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King Dollar Here, Where's Risk?Our focus on the dollar today is based on the fact that for over a year the DXY has been forming a double bottom reversal pattern. Now that we're back near the recent high's, we're seeing the stars align for a major market correction, not necessarily off the back of a DXY breakout, but perhaps because of a major risk off move across the asset classes. I mean, the Fed did just say they're going to begin a taper schedule as early as this year. If that doesn't spook markets, I don't know what will. Power hour in 40 minutes...
TVC:DXYLong
by Hedge_Of_The_World
6
Fed Sparks Global Market Meltdown, Vixplosion Next?Good morning, folks! Well, well, well, the Fed decides to taper this year, and all of a sudden all hell breaks loose in global markets. If you're thinking this entire "recovery" was just one big magic trick of coordinated monetary debasement, you're absolutely right, and the market's reaction to the Fed minutes yesterday (and today) is a perfect demonstration of the farce. It was an ugly overnight session across global markets, and as of 8:40AM, the Dow is down -0.91% to 34,645, the S&P is down -0.77% to 4,366, the Nasdaq is down -0.60% to 14,769, and the Russell is getting monkey hammered, we're down -1.65% to 2,128 (after losing long term ascending trendline support yesterday). Vix is up a whopping 52% this week and sitting at a 23 handle. We're in the process of testing the descending trendline from the March 2020 high around 85. If this resistance crumbles, imo Vix is going to a 40 handle, and possibly a 50 handle by EOM. Don't forget, we have Jackson Hole at the end of August as well, and if the sentiment at the event is negative after the Fed's hawkish minutes, Vix could have a multi-week breakout, sending it back toward last year's high's. We all know valuations are at nose bleed levels, and speculation is at ATH's. The Fed was the only thing standing in the way of a return of price discovery/fundamentals, and now they've folded their hand to inflation. You know what comes next. The dollar is scorching higher this morning - we actually tested the lower band of the wedge around 93.50 moments ago, before cooling back to 93.37. If we see a notable shift in the US Equity Put/Call, we're likely going to see a dollar breakout to our previous target around 95. This would imply a major correction across the asset classes. Simultaneously, USTs are being bid here which is sending rates tumbling also. The last time we saw a divergence this large against the S&P was in February 2020, just before the market crashed. In other words, the bond market clearly knows something stocks don't, and bond investors have been positioning for a crash since the US10Y yield peaked in March 2021. In Crypto, Bitcoin (BTCUSD) slipped back to a 43k handle before recovering some of the losses. We're sitting at 44,486 and looking brittle. Having said that we have the 21EMA just below us at 43,359, as well as the 21EMA (w) around 40,867. These supports are likely to hold in the interim, but if we do get a multi-week repricing of risk, it's highly probable we see a revisit of the July low around a 29k handle by next week. Ether (ETHUSD) also appears to be losing steam here and rolling over aggressively on the weekly timeframe. A retest of the 21EMA (w) around 2,418 would be my base case in a prolonged risk off scenario. Finally, on the data front, we saw initial claims come in this morning at 348k vs the 370k expected, while continuing claims slipped to 2.82MM vs the prior print of 2.899MM. This is actually not good for markets because the hotter the economy gets, the more the Fed will step off the gas. For a change, good news is bad news. The Philadelphia Fed index also came in moments go which shows an ugly divergence between the analysts expectations and reality. We're looking at 19.4 vs the 24 expected. Clearly regional manufacturing/business growth is slowing rapidly, hinting at stagflation dead ahead. Trade accordingly... Thanks for your time today guys and enjoy the rest of your day, it should be a very exciting day of trade! Cheers, Michael. * I am/we are currently long UVXY, HUV
TVC:VIXLong
by Hedge_Of_The_World
10
Futures Dip Ahead of Potentially Hawkish Fed MinutesGood morning, folks! It was a relatively quiet overnight session with futures drifting sideways and trading essentially flat as we approach the open. As of 8:45AM the Dow is down -0.20% to 35,187, the S&P is down -0.11% to 4,438.75, the Russell is up 0.11% to 2,176.90, and the Nasdaq is down -0.3% to 14,989.75. Traders will be keeping a close eye on today's Fed minutes (from July) for any hints/announcements of balance sheet tapering, changes to the inflation/economic outlook, and of course, any changes in rates. It's unlikely we'll see any major policy changes from the last meeting, however, I do expect more of the members to begin turning hawkish as PPI approaches 8% and CPI 5.5%. Some analysts expect the Fed to announce a taper schedule to begin as early as October and to run for as long as 10 months into mid 2022. That sounds about right, but if markets or the economy react poorly to the Fed's tighter policy stance, how long until they reverse course (again)? Wash, rinse, repeat. Moments ago we saw the MBA Mortgage Applications Index come in at -3.9% vs the prior print of 2.8%. We also saw Housing Starts come in at 1,534k vs the 1,610k expected, while Building Permits rose 1,635k vs the 1,610k expected. At 10:30AM we'll see the latest EIA Crude Oil Inventories, and then of course, at 2:00PM we'll get the July Fed minutes followed by the Powell Q&A. * I am/we are currently long HUV, UVXY
AMEX:SPYShort
by Hedge_Of_The_World
6
VIX - Price Objective Traded for Micros / LONG ApproachingPrice remains in a well controlled descent, although Price has completed a Target for retracement. Retracements have been minor measure moves, 6 failures at each RT. CASH / SPOT VIX has a Daily GAP at 14.80, lower Range is 14.20. The parabolic move off the lows could see 150-200% gains in very short order. We patiently wait for fills at targets with No Positions. A reversal is setting up for an extreme move on the Daily/Weekly TF.
CBOE:VX1!Long
by HK_L61
1
NFP Beats, Futures Hover Near ATH's (Again)Happy Friday, folks! Another week has come and gone, and US Futures (sans the Russell) are glued to the ATH's. Will the nightmare ever end? We drifted higher all day yesterday, only to see yet another short squeeze into the close. The equity inflows are absolutely relentless, and with today's NFP report blowing away expectations (943k vs the 925k expected), and unemployment dropping to 5.4% vs the 5.6% expected, markets couldn't possibly be more exuberant. Having said that, the notable improvement in the labour market could give the Fed the ammunition it needs to taper bond purchases as early as Q4 2021. We all know the last time the Fed tried to taper, markets crashed, so when the same thing happens this time, how long will it be before they resume their bond purchases? I swear with each passing day, the market becomes less and less recognizable, and price action makes less and less sense. As of 9:00AM, the S&P is down -0.6% to 4,418.50, the Dow is up 0.16% to 34,995, the Russell is up 0.50% to 2,243, and the Nasdaq is down -0.51% to 15,091. We're seeing a solid bid for the dollar (DXY) as we slowly work our way back up to wedge resistance. We're sitting at 92.62 heading into the cash open, and up around 0.41% on the day. While the dollar is bid, the US10Y yield is rising also, potentially off the back of stronger than expected jobs data, and rising expectations of Fed tapering sooner rather than later. Bitcoin (BTCUSD) had a solid rally yesterday tagging a 41k handle, while also recapturing the 21EMA (w) - I do expect a rejection today to end the week below the 21EMA (w). We're down -0.32% on the day, and sitting at 40,793. Gold on the other hand is seeing some notable outflows; we're down -1.63% to 1,779. Lastly, Vix is down -0.69% to 17.14, and sitting just above the multi-year ascending trendline support. At the moment it looks as though markets will never fall more than a couple percent again, but there's a lot happening under the surface that retail investors aren't seeing, and the Fed knows they're going to be the reason markets crash again. Let's see how the month shapes up and if we get that correction we've been waiting so patiently for off the back of increasing Fed hawkishness. Have a great weekend everyone. Cheers, Michael.
BITSTAMP:BTCUSDShort
by Hedge_Of_The_World
2
Futures Sink as ADP Pukes, Data in FocusGood morning, folks! As of 8:45AM on Wednesday morning, US Futures are seeing some light weakness with the Dow down -0.33% to 35,003, the S%P down -0.27% to 4,411, the Nasdaq down -0.10% to 15,046, the the Russell down -0.82% to 2,202.80. The ADP Employment Change came in moments ago at 330k vs the 650k expected, and the weak print has erased some of the overnight gains, but we're still holding on to most of yesterday's gains, so nothing to write home about. The dollar (DXY) is holding steady just under a 92 handle (91.91), while the US10Y yield is also seeing persistent pressure as we continue to see heavy bond inflows. The Treasury has announced that they will begin reducing the size of bond auctions at the Nov 2021 meeting. That's going to make it tough for the Biden Administration to maintain current spending levels, and so with a reduction in Treasury supply ahead, monetary conditions are going to tighten as early as November, maybe even earlier if the Fed decides to taper purchases/hike rates at Jackson Hole. Clearly the bond market knows something the stock market doesn't, and if the crashing US10Y yield is mimicking last years drop, we're likely about to see a major correction in markets. Having said that, we still have room to the upside in stocks (based on the technicals), particularly considering we're holding on to key supports like it's a religion, and money is still free. Every dip is being bought without hesitation, and that really hasn't changed (yet). Yesterday was a perfect example of how easy it is for the bulls to achieve new ATH's. Gold is seeing some solid flows here as Powell continues to punish the Ctrl + P buttons on his keyboard. But, while Gold rallies, Bitcoin (BTCUSD) is seeing persistent pressure at 40k and has been unable to breakout since we lost this level in May 2021. Bitcoin and Gold do not trade in tandem - Gold trades as a safe haven along with the JPY, Dollar, Treasuries, to name a few, while Bitcoin trades like a risk asset. When markets correct and money flows out of risk, crypto gets hit the hardest as it carries the most risk/highest beta across most asset classes. Let's see how the day shapes up as more data rolls in. At 9:45AM we'll see the IHS Markit Services PMI for July, then at 10:00AM we'll get the ISM Non-Manufacturing Index, and then finally at 10:30AM we'll see the latest EIA Crude Oil Inventories for last week. Good luck out there today, my friends, and see you all at the opening bell for our Live Analysis. Cheers, Michael. * I am/we are currently long UVXY, HUV
AMEX:SPYShort
by Hedge_Of_The_World
2
The Finish Line Is In SightGood morning, folks! For those of you in Canada, I hope everyone had a great holiday to start the week. Let's get right into today's analysis. After rolling sell programs yesterday to kick-off the month of August, US Futures are drifting higher on Tuesday with the Dow up 0.25% to 34,808, the S&P up 0.22% to 4,389.50, the Russell up 0.46% to 2,221.10, and the Nasdaq up 0.14% to 14,973.50 as of 8:30AM. SPY saw yet another rejection at wedge resistance, but the 21EMA (w) around 419.33 has been successfully defended since it was recaptured in May 2020, and as long as this support holds, we're going to continue to melt higher. Having said that, we just saw 6 months straight of gains on the SPY, and imo we're unlikely to see a 7th given the macros, low liquidity, heavy geo-political risks, and policy risks that are looming this month. I believe the finish line is (finally) in sight. The US10Y yield continues to slip after the 200DMA rejection at 1.41%. We've now lost weekly MA supports as well, including the 100MA (w) at 1.1988%, and the, 50MA (w) at 1.1961%, and absent a recapture by EOW, we could to be on the verge of a massive puke toward the August 2020 lows around .50%. The last time this happened, of course, was February 2020 just before the 35% market crash. Let's see if history rhymes. After a solid rejection at wedge resistance, the dollar (DXY) saw notable support at the 50MA (w) around 91.70, and is hovering just above around 92 as we approach the open. If sentiment is in fact about to shift negative, the dollar may be in the midst of a technical retest of the 50MA (w), before setting up for a retest of the wedge once again. Let's see if the bulls can defend the 50MA (w) into the weekend. In volatility, the Vix has been making higher lows for 6 weeks in a row, and is sitting at a 19 handle ahead of the cash open. The descending trendline is still holding as resistance for now, but judging by the stochastic RSI on the weekly time frame, and the PA off recent multi-year ascending trendline support, we're likely at the onset of another major spike in the Vix. First, we'll need to see the 25 level captured on the weekly candle, which would set us up for a second leg higher toward the upper band of the ascending channel around 50. Have a great day of trade, my friends, and let's see how the cookie crumbles this week. Cheers! Michael. * I am/we are currently long UVXY, HUV.
AMEX:SPYShort
by Hedge_Of_The_World
15
This is Just Getting Silly NowAfter another run around yesterday on taper talks by Fed Chair, Jerome Powell, global markets are screaming higher, and headed back for their ATH's. As of 8:30AM, the Dow was up 0.34% to 35,051.80, the S&P500 is up 0.18% to 4,408.40, the Russell was up 0.66% to 2,240.10, and the Nasdaq was flat at 15,018.10. China convened a meeting with top banking officials after markets reacted negatively to a broad regulatory crack down. This has Asian markets roaring higher with the Hang Seng leading the way, up a whopping 3.29% to 26,218.50. Moments ago we saw Q2 GDP come in at 6.5% vs the 8.5% expected. Initial claims came in at 400k vs the 375k expected, while Continuing Claims came in at 3.269MM vs the prior print of 3.262MM. At 10:00AM we'll see Pending Home Sales with the consensus estimate at 0.8% for June. Not that market signals or fundamentals mean anything anymore. But, I digress. After Powell's promise of more dollar debasement with over $1.4 Trillion in stimulus flowing in on an annual basis, the metals are being heavily bid today for a change. Gold is up 1.7% to 1,830.50, Silver is up 2.85% to 25.59, and Platinum is up 2.04% to 1,079.70. Of course, as inflation hedges are bid, the dollar (DXY) is puking, and is down -0.40% on the day and sitting at 91.95. FB fell by over -3% in premarket trade after the company reported strong earnings, but admitted their outlook is turning negative with new Apple advertising rules being implemented. It looks like we're seeing yet another strong earnings season, but more often than not, I'm seeing stocks sell off on strong earnings. Potentially, we're seeing large funds seeking to reduce equity exposure by liquidating positions on strong earnings. Due to the "buy every dip," cult-like behaviour in markets, transferring risk on to unsuspecting retail investors has never been easier. According to Peter Oppenheimer at Goldman, "Buying the dip mentality in general does make sense because we do have policy settings which are really going a long way to reducing the tail risk for investors, the combination of extremely loose monetary policy and forward guidance, together with fiscal support, suggests that deflationary risks that dominated the post-financial crisis era are moderating." I guess who needs a real market when you have the Fed stealing the working class' wealth to keep asset prices rising, and zombie corporations lights on. In crypto land, Bitcoin (BTCUSD) hit a massive wall at the 21EMA (w) around 39,437. But, we're still hovering just above this level, and the bears have until EOW to recapture this resistance level or risk a potentially massive rejection. Lastly, the US senate voted on, and agreed upon a new infrastructure package of $550 Billion. That's not quite $3.5 Trillion, but hey, it's more free money, folks! The farce continues. What can I say, patience is a virtue. I'm working on some new strategies for you guys today. The old Vix trade is still on the board, and I'm holding my UVXY and HUV (for now), but we need some new and exciting ideas to trade asap. I'm looking at some potential longs (while hedging downside with Vix and tight stops), as well as shorts, so let's discuss a few of those in the private Telegram group tomorrow and get the ball rolling. Best of luck out there today, my friends, and see you guys at the opening bell tomorrow to wrap up the week. Cheers, Michael.
AMEX:SPYShort
by Hedge_Of_The_World
10
Is Vix About to Become the Most Crowded Trade on the Street?Global Futures are trading broadly in the red on Tuesday after drifting sideways for most of Monday. Having said that, we're still at ATH's, and looking like a freight train without breaks. As of 9:00AM the Dow was down -0.25% to 35,055, the S&P was down -0.14% to 4,416, the Russell was down -0.66% to 2,202, and the Nasdaq was up 0.06% to 15,134. Despite the parade of perma bulls leveraging their asses to go all-in on this ponzi of a market, the Vix is still holding on to multi-year trendline support with conviction. We're seeing accumulation here, with a high probability of a Vix spike in the near term off the back of extremely elevated asset valuations, and essentially unrecognizable fundamentals/ historic technical deviations. We're up around 5.5% on the day and sitting at 18.60. At 8:30AM we saw Durable goods come in significantly below expectations at 0.8% vs the 2.1% expected. We also saw Durable goods ex-transports come in at 0.3% vs the 0.9% expected. Based on the previous ISM and PMI prints, we may have seen the peak of the "recovery," in Q2, absent another massive stimulus every quarter going forward (not impossible in this Truman Show version of Capital Markets). The S&P Case-Shiller Home Price Index came in hotter than expected at 17% vs the 15.2% expected. Looks like inflation isn't so transitory after all. Powell is a liar. Period. He's doing his best not to bankrupt the US goverment by raising rates. Let's see how well that plays out. Later on around 10:00AM we'll see Consumer Confidence with the expectation of a minor drop from the last print (127.3) to 124.5. The US10Y yield saw a solid rejection at the 200DMA (1.291%) and we're seeing some notable weakness today as bonds are bid on the broad market weakness. We're back at 1.249% and looking bearish. If we see a sell off in equities, yields may crash. Then again, if we hear more talk of taper from the Fed tomorrow, then all bets are off and yields could spike hard on the confirmation of diminishing demand for bonds by the Fed. Imo it's only a matter of time until we get that confirmation, and both the bond and stock market crash hard. Let's see how the cookie crumbles this week... Stay tuned for our live analysis at 9:30AM. Cheers, Michael. * I am/we are currently long UVXY, HUV.
TVC:VIXLong
by Hedge_Of_The_World
15
VIX - Time Decay for the VIX STR and HYPER BUBBLE EnteriesS&P VIX STR Index will continue roll to V2/M2 as the constant 30 Day rolling Index weightings between V1/M1 & V2/M2. As a consequence, 82% of the time the VX Futures see time decay close the Roll Yield. Roll Yield is calculated by the spread between V1/M! & V2/M2 as a percentage. The average is roughly 8%, over this percentage an we see Price tend towards a decay of Price through time into the next Rollover. On April 19th CASH VIX Closed @ 22.50 - the VXQ closed @ 21.45 * A LARGE TELL: The Negative Roll Yield :) The value of ETPs are all calculated from the 30 Day Constant. All derivatives: VXX, UVXY, SVXY are calculated using this formula. Price can change at any time, it is important to remember this - there is a clear percentage of the time when the VIX can move far higher. The trick is to determine when the probability favors this move.
CBOE:VX1!Long
by HK_L61