosure highlights potential risks that should be taken into account:
Market Risk: Trading involves exposure to market fluctuations, which can result in financial losses. Market conditions, including volatility, liquidity, and economic factors, can impact the performance of the trade and lead to unfavorable outcomes.
Risk of Loss: There is a possibility of losing some or all of the invested capital. Past performance is not indicative of future results, and there are no guarantees of profitability. Traders should be prepared for the potential loss of their investment.
Volatility Risk: Financial markets can experience rapid price movements and increased volatility. Sudden price swings may affect the trade, leading to unexpected gains or losses. Traders should be aware of the potential for high volatility and its impact on their positions.
Liquidity Risk: Certain securities or markets may have limited liquidity, which can make it challenging to execute trades at desired prices or volumes. Illiquid markets can lead to wider bid-ask spreads and increased slippage, potentially impacting trade execution and profitability.
Counterparty Risk: Trading involves interactions with various counterparties, such as brokers, clearinghouses, and other market participants. The default or insolvency of a counterparty can result in financial losses or difficulties in closing or settling trades.
Regulatory Risk: Changes in regulations, laws, or government policies can have an impact on the trading environment. Regulatory shifts may affect market conditions, trading practices, and the availability of certain instruments or strategies. Traders should be aware of the potential regulatory risks and their implications.
Execution Risk: The speed and reliability of trade execution can be influenced by technological factors, including internet connectivity, trading platform performance, and system outages. Traders should consider the risks associated with trade execution and have contingency plans in place.
Leverage and Margin Risk: Trading on margin or using leverage can amplify both potential gains and losses. Increased leverage exposes traders to the risk of margin calls, where additional funds must be provided to maintain positions. Failure to meet margin requirements may result in the forced liquidation of positions.
Psychological Risk: Emotional factors, such as fear, greed, and impulsive decision-making, can impact trading outcomes. Traders should be aware of the psychological challenges involved in trading and have appropriate risk management strategies in place.
External Events and Force Majeure: Unforeseen events, including natural disasters, geopolitical tensions, or global economic crises, can significantly impact financial markets. Traders should consider the potential risks associated with such events and their potential effects on their trades.
This risk disclosure is provided for informational purposes only and does not constitute financial advice. Traders should conduct thorough research, seek professional advice, and carefully assess their risk tolerance before engaging in any trade idea.
Analysis
Looking for Price in DXY to rise approximately first half of July.
Following that We are looking for Price to Run Out June's High into the Highlighted price point
and following that we will be looking for bearish confirmations to go short for the rest of the summer.
AMAT enter LONG ↗Reasons:
above all moving averages
broke the horizontal resistance
bullish seasonality
LONG run in Adidas📈I've placed a limit buy in this market because:
the long-term descending trendline was been broken
we have a bullish seasonality for Adidas
the price has broken above the 30's SMA
the price has broken above the prior swing high
the price has formed now a sequence of higher highs and higher lows (= bullish trend)
March CPI and PPI WeekCPI & PPI will fumble around whip back and forth
(Probably see SMT between CPI and PPi days)
then after PPI go bullish head toward REQH
and there is still a gap in that high from the
previous week right about the REQH's
probably go bullish till at least mid-April
and will probably take out Feb's high
if not mitigate into a higher area from Feb.
but for now, I'm only anticipating this area
Approaching a pivotal week for the S&PThe S&P500 / ES is sitting right at a critical point which I believe will break this week or next
The weekly chart shows that the S&P is now above most key moving averages, including the 200 moving average (displayed in black), the 20 moving average (displayed in white) and the 50 moving average (displayed in yellow). Also it has broken above the upper resistance trend line (displayed in red), these are all obviously very bullish but a few major headwinds remain that may upset this upwards momentum.
Price last week touched the 100 moving average (displayed in blue) but then rejected back down to end up finishing right at the Fib Extension 0.236 level. Ironically the 100 moving average has been a menacing level that has been difficult for the S&P to break through, 7 weeks ago and 21 weeks ago exactly the same touch and rejection of the 100ma occurred. Further to this we are about to enter one of the most bearish seasonal periods of the year for the S&P, I've included a seasonality indicator in my chart which shows 3 year, 6 year and 9 year tendencies and they all have exactly the same downwards pattern starting in February. The indicator below the Seasonality scan is RVI (relative volatility index), this is good for measuring both the volatility along with direction. Inline with what the market has been doing the past few years the RVI had been generally trending up and created a support line that was largely unbroken from end 2018 - Jan 2022, and since been broken the RVI is now showing a downwards trend and instead of a support line there is a resistance level over head that price is close to approaching.
The last indicator on the chart includes Larry Williams Vix_Fix which had turned red recently (2 bars/weeks), signalling we are in historically low volatility period in the VIX, most traders know that large moves often follow periods of very low and/or contracting volatility. This last indicator also includes a display for the bond yield curve and this is currently shown in the maroon/deep red which confirms a fairly long period inverted curve which is also known as a precursor sign of recession and market sell off.
The recent closed weekly candle was an indecision candle so this week that is coming or perhaps the one that follows should tell a lot about where the market will be heading over the course of the next few months
A bullish bias would mean
Price this coming week will disregard the seasonal bearish tendency and instead break above both the 100ma and the 0.236 Fib and close the week above these levels.
A bearish bias would mean
Price has closed back below the resistance level on the chart (both price resistance & RVI resistance) and price has tracked the normal declining seasonal pattern that plays out around this time of the year.
I see more chart evidence of a coming decline than an incline but in any case we still need to wait for direction confirmation which should look like one of the above scenarios. So it is time to pay very close attention to the charts and In the week that follows the market direction confirmation signal I suspect we will see some large and fast moves of either sideline money coming into the market to cause one last blow off top before some kind of recession sell off later in the year or heavy selling as these key levels get rejected and the seasonal sell of takes hold.
My 2 cents on eBay It's technically a quite bullish chart. The price has established an higher low, has broken above the 30's SMA and has broken the descending trendline, re-tested it and now it seems like we're in the game. ;)
Furthermore there is a bullish seasonality playing out ATM. So I put on my horns in this case ...
Take-Off for Micron Technology📈
above all moving averages
has just broken through the decending trendline
bullish seasonality
Expecting the price to rise in the next weeks and months.
Google Mothership is bullish?⚡
Weekly breakout of the decending trendline ahead
bullish seasonality
supported by the 200's SMA
the price has made already the higher low - just needs to get to an higher high
Pivotal week (or 2) ahead for the S&P The S&P500 / ES is sitting right at a critical point which I believe will break this week or next
The weekly chart shows that the S&P is now above most key moving averages, including the 200 moving average (displayed in black), the 20 moving average (displayed in white) and the 50 moving average (displayed in yellow). Also it has broken above the upper resistance trend line (displayed in red), these are all obviously very bullish but a few major headwinds remain that may upset this upwards momentum.
Price last week touched the 100 moving average (displayed in blue) but then rejected back down to end up finishing right at the Fib Extension 0.236 level. Ironically the 100 moving average has been a menacing level that has been difficult for the S&P to break through, 7 weeks ago and 21 weeks ago exactly the same touch and rejection of the 100ma occurred. Further to this we are about to enter one of the most bearish seasonal periods of the year for the S&P, I've included a seasonality indicator in my chart which shows 3 year, 6 year and 9 year tendencies and they all have exactly the same downwards pattern starting in February. The indicator below the Seasonality scan is RVI (relative volatility index), this is good for measuring both the volatility along with direction. Inline with what the market has been doing the past few years the RVI had been generally trending up and created a support line that was largely unbroken from end 2018 - Jan 2022, and since been broken the RVI is now showing a downwards trend and instead of a support line there is a resistance level over head that price is close to approaching.
The last indicator on the chart includes Larry Williams Vix_Fix which had turned red recently (2 bars/weeks), signalling we are in historically low volatility period in the VIX, most traders know that large moves often follow periods of very low and/or contracting volatility. This last indicator also includes a display for the bond yield curve and this is currently shown in the maroon/deep red which confirms a fairly long period inverted curve which is also known as a precursor sign of recession and market sell off.
The recent closed weekly candle was an indecision candle so this week that is coming or perhaps the one that follows should tell a lot about where the market will be heading over the course of the next few months
A bullish bias would mean
Price this coming week will disregard the seasonal bearish tendency and instead break above both the 100ma and the 0.236 Fib and close the week above these levels.
A bearish bias would mean
Price has closed back below the resistance level on the chart (both price resistance & RVI resistance) and price has tracked the normal declining seasonal pattern that plays out around this time of the year.
I see more chart evidence of a coming decline than an incline but in any case we still need to wait for direction confirmation which should look like one of the above scenarios. So it is time to pay very close attention to the charts and In the week that follows the market direction confirmation signal I suspect we will see some large and fast moves of either sideline money coming into the market to cause one last blow off top before some kind of recession sell off later in the year or heavy selling as these key levels get rejected and the seasonal sell of takes hold.
Cotton prices on the stepping stone?As described here - I see the signs are right for a bullish move in cotton.
Trading Week #3, 2023: Cotton Futures Expected to be UPThis is Trading Week #3 (Jan 16-20) 2023.
Data from the past 10 years (2012-2022) shows that Cotton Futures was up 9 years (90%) of time.
Get ready to LONG on Monday!
GOING SHORT IN NZDUSD BY TRADING STRATEGYBullish Indications
1. Higher Highs and Lows
2. 8 out of 12 years December remains bullish
3. Trend is bullish on 1D TF
Bearish Indications
1. Shooting Start at Higher High
2. Broken Trendline
3. Bearish Divergence on 4H and 1D
4. Price is exactly bounced back from the previous rally LH
5. Trend is mature enough
Seasonal Data
Dec 10 => Green
Dec 11 => Red
Dec 12 => Green
Dec 13 => Green
Dec 14 => Red
Dec 15 => Green
Dec 16 => Red
Dec 17 => Green
Dec 18 => Red
Dec 19 => Green
Dec 20 => Green
Dec 21 => Green
GOING Long in CADJPY Trading StrategyBullish Indications
1. Tweezer Bottom and 3 White Soldiers
2. Tested Strong Support
3. Bullish AB=CD Pattern
4. Bearish Trend is Mature Enough
5. Need to Break Resistance Upper Trend Line
6. Found a very strong bullish divergence on 1D
7. Falling Wedge
8. 11 out of 16 times remain bullish
Bearish Indications
1. Lower highs and Lows
2. If it breaks support then we can enter
Seasonal Data 2006-2021
Dec-06 => Green
Dec-07 => Green
Dec-08 => Red
Dec-09 => Green
Dec-10 => Green
Dec-11 => Red
Dec-12 => Green
Dec-13 => Green
Dec-14 =>Red
Dec-15 => Red
Dec-16 => Green
Dec-17 => Green
Dec-18 => Red
Dec-19 => Green
Dec-20 => Green
Dec-21 => Green
