ridethepig | SHCOMP Market Commentary 2020.08.26📌 A quiet few weeks and enjoying the last few days of summer before things get very active in markets for the rest of the year and into 2021.
Global Equity buyers received their reward for their braveness play: overshoots are a weakness.
See diagram below.
The mysterious 2650 lows were held from the Giant Panda (PBOC), when retail threatened the attack down to make the recovery difficult the monetary side played the defence. At the same time, it also makes the inevitable far worse as the energy needed to get back to 2750/2650 is minimal. The book is very thin.
Buyers have made good use of the swing higher, ignoring Covid cases and deaths and totally looking through US/China protectionism. Sellers have played the waiting game and distributed on the test of resistance 3400/3350:
Prepare for a parry away as the ever present threat of covid approaches and puts further lockdown threats in play. The risk of a full blown monetary crisis has put Equities under permanent threat as the weakness comes from confidence. If consumers are not confident enough to return, or will question if clients are even able to meet, then it will not matter the amount of stimulus as the issue is far bigger than central banks.
A strong move here would be to push the tempo and threaten the immediate breakdown. Live portfolio flows and chart updates resuming as 'normal' from Jackson tomorrow.
As usual thanks for keeping the feedback coming 👍 or 👎
Shcompvsdji
ridethepig | Chinese Equities ... The Slaughtered PigThe "hanging" candle
The problem is as follows:
If the only way to reach risk-on in and remove social distancing is either via a vaccine (most preferred option although not really in scope till 2021) or further extreme lockdown measures (as you all know extremely costly and damaging to the monetary side) to completely remove the virus from circulation. With all roads towards confidence blockaded, it's more advisable to take a contrarian stance to the equity promoters.
This is not an easy one to add too. It depends on the circumstances next week, namely on the virus front as Europe looks set to follow the US and lose control. This is something I would like you all to anticipate: it is all too easy as for the Robinhood pawns who tend to be weak when tested.
The flows are as follows:
1️⃣ the flows themselves in US equities are open to attack
2️⃣ the final nail in the coffin comes from long bonds which are too much pressure to maintain: this means that the necessary complacency forces retail to buy all the junk while those smart enough unload and exert Puts / shorts.
Here the notion of parking capital in China in the short-term turns out to be deceptive and soft. Once more the reason can be found in the previous SHCOMP swings: in diagrams attached below you will see excellent examples of PBOC blockaders and failures.
Ride the PBOC, Feb 3rd 2020
The attempt to ride the CB flows, the hanging lows were relatively obvious and panic creates weakness which can be bought with confidence like passing clouds.
SHCOMP Market Commentary, Feb 24th 2020
The pullback was a result of the PBOC and sharp hands. Many moons ago I would've been convinced by this market...not today.
This leads to the long run choppy conditions and unfavourable outcome of soft hands who placed their stops too blatently. The sell side is still there on the move, ride weakness is the strategy and balance out at key support levels.
Thanks for keeping the feedback coming 👍 or 👎
ridethepig | SHCOMP Market Commentary 2020.02.24A bloodbath across most of Asia with SHCOMP managing to hold via PBOC intervention. Actively sold the Tokyo close as red alerts have been triggered across Global EQ Index.
Those familiar with the current technical flows we are tracking will remember the PBOC dip; it was a classic example of CB intervention in attempt to stop the bleeding. The issue is that markets want to test the limits, CV is showing no signs of abating and the impact is still yet to be seen in earning and growth figures.
We have retraced back to the last breakdown point and selling has begun as if a new crisis is here...
Good luck all those on the sell-side in equities, a major move in the making if things do not get under control within days on the virus front. Thanks for keeping the support coming with likes, comments and etc!!
