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5 Things to Watch in the Next 2 WeeksCME: E-Mini S&P 500 Put Options ( CME_MINI:ES1! ) Important data releases in the coming weeks would shed light on the health of the US economy and could have significant impacts on global financial markets. We will focus on a number of critical datasets, mainly the following, in the upcoming weeks: • Federal tax revenue (Tax filing deadline: April 18) • Existing home sales (April 20) • Personal income and outlay (April 28) • Fed rate hike, or the lack of it (May 3) • Gasoline price trend (before peak summer driving season) Federal Tax Revenue According to the US Treasury Department, the sources of tax revenue for US federal government in 2021 were: • Individual taxes: 42.1% • Social insurance taxes: 23.8% • Consumption taxes: 16.6% • Property taxes: 11.4% • Corporate taxes: 6.0% The annual tax filing deadline for individual and corporation is April 18th. In practice, income tax, social security and Medicare are withheld from each paycheck for employees. Corporations pay estimated tax on a monthly basis. Property taxes are assessed annually. Sales tax is paid whenever you buy products or services. Tax filing is a process where taxpayers calculate tax liability and claim tax credit. If you’ve paid too much, ask for a refund. If you didn’t pay enough, send Uncle Sam a check. We could track government tax revenue and expenditure using the Monthly Treasury Statement (MTS) data published by the Treasury Department. Here are what I found: • In the first three months of 2023, gross tax revenue is $2.268 trillion, while tax refund amounts to $219.8 billion; The resulting net tax receipts are $2.048 trillion; • Comparing to Q1 2022, gross tax revenue is down 0.2%, but tax refunds are up big time by 45.8%. Net tax receipts are down 3.5% year-over-year; • Q1 individual income taxes $1.22 trillion, tax refunds $192.4 billion and net tax receipts $1.03 trillion; Y/Y changes are -1.9%, +59% and -8.5%, respectively; • Q1 corporate income taxes (in billions) $159.0, refunds $19.0, and net tax receipts $140.0; Y/Y changes are +5.1%, -20.7% and +10.0%, respectively; Individual taxes are the most important revenue source for the United States. A declining tax receipt would push the federal budget deeper in the red. But with unemployment at record low and wages on the rise, why is income tax revenue going down? In 2020, the top 1% of income earners earned 22% of all income and paid 42% of all federal income taxes – more than the bottom 90% combined (37%). For the top earners, most of their income taxes come from capital gain, not from wages. In 2021, Dow Jones Industrial Average gained 18.7% while the S&P 500 and Nasdaq 100 had annual returns of approximately 27%. I examine the MTS data for April 2022, which covered the tax filing period for year 2021. Net income tax receipt was $1.72 trillion, up 68.5% y/y. This shows positive correlation between stock market gains and growth in individual income tax revenue. In 2022, the Dow declined 8.8%, while S&P and Nasdaq were down 19.4% and 33.0%, respectively. The individual income tax in Q1 2023 was down 1.9%, but tax refund was up 59%. This again shows positive correlation – stock market losses and decline in income tax revenue. March MTS data strongly indicates that investors are writing off big capital losses from last year. When the tax season is over, I expect to see bigger tax refund and widening net receipt shortfall in the April MTS data vs same period in 2022. Implications: Urgency for Debt Ceiling Negotiation In January, in a letter addressed to House Speaker Kevin McCarthy, Treasury Secretary Janet Yellen warned the US has once again reached its debt limit. The Treasury Department started taking extraordinary measures to keep paying the federal government’s bills, but it would suspend new investments until June 5, 2023. Yellen warned both moves are subject to “considerable uncertainty” if Congress does not pass the bill to increase the debt ceiling. US financials have deteriorated since. According to USDebtClock.org: • US National Debt: $31.69 trillion • US Federal Spending: $6.03 trillion • US Federal Tax Revenue: $4.61 trillion • US Federal Budget Deficit: $1.42 trillion We now expect tax revenue to decline by at least tens of billions of dollars, while spendings on Defense, Medicare, Social Security, and Debt Interest are all going up. As a result, federal budget deficit could be underestimated by well over one hundred billion dollars. Would the federal government have enough money to keep the light on until early June? I suspect the insolvency time bomb is ticking closer and closer. Short-term Trading Strategies Although we had two rate hikes and a banking crisis in the first 100 days of 2023, major stock market indexes are all in the positive territory. The Dow gained 2.2%, S&P 500 rebounded 7.8%, and the Nasdaq pushed up 19.6% YTD. While investors managed to brush off bad news so far, balance sheet deterioration in government, corporation and household would eventually catch up. I am seeing a 5-10% correction in the S&P 500, if some of the following conditions materialize: • Federal tax revenue comes in significantly lower than expected. April MTS report would be released around May 12th; • May 3rd FOMC: If the Fed raises rates and does not signal an end of the tightening cycle, both corporate earnings and household spending would suffer; • US banks could tighten lending standards in the wake of banking crisis. This would add to higher borrowing cost on top of the rising interest rates; • Debt ceiling negotiation: if the White House and the Congress could not reach a deal quickly, we may be heading for the technical default of US government debt. Right now, they are not even sitting at the negotiating table. Options on CME E-Mini S&P 500 may be a way to express a bearish view. The E-mini S&P 500 Index Futures June contract (ESM3) is quoted 4171.75 last Friday. With a notional value of HKEX:50 x S&P 500 Index point, each contract is worth $208,587.5. Put option with a 4070 strike, which is about 100 points below market value, is quoted 76.25. To acquire one option requires an upfront premium of HKEX:3 ,812.50 (=76.25 X HKEX:50 ). Put option carries a nonlinear payoff diagram. Your loss is limited to the premium you paid, but potential gain is unlimited. Hypothetically, if the S&P futures price falls to 3900, put option will be 170 points in the money (=4070-3900). The gain on the account would be HKEX:8 ,500 for each contract. If our view proves to be incorrect and the S&P goes up instead, put premium could decline in value, resulting in a loss. The worst-case scenario is that options would expire worthless. Happy Trading. (To be continued) Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. 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
CME_MINI:ES1!Short
by JimHuangChicago
19
230% vs 110% returns which one will you choose ?So I recently got an Apple Watch to keep track of my fitness goal. It can help track my running distance and better still, my swimming log as well. It is pretty cool except for one thing I noticed. It syncs with your Apple Phone and all your apps that are in there will automatically sync with your Apple Watch. So, I have finance, fitness, social media, etc apps that keep sending me notification. It can be pretty annoying and disturbing to become a slave to these tech items, haha. I believe the trends globally is quite the same maybe for a few European countries like Switzerland ( I could be wrong) Finland, Norway,etc. Taking a train to work, I can see almost 95% of the commuters glued to their phones. What happened to reading a book , I mean a hardcopy book? Sadly, all the bookstores in Singapore are closing one after another. Read article here Anyway, this trend is so massive and has become a part of everyone's daily lives that buying its stock to me is a no brainer. Just taking the last 3 years performance, buying Apple shares will generate a 230% returns versus 110% returns for SPX500 index. What other deep seated trends can you identify in your own country ? Find the Apple alike competitor in your own country and buy it.
NASDAQ:AAPLLong
by dchua1969
28
I cannot cannot short this...Today's CPI data (down to 5.0% from 6.0% YoY) created interesting and actionable price action this morning... more on my thoughts about it later. Technically the data release created a Spike Alert by punching through the pre-market high and then closing back inside it before the cash open. This is happening within two important contexts: A double top for the price action of April's highs The 4155.25 level which is the most important level of 2023 4155.25 is the 50% Retracement for the entire 2022 bear market. This is THE level which the S&P 500 has been holding all year and stubbornly refusing to break higher. The first time it was hit was the December 2022 CPI data. That signaled the December bear trend to yet another key 50% Support. The next time was the top of the January 2023 rally that got everyone excited. Following the recent February/March malaise price is once again testing this level. The CPI data release has very much driven the highs and low (October CPI being the major bottom) for the last many months. Inflation, and how the Fed handles it, has driven this current era of the stock market (and all risk assets). While the news is that inflation is coming down it is still well above the Fed's target 2.0% rate. There is no guarantee or sign that the Fed will change its mind. Yesterday I sat in on a presentation that juxtaposed the current GDP numbers (which have been recently positive) with the LEI (Leading Indicators) which are sending up a recession signal. I am ALWAYS hesitant to take FUD into account in my analysis. However, the signal is the signal. The trade of this post is based upon a confluence of four factors (news event, spike, double top, 50% Retracement). My rules state that I must trade this... win or lose. The LEI is also a signal that has a high probability of efficacy. It should also be heeded.
CME_MINI:ES1!Short
by norok
39
OKXIDEAS contestCheers to all traders out there! Today we are kicking off our OKXIDEAS Trade Ideas contest! All you need to do is publish a trading idea with the tag " OKXIDEAS " and make it go viral! The top 10 best and most popular submissions will share a 13 ETH Prize Pool + Trading View Premium plans + OKX Product Partnership Wildcards! 1st Prize 2 ETH 1 year TradingView Premium Plan OKX Product Partnership Wildcard, giving you the exclusive privilege to have your future ideas published on the OKX Ideas feed, a chance for an appearance on the Web3 Breakdowns Podcast, prefunded trading accounts, OKX swag and more. 2nd - 3rd Prize 2 ETH each 6-month TradingView Premium Plan Get shortlisted for a Product Partnership Wildcard 4th - 5th Prize 1 ETH each 6-month TradingView Pro Plus Plan Get shortlisted for a Product Partnership Wildcard 6th - 10th Prize 1 ETH each 6-month TradingView Pro Plan The Rules 1. Connect your OKX account to your Trading View account. 2. Post your best crypto trade idea with the OKXIDEAS tag. IMPORTANT : make sure you use an OKX price feed, e.g. OKX:ETHUSDT or your idea will not be eligible to win the prizes. 3. Your idea's time horizon can be anything from one week all the way up to several years in duration. Be sure to respect TradingView's House Rules and add a solid description that explains the reasoning behind your idea. 4. Once you have published your idea, it's time to make people notice it! Share it on social media and make as many people engage with it as possible to increase its popularity on TradingView. Feel free to also update your idea whenever you want. You can follow other submissions by searching TradingView for ideas with the OKXIDEAS tag. Submissions close on May 11th at 10:00 am UTC . Winners will be selected within 14 days after the contest ends and we will reach out to the 10 lucky ones via direct message on TradingView. We will be judging ideas based on three criteria: popularity, the quality of the idea/explanation, and conformity with the campaign rules. Only one entry per user - if you post multiple ideas from your account, or through multiple accounts, only the highest ranking one will be considered! Let's see your crypto trading ideas go viral! OKX Team.
by OKX
55
Exploding MOVE/VIX Ratio: A Major Warning SignHey everyone 👋 Guess what? This post was created by two TradingView users! @SquishTrade and I collaborated on this post. We wanted to share our thoughts about the MOVE/VIX ratio, which has been exploding recently, and which may be presenting a warning about the future movement of the S&P 500 ( SPX ). Before we begin, here's a bit more about the MOVE index: The MOVE Bond Market Volatility Index measures the expected volatility of the U.S. Treasury bond market. It is calculated based on the prices of options contracts on Treasury bonds. The higher the price of these options, the higher the expected volatility of the market. The MOVE index is widely used by investors, traders, and analysts as a measure of risk in the bond market, as changes in market volatility can have a significant impact on the prices of bonds and other financial instruments. The above image shows a 10-year U.S. Treasury bond issued in 1976. Here's a bit more about the VIX volatility index: The VIX is a measure of volatility in the stock market. More specifically, the VIX measures volatility by using weighted prices of SPX index options with near-term expiration dates. When the VIX volatility index was created by the Chicago Board Options Exchange (CBOE) in 1993, it was calculated using at-the-money (ATM) options. In 2003, the calculation was modified to include a much wider range of ATM and out-of-the-money (OTM) strikes with a non-zero bid. The only SPX options that are considered by the volatility index calculation are those whose expiry period lies within more than 23 days and less than 37 days. The above image shows the highest VIX ever recorded at the close of a trading day. It occurred near the start of the COVID-19 pandemic shutdown. Recently, @SquishTrade discovered that the ratio between the MOVE bond volatility index and the VIX volatility index has been rising along a trend line (as shown below). Indeed, since 2021, the MOVE/VIX ratio has been exploding higher and is now approaching the highest level ever. @SquishTrade identified that the daily chart of the MOVE/VIX ratio has shown a moderately strong positive correlation to moves in the S&P 500, this correlation appears to be statistically significant. Citing the above chart, @SquishTrade further explains that: The peaks in MOVE/VIX seem to correlate with peaks in SPX, especially since late 2021 (exceptions in yellow circles). This makes sense. When a rise in MOVE occurs, but VIX stays low, this raises the ratio. Of course, when VIX stays low, it's almost always because SPX price has risen or remains supported. Overall, higher MOVE and lower VIX suggest underlying problems in broader bond markets / financial system / economy AND that this is not being reflected in implied volatility (IV) for SPX. In other words, for a variety of reasons, some of which may have to do with volatility players, equity volatility shows that equities don't care yet. When the VIX rises, the ratio falls. The interesting thing is that the peaks in MOVE/VIX correspond with the peaks in the SPX. The other interesting thing is the general trend up in MOVE/VIX and the corresponding trend down in SPX since late 2021. So when MOVE/VIX peaks, it is as if rates markets are flashing red, and SPX is rallying like all is well. That process continues until a top in both SPX and MOVE/VIX occurs, at which time SPX gets the memo, VIX rises, and the MOVE/VIX and SPX fall together. My response to @SquishTrade's above analysis is that: It is my belief that the explosive move higher in the MOVE/VIX ratio relates to the capital dislocation hypothesis, which I explain in further detail in my TradingView post below: In short, the capital dislocation hypothesis is that there is far too much capital in the stock market (SPX) for bond yields to be as high as they are (and while GDP growth is also as low as it currently is). Similarly, S&P 500 volatility (VIX) is far too low for bond volatility (MOVE) to be as high as it is, as @SquishTrade alludes above. Exeter's inverted pyramid (shown below) ranks financial assets according to safety, with the safest assets at the bottom of the inverted pyramid. Whenever an asset lower down on the inverted pyramid becomes volatile, riskier assets above it tend to experience some greater degree of volatility. This often occurs on a lagging basis since macroeconomic processes are not instantaneous. Therefore, we can extrapolate that the extreme volatility of U.S. Treasury bonds will likely precede extreme volatility in riskier asset classes, including stocks. Consequently, the exploding MOVE/VIX ratio is likely a warning that the VIX may move much higher soon. Chart analysis of the VIX, as shown below, potentially supports this conclusion. Bond volatility, as measured by the MOVE index, has likely increased due to the market's extreme uncertainty about the future of interest rates and monetary policy. This extreme uncertainty underpins the stagflation paradox: persistently high inflation pulls the central bank toward monetary tightening (higher bond yields) while liquidity issues and slowing economic growth pull the central bank toward monetary easing (lower bond yields), thus resulting in bond volatility. The explosion of bond volatility is likely a sign of impending stagflation, which may be severe. For more of my stagflation analysis, you can read the below post: Certain futures markets, such as the Eurodollar futures market, which typically guides the Federal Reserve's monetary policy, have been experiencing historically high volatility, as shown below. The above futures chart suggests that the uncertainty about future interest rates stems directly from ambivalent market participants. Since the Federal Reserve generally follows the market, if there is extreme uncertainty and ambivalence about the future of interest rates among market participants then the result will likely be a period of whipsawing monetary policy (whereby the Fed hikes, cuts, hikes, and cuts interest rates in rapid succession). In the quarters and years to come, we will likely see extreme monetary policy whipsaw as the Federal Reserve grapples with the dueling high inflation and slowing economic growth crises that characterize stagflation. Be sure to follow @SquishTrade on TradingView, and let us know in the comments below if you would like us to collaborate on additional posts! If you're interested in collaborating with us, also let us know! Important Disclaimer Nothing in this post should be considered financial advice. Trading and investing always involve risks and one should carefully review all such risks before making a trade or investment decision. Do not buy or sell any security based on anything in this post. Please consult with a financial advisor before making any financial decisions. This post is for educational purposes only.
TVC:MOVE
by SpyMasterTrades
180
Debunking Kerrisdale Capital's Bearish Take on C3.aiI'm long on C3 - so I'm as biased as Kerrisdale here, but apparently, that doesn't keep people from taking their word for granted, either. I have a degree in Finance, worked at a big-four accounting firm, in the financial industry (upper management), and am now a business owner (that was too lazy to create a new account for posting this - that's why you'll find me posting all kinds of UE5 stuff, otherwise. My dirty hobby...) But I'm a hopelessly logical investor, meaning I couldn't figure out why Kerrisdale's letter to Deloitte yesterday moved the markets at all. So I needed to understand the whole situation better and digged deeper. I went through C3's financials and Kerrisdale's report and looked at their letter to the Auditor, and here are my two cents on their March 6th report and their letter to Deloitte. Apologies for the lengthy post, but it's a complex topic. It is worth questioning whether Kerrisdale's attempt to undermine C3 serves to manipulate market perceptions, particularly when considering the firm's history of short-selling and ongoing legal scrutiny. Let's start by shortly going over Kerrisdale's report from March 6th. Kerrisdale's report conveniently overlooks C3's unique value proposition and casts doubt on the company's competitive advantage. However, this dismissal seems disingenuous, given the distinct position C3 occupies in the AI software market. Contrary to the report's implications, C3's industry-specific AI solutions set it apart from the likes of IBM, Google, and Amazon. The company's focus on sectors such as energy, manufacturing, and financial services demonstrates its commitment to providing tailored solutions that address the unique challenges faced by these industries. The report also paints a bleak picture of C3's growth rates, suggesting that they are unsustainable. However, the data and industry trends tell a different story. AI adoption is in its early stages across a variety of industries, with tremendous potential for growth. The ongoing digitization of industries and the increasing demand for AI-driven solutions are good for C3's prospects. C3's ability to secure long-term contracts with major clients demonstrates the trust and satisfaction customers have in its products and services. This contradicts Kerrisdale's pessimistic outlook and raises suspicions about the firm's motives. They basically take one of C3's strengths (their ability to build long-term partnerships and client relations) and give it a negative spin. Kerrisdale's report attempts to pigeonhole C3 as a company reliant on the energy sector, potentially to create uncertainty and fear in the market. But this claim conveniently omits the company's broader diversification strategy. C3 has made significant strides in expanding into healthcare, manufacturing, and financial services, proving its ability to penetrate new markets and adapt to different industry needs. This diversification not only mitigates the risks associated with dependence on a single sector but also showcases C3's resilience and growth potential. The report also casts doubt on C3's future competitiveness by highlighting declining R&D spending. This interpretation, however, seems deliberately misleading when considering the broader context of the company's strategy and expertise. Streamlining R&D spending could be a strategic move by C3 to optimize resources and concentrate on the most promising projects. It is important to recognize that R&D spending is not always directly proportional to innovation or product development success. Moreover, C3's existing technological expertise and intellectual property provide a strong foundation for future growth. The report's attempt to misrepresent the company's R&D spending is... questionable. All in all, I'd say that C3's unique competitive advantage, growth potential, diversification strategy, and technological expertise paint a more optimistic outlook for the company's future prospects than Kerrisdale's report suggests. As AI continues to transform industries, C3's targeted offerings are well-positioned to capitalize on these opportunities, in my opinion. Of note to me is their ESG product - ESG will be a really, really big thing in the near future, especially here in the EU, in the near future. My opinion: investors and market participants should be mindful of the potential for market manipulation and misinformation, especially when considering reports from firms with questionable motives and legal standing. Let's finally move on to what caused yesterday's market movements. Kerrisdale's letter to the auditor, Deloitte. Keep in mind that this is just my take on it. But I think that my opinion is not entirely unqualified. TL;DR: Deloitte is the biggest accounting firm in the US, and it basically comes down to this: you either trust a short-seller publishing an open letter going hand-in-hand with a well-timed media campaign at a conspicuously opportune moment (C3 was about to really take off and obliterate their short position), or you trust that C3's financials, on which Deloitte signed off on, are correct. Your call. Slightly longer version: Kerrisdale Capital sent a letter to C3's auditor, raising concerns about the company's accounting and disclosure practices. The letter questions the company's revenue recognition methods, particularly for long-term contracts, and the impact on financial results. C3 has consistently provided transparent financial results, as evidenced by their fiscal Q1, Q2, and Q3 2023 reports. The company has experienced steady revenue growth and diversified its client base, showcasing a strong business model. C3's financial reports adhere to US Generally Accepted Accounting Principles (US GAAP), ensuring that revenue recognition and other financial practices are in line with industry standards. As per US GAAP guidelines, companies recognize revenue when the performance obligations under a contract are satisfied. C3's long-term contracts are structured to deliver AI software solutions and services over time, and the company recognizes revenue accordingly. It is essential to emphasize that C3's revenue recognition practices are compliant with the accounting standards and have been consistently applied across all financial reporting periods. In their own March 6th report (page 13), Kerrisdale calls out C3 for their long product cycle (6-18 months). Considering C3 is a rapidly growing company that closed bookings of about $650 million in Q3 FY 23, it's hardly surprising that "the company’s accounts receivable have ballooned", according to their letter to the auditor. With C3.ai's strong bookings performance in Q3, it is reasonable to expect a corresponding increase in unbilled receivables. This growth in receivables is a natural consequence of the company's expanding business and long-term contracts, reflecting the ongoing demand for its AI solutions. On page 13 of their report, Kerrisdale acknowledges that C3 has a long product cycle, ranging from 6 to 18 months. This admission, coupled with the growth in unbilled receivables, suggests that Kerrisdale's claims are inconsistent and contradictory. The long product cycle means that C3's revenue recognition is spread across multiple reporting periods, which naturally leads to a growth in unbilled receivables. This growth aligns with US GAAP guidelines. The contradictory nature of Kerrisdale's claims raises questions about their understanding of US GAAP or their willingness to misrepresent financial information intentionally. It is essential to consider the possibility of malicious intent, particularly in light of the firm's ongoing legal scrutiny and history of short-selling. The US Department of Justice and the SEC are currently investigating dozens of firms, including Kerrisdale Capital, for potential market manipulation through short-selling schemes. I found relatively little information on this, but little or unsubstantiated information apparently suffices. I quoted one of several articles earlier in this post. Given this backdrop, Kerrisdale's claims regarding C3's accounting and disclosure practices might be an attempt to manipulate market sentiment and cast doubt on the company's financial integrity. In light of the transparent financial results provided by C3 and the company's adherence to US GAAP guidelines, Kerrisdale's claims regarding accounting and disclosure issues appear to be unfounded. In conclusion, C3.ai's growth in unbilled receivables is a plausible outcome of its strong Q3 bookings performance and long product cycle. Kerrisdale's contradictory claims and potential misunderstanding or manipulation of US GAAP guidelines warrant skepticism and caution, IMO. I expect Deloitte to back up C3 in their FY 23 audit opinion, voiding Kerrisdale's claims. I think the whole thing is a well-executed publicity stunt by a short-seller that was facing serious trouble from the stock being about to take off. I would have done it the same way. Even including the SEC, which is/was investigating Kerrisdale, in their letter is a bold move, but implying regulatory action/fraud, is exactly what Kerrisdale needed to "cover their ass" here and get the much-needed market reaction. Hats off to them, textbook execution. So that's it. Thanks for reading, if you even made it this far. Make of it what you want, as I'm as biased as Kerrisdale on this.
NYSE:AILong
by Donfelice
29
MicroStrategy - Bitcoin Holdings Chart & Purchase HistoryPrices and volumes of Bitcoin purchases at MicroStrategy Over 9k BTC at an average price of 58000. 19452 Btc at $52765. Even these whales are buying at the tops and sitting in the minuses for years The largest holder of Bitcoin on the planet is not Microstrategy , but the Chinese government, cryptoanalysts found (twitter.com/cryptoquant_com). In 2019, Chinese authorities confiscated 194 thousand #BTC , 833 thousand #ETH and other coins as a result of an investigation into PlusToken fraud. To this day, the confiscated crypto lies in the wallets of China's national treasury. In comparison, MicroStrategy has about 130,000 bitcoins . 27 march MicroStrategy repaid its $205M Silvergate loan at a 22% discount . As of 3/23/23, $MSTR acquired an additional ~6,455 bitcoins for ~$150M at an average of ~$23,238 per #bitcoin & held ~138,955 BTC acquired for ~$4.14B at an average of ~$29,817 per bitcoin . Best regards EXCAVO
BNC:BLX
by EXCAVO
44
The Golden Elephant-- Prologue -- Crises don't come when everybody expects them to. I have said this over and over again, for the last year I've been in this platform. I don't take it back. Finding out the kind of crisis that will come, the time and the severity, is hard. Trading, investing, living, is hard... Some have called me schizophrenic. This is funny. When you say what they want to hear, you are a genius. When science presents something we aren't used to, we take it as impossible. In my last few ideas, I received the "kindest" comments of all. How is it possible... when a chart shows weakness on equities and strength on commodities, it is loved. How is it possible... when a chart shows weakness on gold and strength on dollar, it is hated. In my bio I warned you. You will have to deal with my presence for much, much longer. So here I am again. In front of your face. -- Analysis -- Price discounts everything. The magic of the fractal nature of the stock market satisfies me every time. Chart patterns like flags, wedges, channels, triangles, rectangles, rounded tops, appear everywhere. Some of them have greater strength than others. But each one of them has it's meaning and importance. To get the elephant out of the room, let's look at the historical Gold chart. Do note that this chart measures: How much one ounce of Gold is worth in dollars? In a sense, how precious is a piece of colorful paper compared to a piece of yellow metal? After decades of QE, Gold has trapped itself inside a MASSIVE wedge, that engulfs it's entire lifespan (inside stock market). What is the outcome of such a trap? Usually down. Fractals at their best!!! If one believes in the Dollar Milkshake, they must not believe that Gold/USD will explode. And with Bull-Flagging dynamics in the scarcity of Dollar, what will the outcome be? -- Thought Experiment -- IF a food crisis comes, and you have invested in gold, what would you do? - Find a food market that accepts gold, and purchase food with gold. - Find a gold market and sell gold for dollars, and purchase food everywhere with dollars. Even if you buy stuff with gold coins, the receiver of the coin will go out and exchange it for dollars to pay out their business responsibilities. In both scenarios, gold is taken out of the picture, exchanged for dollars. Either we like it or not, by default we give more value to money because we use it as money. We don't use gold as money. -- Conclusion -- There are two ways price increases. Scarcity and demand. Gold is scarce but who demands it and for what? Dollar is plentiful and everyone uses it. And now, it gets less and less plentiful. Tread lightly, for this is hallowed ground. -Father Grigori -- Extra Charts -- Commodities like oil could very well overperform equities. I don't advice for or against any investment. I am not an investor. Trade at your own risk. If one believes in the Dollar Milkshake, then they should invest either in dollars, or in dollar-denominated investments. Question is: What could these investments be, and how will they perform? For more information, I have linked below my two hated ideas.
TVC:DXY
by akikostas
95
A Crude Awakening!The surprise production cut announcement from OPEC+ on Sunday caught us off guard! With oil prices surging close to 7%, the question arises: will this trend persist? To put the production cut into perspective, the unexpected 1.16 million barrels per day reduction is a continuation of the cuts announced last October. In total, these cuts will represent roughly 3.7% of global demand. Since it has been some time since we covered oil, let's revisit some of the factors we see affecting oil now. Strategic Petroleum Reserve First, the US Strategic Petroleum Reserve (SPR) is currently at its lowest level since 1983. The remarkable depletion of the reserve to combat energy inflation finally ended in December. How has crude oil performed since then? It has been trading relatively flat, with the recent news pushing crude back to its December peak levels. We view this as a potential positive for crude oil, as the current low SPR levels indicate that supplies cannot be easily smoothed out by artificial market forces to suppress oil prices. Furthermore, the SPR will eventually require a refill at some point, adding buying pressure. Dollar weakness As crude oil is quoted in USD, the dollar's performance greatly influences oil prices. The chart above depicts the dollar (inverted) against crude oil. Over the past 20 years, periods of dollar weakening have been associated with higher oil prices. With the recent dollar decline, we have yet to see a significant response from crude. COT Positioning Another interesting note about oil is the reduction of non-commercial long positions over the past year as oil rallied from the depths of negative prices in 2020. As long positions close, net positioning (blue) has returned to 2016 lows. The current positioning landscape presents opportunities for a renewed surge in Crude Oil if market participants re-establish their longs. Term Structure The term structure of Crude Oil remains significantly in backwardation, indicating possible demand pressures, as measured by the Dec 2023 – Dec 2024 spread as well as the Jun 2023 – Jun 2024 spreads. The news on OPEC production cut resulted in a spike in the steepness of the term structure, further emphasizing the presence of price pressures. Political Gamesmanship Last but not least, as global powerhouses China, Russia, and Saudi Arabia jockey for positions on the world stage, it's undeniable that oil plays a pivotal role in their strategic arsenal. By leveraging their influence over this vital commodity, these nations may attempt to exert pressure on the US, seeking to tip the geopolitical balance in their favor and assert their dominance in the energy market. Looking at the charts, we see crude oil struggling to break lower after completing a descending triangle. The recent gap up has now positioned Crude Oil just above the 200-day moving average and descending triangle. Combined, the stage seems set for oil’s next leg higher as the low SPR levels, dollar weakness, term structure & net positioning act as potential tailwinds to propel Crude Oil higher. We set our stops at the previous support level of 73.15 and take-profit levels at 92. Each Crude Oil Future contract is equal to 1000 barrels of crude oil. Each 0.01 point increment in Crude Oil Futures is equal to 10 USD. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com www.reuters.com
NYMEX:CL1!Long
by inspirante
16
Occidental Petroleum Corp.: Bullish Bias. ContinuationTo be successful on Wall Street, it is important to be flexible and be able to recognize changing market winds - the patterns that tell investors when to get in and out of the market. Sometimes a breeze is a warm and inviting wind: assets rise in value, and it seems that everyone is making money. Other times, it turns into a violent storm, leaving in its wake financial destruction, memories of the past, and hope that better times are yet to come. Occidental Petroleum Corporation (often abbreviated as Oxy in reference to the symbol and logo) is an American company engaged in hydrocarbon exploration in the United States and the Middle East, as well as petrochemical production in the United States, Canada and Chile. The oil company, among other Value Investing Assets, has become one of the main beneficiaries of the weakening and reversal of WFH ("Working From Home") disinflationary trends that quickly shook the entire financial world against the backdrop of the Covid-19 pandemic in Q1 2020. But faded also just as quickly, while since the first quarter of 2021, in two years, many growth assets have been undermined, rocked by scandals, or completely destroyed. It was revealed in March that Warren Buffett's Berkshire Hathaway added more shares to an already large bet on Occidental Petroleum, according to an SEC Form 4 report released on March 7, 2023. The Buffett conglomerate bought nearly 5.8 million shares of the oil company over multiple trading sessions in March, at prices ranging from $59.85 to $61.90, according to the documents. Berkshire now owns 200.2 million shares of Occidental, totaling 22.2% of the oil company's shares, up from 21.4% previously. Occidental shares are currently among the top 10 Berkshire holdings. The energy company outperformed the S&P 500 index last year, more than doubling in price. In March, Occidental CEO Vicki Hollub said in an interview with CNBC that she met with the 92-year-old investor, noting that they talked about the oil and gas industry and related technologies. Last August, Berkshire received regulatory approval to buy up to 50% of Occidental, sparking speculation that Berkshire could eventually buy out the entire Occidental company. Berkshire also owns $10 billion of preferred shares in Occidental and has warrants to buy another 83.9 million shares of common stock for $5 billion, or $59.62 each. The warrants were obtained as part of the company's 2019 deal that helped finance the purchase of Anadarko Occidental. While many investors even now continue to believe in the crypto-snow that melted without a trace the winter before last, the technical picture indicates the possibility of Growth comtinuation in value investment assets, incl. Occidental Petroleum - after the completion of the 0.618x Fibonacci retrace to the Growth that began later to Russian President "Special Military Operation" announcement in Q1'22. Also, the support of weekly SMA (200) in CL1! - Crude Oil Futures adds bullish bias to market participants.
NYSE:OXY
by Pandorra
11
The U.S. government is unloading 1000s of BTCs into your handsIn the past five months, we showed multiple odd developments on the 1-minute charts, which included sharp upticks in the price of Bitcoin, often leading to new highs which lasted only a few seconds during the weekend or shortly after the close in the futures market (in generally illiquid markets). In addition to that, we noted that many of these price movements looked artificial and unhealthy to sustain the rally in the long term. As a result of that, combined with tight monetary policies, worsening economic conditions, and other factors that are typically bearish for risk assets like Bitcoin, we concluded that the market has not bottomed out. Accordingly, we maintained our bearish outlook beyond the short term with the notion that Bitcoin would return to its 2022 lows over time. During the same period, we noticed that sentiment among retail investors turned extremely bullish and arguably even more so than on previous rebounds. We warned about this deceitful nature of bear market rallies several times in the past year, always outlining those same developments - people getting overly bullish while dismissing the reality and surrendering to so-called “FOMO” (while telling everyone else that they are missing out on a “lifetime opportunity” if they are not invested). This theme became central to the cryptocurrency market and even stronger with the recent banking fiasco in the U.S. and Europe, prompting many people to revolt against “irresponsible” bankers and governments by buying Bitcoin. However, before the weekend (and two weeks after our warnings about retail investors ending up holding the bag), big news came out regarding the U.S. government and its sale of Bitcoins seized thanks to the Silk Road bust (a stash of about 50 000 Bitcoins). The U.S. administration reportedly sold approximately 9 861 Bitcoins valued at about $216 million in March 2023. Furthermore, the government seeks to unload the remaining 41 139 Bitcoins during the course of the current year (in multiple batches). We expect this to be conducted with the maximum benefit to the government. Moreover, if we were to take any lesson from commodity traders within the U.S. government in the past year, we would point out their successful game in the oil market, where they happened to sell oil at highs last year, only to seek a refill of Strategic Petroleum Reserves near the lower end of $70 in 2023. That leads us to speculate that the U.S. government does not foresee much higher prices (from the current level) at which it would otherwise sell its stash. Overall, we think the whole situation is growing increasingly ironic because of the fact that so many people seek to buy Bitcoin in order to get away from the system, and instead, the government will dump its holdings into their hands, leaving them with less than what they paid for at the end. Illustration 1.01 Illustration 1.01 shows the daily chart of BTCUSD. The red and green arrows indicate particular technical developments which raise questions about the rally's sustainability (the rising price accompanied by declining volume and divergence between the price and RSI). The yellow arrow indicates an area of interest, which we will pay close attention to in the following days. Technical analysis Daily time frame = Neutral Weekly time frame = Bullish (weak trend) Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
BITSTAMP:BTCUSD
by Tradersweekly
75
AAPL: Navigating the Push to $166-$167 and its Impact on SPXOn March 28, merely three days ago, I highlighted the inverted head and shoulders pattern observed in AAPL's stock price. In this particular case, the pattern indicated a bullish continuation. I discussed the support and resistance flip that transpired at the $156 mark. At that time, AAPL was trading just below $156.50, and I projected a bounce to $166, provided that the stock found support at $156. Currently, with AAPL at $164, I maintain my expectation of a push towards the $166-$167 range in the upcoming sessions. AAPL's performance has contributed significantly to the upward movement of the SPX in recent days. While not the sole reason, AAPL's strong showing is indeed a critical factor, given its heavy weighting in the index. Other stocks, such as TSLA, have also performed well, further bolstering the SPX. This week, the SPX has experienced multiple gap-ups, and as AAPL approaches the $166-$167 price target, I recommend using this opportunity to reduce risk exposure. It is plausible that we may see a short-term pullback from these levels, even for those with a bullish outlook. EDUCATION - Head and Shoulders - Continuation Technical analysis is a vital tool for traders looking to identify trends and make informed decisions in the financial markets. Among the many chart patterns that traders rely on, the head and shoulders pattern stands out as a widely-recognized and powerful indicator. However, the lesser-known inverted head and shoulders pattern can also serve as a continuation pattern in an uptrend rather than a reversal formation. I'd like to dive into this a little bit in case there are readers that did not understand how I came to the conclusion I came to with AAPL. Understanding the Inverted Head and Shoulders Pattern The traditional head and shoulders pattern is characterized by three consecutive peaks resembling a head and two shoulders. Conversely, the inverted head and shoulders pattern consists of three troughs, with the middle trough being the deepest and the other two at roughly the same level. While the conventional head and shoulders pattern typically signifies a bearish reversal, the inverted version can signal either a bullish reversal or a continuation of an existing uptrend. Identifying the Inverted Head and Shoulders Continuation Pattern To effectively spot an inverted head and shoulders pattern in an uptrend, traders should look for the following characteristics: 1. Preceding Uptrend: The pattern must form within an existing uptrend to qualify as a continuation pattern. 2. Distinct Troughs: The pattern should have three clear troughs, with the middle one (head) being the lowest and the other two (shoulders) being roughly equal in depth. 3. Neckline: Connecting the highs of the two shoulders forms the neckline, a resistance level that the price must break through to confirm the pattern. 4. Volume: Ideally, volume should decrease as the pattern forms and increase upon breaking the neckline, signaling the continuation of the uptrend. Trading the Inverted Head and Shoulders Continuation Pattern When utilizing the inverted head and shoulders continuation pattern in trading, consider the following steps: 1. Confirmation: Wait for the price to break above the neckline with an increase in volume. This confirms the pattern and suggests the continuation of the uptrend. 2. Entry: Enter a long position when the price breaks above the neckline. 3. Stop-Loss: Place a stop-loss order below the right shoulder to minimize potential losses. 4. Profit Target: Calculate the profit target by measuring the distance between the neckline and the head. Add this value to the neckline's breakout point to determine the target price.
NASDAQ:AAPLLong
by bitdoctor
28
😀 SVB Crisis Is Over?! What S&P500 and VIX Are Talking AboutThe stock market just flashed the first sign that investors think the Silicon Valley Bank crisis is over. 👉 The CBOE Volatility Index VIX closed below the 20 level on Wednesday, for the first time since SVB - The Silicon Valley Bank collapsed. That is basically could be a constructive sign and is certainly counter to the general gloom of investors post SVB-failure. 👉 The VIX term structure is also back into normal contango. This normalization of spread is often a sign investors see the worst of the crisis behind. The lower chart illustrates 3-months futures spread between VXN2023 a July, 2023 VIX Futures contract and the nearest - VXJ2023 - April, 2023 VIX Futures contract, that is three months ahead of that, marking that the reddish days are over. 👉 S&P500 Technical picture indicates the breakdown of reversed Head and Shoulders Chart Pattern structure is happening. SPX is above weekly SMA (200) as it got the support early on Q4'22. 52-weeks simple moving average is trying to hold on above, for the 12th year in a row. 👉 If investors expect an imminent financial crisis but one doesn't materialize, the change in sentiment will help drive stocks higher as investors unwind bearish positions and get more bullish . All-in, with stocks higher over the past six months since the mid-October low, so further upside could be ahead. If stocks do not make a new low post this crisis, the bears could capitulate.
SP:SPX
by Pandorra
15
S&P 500 Futures: Fibonacci Levels and Upcoming TrendsS&P 500 futures are currently experiencing a pause due to Fibonacci extension targets, with a possible further upside move towards the 4100 level. A short-term cool down period and pullback is expected before potentially heading higher into mid-week next week. Keep an eye on the VIX for potential moves. I noticed an interesting battle around Fibonacci levels at the close on Thursday. There are a couple of pivotal points to consider. The first set of pivots are 3937 > 4033 > 3981, which create Fibonacci extension targets of 4079 and 4102. This likely explains the current pause in the market. Another layer of important pivots are 3839 > 4073 > 3937, which place a 61.8% Fibonacci extension target at 4084. This further reinforces the reason for the price action pause today. Based on this analysis, I expect that we're going to see a further upside move tomorrow, as there is still a decent amount of momentum behind this market movement. It seems likely that the 4100 level will be tapped. Numerous indicators are overbought on most timeframes, including higher timeframes such as the 4-hour and daily charts. The key takeaway is that a portion of the current correction appears to be almost complete, suggesting a cool down period as I mentioned yesterday. I anticipate a pullback to somewhere near 4000-4025 before heading higher into mid-week next week. As I've been discussing April 6th for a while now, this should serve as reinforcement. My projected path is up tomorrow, down on Monday/Tuesday, up on Wednesday/Thursday, and then I will determine what happens next. I'm also keeping an eye on the VIX. There is a possibility that it is bottoming out around 19 for now, with a potential move up to 25 in the coming weeks. However, it's important not to make hasty trading decisions based on this observation alone.
CME_MINI:ES1!
by bitdoctor
18
Gold is trades inside triangle and can rise to resistance lineHello traders, I want share with you my opinion about Gold. Looking at the graph, we can see how Gold re-tested the buyer zone 1915-1905, from which formed an upward impulse and broke through the resistance level 1980. Over time, the price has created a symmetrical triangle, and it now trades inside. We see how, after a small correction, the price re-tested the support line and continued to move upwards. Currently, the price is trading above the support line and can continue to rise and break through the resistance level. I think that after a possible breakdown of the resistance level, Gold can continue to grow and reach the resistance of the triangle. Based on this data, I set 2 goals at resistance level 1980 and at level 1995 which coincide with resistance line. Please share this idea with your friends and click Boost 🚀
FOREXCOM:XAUUSDLong
by LegionQ8
36