Lumber up Almost 1,000% Since Great RecessionLumber just hit $1,700 after this morning's 3.7 sigma payrolls miss. More money printing equals more inflation; a child understands this concept. But, central banks say they're still trying to get inflation to 2%. I mean, I have no words, folks...
US10Y
DXY: Snap, Crackle PopDXY has definitely snapped to the downside right to the brink of the pattern. Pattern could fail and we'll see it crackle lower or Pop to the upside. 90.1 is the level I'm watching. IF it falls below its over and I'd expect DXY rest of the year in the 80's with SPY jumping to 454. IF DXY pops I expect a broad market correction.
What happens to CAPM when there is no risk in Market premium, assets are prices on Beta, or momentum only. Issue with that is that there is no discount and growth is capped by inflation alone. However, no one can beat inflation in the end as it will always out pace asset prices in a "riskless" market. Let me hear your thoughts. Going to be an interesting summer no?
Payrolls Disaster Proves the Ponzi Isn't Working, Fed StuckWe had a very interesting day of PA on Thursday after jobless claims rose by 498k vs the 530k expected. Continuing claims sit at 3.69MM, rising by approx. 400k vs last week's print. According to ZeroHedge, we still have over 16MM Americans on some form of income benefits, so of course, take any jobless claims print with a pinch of salt. Remember, the government is essentially subsidizing labour costs for businesses, while stimulating demand, and when this eventually ends, all of those zombie companies that are contributing to this fake rebound, will perish.
Looking at the day ahead, we just saw the much anticipated April Payrolls report which was whispered to be in the range of a whopping 2MM. However, the report was a complete shock to Wall Street with a measly 266k jobs being added to Nonfarm Payrolls, and 218k added to Nonfarm Private Payrolls.
The Unemployment rate rose to 6.1% from 5.8%, showing a deterioration in the labour market in April. The average work week rose from to 35 hours, from 34.9. Someone call the Fed, we're gonna need more free money!
US Futures rose broadly overnight after a rollercoaster ride yesterday saw every sell program be met with a relentless short squeeze. According to Goldman Sachs, Hedge Funds have been shorting the Nasdaq for the past couple weeks, and so, what we saw yesterday, is potentially profit taking flows from these funds. However, after the ugly payrolls miss moments ago, global markets are experiencing some volatility, with the Dow down 0.06% to 34,422, the S&P up 0.37% to 4,209.62, the Nasdaq up 1.4% to 13,780.38, and the Russell down 0.11% to 2,236.35. In Europe, the Dax is up by 0.58% to 15,345.50, the FTSE 100 is up 0.20% to 7,085, and the SMI is down 0.15% to 11,115. In Asia, The Nikkei 225 is down 0.06% to 29,328, the Hang Seng is up 0.66% to 28,596, the CSI 300 is down by 1.24% to 4,992.60, and the Nifty 50 is up 1% to 14,930.
The rotation into growth is now back, with the Nasdaq being heavily bid, while small caps puke. Clearly the talk of tapering has simmered notably after the obvious weakness in the labour market. It's another win for the speculators, as they assume the Fed now has no choice but to continue to support their risk appetite.
The Vix is sitting at 18.1, showing resilience after yesterday's short squeeze into the close. We're still channeling up, and are sitting just below daily resistance at 18.80. We'll be looking for a breakout above 21, for confirmation of a larger move ahead, and are positioned for bearish PA into the close, and next week. The US10Y yield is puking, and is back to 1.51% after losing the 50DMA earlier on in the week. We have downside to 1.35% where the 100DMA is sitting. Needless to say, the knee jerk reaction to flock into bonds is warranted after the ugly payrolls report, and interestingly the dollar is puking after the report to 90.45, which could lead us to believe that the Fed's debasement scheme has spooked dollar bulls. Should be a doozy of an open, so stay tuned.
* I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
Gold Futures ready to popKeeping an eye on the relationship between the Gold Futures and the US 10 Year Yields.
Currently, the yields are coming off their highs, but the Gold hasn't reacted yet. If we get a breakdown in the US dollar, that will be the catalyst I am sure and currently, the US dollar index is finding resistance from old support.
Jobs data was good today, but there is a chance that NFP doesn't meet expectations as there are some lofty numbers being pushed around.
Yellen Walks Back Inflation Comments, Futures Rally"The Fed is boxed into a corner. Powell knows it. Yellen knows it. But give them props – they are putting on quite a show trying to assure us everything is fine to keep the markets calm. It reminds me a little bit of the orchestra playing as the Titanic sinks." - Michael Maharrey, SchiffGold.com.
US & European Futures are broadly up on Wednesday as of 9AM, with Asia showing signs of light weakness. The Dow is up 0.32% to 34,126.50, with the S&P up 0.47% to 4,177.38, the Nasdaq up 0.78%, and the Russell up 0.60% to 2,258. In Europe, the Dax is up 1.10% to 15,118, the CAC 40 up 0.37% to 6,286, and the FTSE up 0.74% to 6,977. In Asia, the Nikkei 225 is down 0.33%, the Hang Seng is down 0.15%, the CSI 300 is down 0.82% to 5,109.80, and the Nifty 50 is essentially flat at 14,712.50.
We saw relentless selling (particularly in growth) yesterday morning, but drifted higher all afternoon on buy-backs, and perpetual sell-side euphoria. Janet Yellen's remarks about rising rates (eventually) to cool an overheating economy, was the obvious catalyst for the sell off. However, later on in the day, she felt the need to walk back her simple, honest, and basic monetary policy comments. Essentially she said inflation won't be a big problem (repeating Powells mantra), and said she's not suggesting or forecasting rate hikes. Wow. Is the game is to ignore inflation until there's civil unrest about prices? These policy makers are straight up criminals imo.
According to ZeroHedge, the Treasury was set to borrow $95 Billion in Q2, but that figure is now a whopping $463 Billion. In Q3, the estimated borrowing is $821 Billion. In other words, we're looking at exponential printing of GDP to keep up the appearance of a functioning economy. Let's see what they project for Q4. Maybe $1.2 Trillion? And, what about next year? I swear, it feels like we have children with no experience running the economy into the ground. Welcome to MMT hell, folks.
Commodities continue to rise as inflation take hold, with Lumber up 4.5% to new high's at 1,481.50. Oil continues it's slow march higher with WTI up 1.31% to 66.47, and Brent up 1.23% to 69.73.
Vix is down around 5% on the day and sitting at 18.53, just below our intraday support level of 18.80. We tested the 21 level resistance yesterday and saw a massive rejection as the afternoon melt up ensued. The Dollar (DXY) is essentially flat and trading at 91.28, near yesterday's highs. Let's see how the day unfolds.
* I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
US10Y The critical trend-line.A lot of talk is being made in 2021 about the bond yields and personally I have been following the US10Y very closely due to its effect on Gold and stocks.
At the moment I have singled out the most important trend-line that should weigh heavily on the 10Y in the following weeks/ months. As you see it is the 2 month Higher Lows trend-line that started after the March 11 Low. Despite the Channel Down that has emerged since the March 30 top, this trend-line has supported the price on multiple occasions since April 15. If broken, I expect a prolonged downtrend until the end of the year. Especially if the 1D MA50 (yellow trend-line on the chart) gets tested and rejected as a Resistance. Today we've had the strongest 4H candle closing below the 1D MA50 since last August and that should tell you something.
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Market update US10Y;TECHNICAL
FORECAST:POSSIBLE BULLUSH CONTINUATION
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Are bonds ready for a bounce?Bond have fallen a lot and quite fast. The sentiment is really stretched and most expect yields to rise more (bonds to fall lower). In my opinion there is quite a decent chance the bond bull market is over given that we had a massive blow off top in March 2020, but this doesn't mean that I don't see a potential bounce here or even bottom. Bonds hit key support, swept the lows before the big move up and are no showing signs of life.
When I see so much debt, when I see slow growth and all the bad things going on around us... I don't think we'll get huge inflation any time soon. To me this is cyclical inflation after a supply shock rather than anything else. Many other yields are decreasing and spreads are the tightest they've been in years, so why would bonds go much lower? The Fed has failed to meet its inflation target for years, but they are going to make it now? We are also post the SLR cliff that could had been the 'sell the rumour buy the news event'
Bulls and Bears Oh My!Whoa. The back and "froth" is getting heated. We have definitely seen a great rally since Covid lows. Lots of people making money in the markets these days which is great, even though history has different things to say about that...Anyways!
We could be coming up on a correction. Maybe not a bear market, but a correction is what I'm seeing. How big? Who knows. It likely depends on how much home equity the retailers are willing to put up as margin to get long again once the hedgefunds start selling. However, maybe the hedgies are all long now and the bull rally is stronger than ever. And maybe we'll have another 10 years of bull markets. Seems unlikely to me given how we got here. But, stranger things have happened.
Currently, I'm reminded of 2012 when a lot of people were getting nervous about the amount of QE that never seemed to never stop rushing into the markets. And look what happened. It seemed to have worked, right? Is this time different? If so what about this rally is so different. Prices.
Prices are what really underpinned the financial crisis. Specifically, price of oil and price of homes. Risk was sure money, and safety was dumb money. The price of getting to work to pay down those "riskless" loans got to be to much of a burden on the barrower and defaults started happening. Now, there was lots of fraud going on with loans for fictitious homes etc etc. But oil prices fundamentally popped the housing market and the housing market spilled over into the capital markets through the sure money instruments that bet on housing always being strong. Personally the parallels are getting to be a bit much and 2012 is starting to feel less like 2021. Will QE save us? Are prices different and are there instruments out there being sold as sure things at break neck speed?
Personally im getting short. Not 100% short that's pretty insane or courageous haha idk. But, Since end of March i've started building a short position, and am currently 25% short. Now it isnt because I'm betting it all on an insane pop downward, but rather I see it as cheap af insurance if there is a pause on the bull market. And while things get more developed and if inflation isnt an issue time will tell. But the point remains. What is cheap is usually wrong till its not. What is expensive is great till it sucks. It can flip flop so easily. So I tend to buy insurance when its cheap, and go long when it looks like things cant get any worse, only so much house can burn. Glad I got insurance. Personally, what happened to sell high and buy low? lmao. When yolo's buy high and sell higher what's really going on huh? Investment bankers working for their money is what.
To the chart now. Finally, right? Right. I dont think we've seen the ATH under an RSI of 70. So am still happy with some of my long positions, but I'm looking to write calls and take profits when the price is right. At the moment SPY just hit my December PT of 420 so profits are in. I'm not actually looking for SPY to hit 321 before I get back in long, but then again maybe I am depending on what comes to light during the next correction. How's it go? Good things come to those who wait? Ha! Tell that to Crypto kitties and NTF's right!?! No. Easy come easy go. You cant escape the truth of you reap what you sow. Personally I'd be a lot happier with an SPY under 400 than over, especially given the price levels we are seeing across the board. Maybe if Inflation wasn't what it was and maybe if there were less zombie corps I'd get stoked to be long over SPY 400. Time will tell Lets take our lessons where we can find them and keep building our wealth. Best wishes to all the market participants out there!
Not advice. Not recommendation. Everything I post are simply my thoughts and opinions. Please make every effort to understand the risks associated with any security before investing or trading. Let me know what you all think. Ive been wrong before and will certainly be wrong again!
JG
Important Level For DXYHi all!
I think we are facing a pivot for the DXY that could bring significant changes to global markets.
IF the DXY doesn't Hold the 90 level and bounce higher, THEN I believe we are looking at new highs across the risk asset spectrum with the DXY going into tail spin and falling out of
this macro down trend channel, possibly to the low 80's even.
However, IF DXY does hold the 90 level and bounces with confidence, I believe it will be the sell signal and risk off signal across the risk asset spectrum. And of course, this could
send DXY well above the down trend channel its been in.
CPG's are planning on raising prices by an avg of 10% next few months so inflation is real regardless of what the market makers *cough cough* sorry I mean Fed chair persons think are going on in the economy. All my models had 10% inflation baked into them as an assumption back in Dec. '20, and subsequently they priced the SPY at 420. We keep getting close to it and seem to be floating there in a state of euphoria, no? Idk, but sounds like 420 to me haha. Hoping we have a correction to ease pressures on the system, but am worried about a crash tbh. I think risk is expensive and safety is worthless so buy insurance and go ham fam!
My ideas are strictly my opinions and are not advice or recommendations. Please make every effort to understand all risks associated with investing or trading any security before purchase or sale. Not Financial advice. Not financial recommendation. Just my personal opinions.
JG
Bull Flag Setting Up?Hi all!
Looks to me like there is a possible long trade here with the possibility as I see it in a bull flag set up. This fits my macro analysis bias related to various other assets. Nevertheless, it should be an interesting next few months.
Please note that this is not advice or a recommendation. Please do not invest or trade anything without proper understanding of the risks associated with a security.
NZD/ USD Kiwi/ Dollar &10Y Bond Yields I was stopped out on the last pattern i posted on this pair and now entered on another pattern. An alternate Bat pattern. In the white ellipses we have where the HSI Arrow printed in an area of extreme reading then PA came down out of reaction and both oscillators made it at least the 50 line respectively, and then did the HSI "Check back" that Scott Carney uses was done on the second white ellipsis. if Pa is able to close below the .7166X level we could be in a position to head down as the dollar strengthens. Its all Dependent on what the 10Y Yields hold in store. Currently waiting to see how the hour closes. i will ad pictures of the hour look and 10Y Yield synopsis too.
1H Time Frame looking for a close below the neck line for a nice ride down.
the daily 10Y Yield
For those not familiar with the 10Y Yield it is the true valuation of the US Dollar. The yield is inverse of the bond price as yields go up prices go down to entice investors to invest in the US Economy (Dollar) and as yields go down Prices go up to protect potential buyers from buying a low yield investment. But, where the money is made in the bond world is that when the yields go down the Bond yield is locked. so at the end of the 10 year period the US will pay the holder of the bond the yield printed on the bond regardless of what the current yield is doing. So, lets say Investor A bought the bond at the very low for lets say 100$/ a bond and he bought 100,000$ worth so that means the yield might be locked in at 2%. Lets say the investor A is strapped for cash, so he enters the bond market with his 2% yield bond it looks very enticing because the current rate is 1.5% so, Investor B approaches Investor A with saying "hey ill buy your bond for 101,000 dollars" Investor A realizes he made a profit of 1,000$ and needs the cash now so he agrees to sell it. Now, Investor B holds the 10Y Bond at 2% and if he decides to hold it to fruition then he too will make a 1,000$ profit on his investment. Now, this is why the bond rates are so important to the US dollar because it will let you know where the long term investors are looking at putting their money as good foundation for their portfolios. This is super simplified on how the bond market works and i am by no means a bond trader. So, if there are any bond traders that would like to clarify or correct me please do so i will greatly appreciate it.
the technical is that currently the yields have hit a .382 retracement, and in a very strong trend prices usually bounce off the .382 before moving further. so right now we are printing an indecision candle and so we could see more upward movement for the bonds. A lot of people are worried about the bond yields making it to 2.00% so fast and that it might cause inflation and they are partly right. Because the US is going to have all this excess cash flow in the market making the dollar weaker because its readily abundant in such a short time. A 2% yields has not been seen since 2019. So, we shall See
Driftwood for Breakfast AgainUS Futures continue to drift sideways in what is shaping up to be another mind numbing day of price action. The S&P literally hasn't moved more than a couple points since last Friday. European and Asian markets were broadly higher, and the Vix slid back to a 16 handle.
It's so frustrating watching the same meaningless price action day after day. But, both Biden, and Powell, are set to speak today on critical matters of the economy, and market, potentially shaking things up for a change. Biden will be revealing more information on his new $1.8 Trillion plan to support (print) GDP. Mean while, the Fed's Powell, will be expected to address bond purchase tapering as early as Q4 2021 (which could send markets into a tail spin), as well as sky high asset price inflation (housing prices are rising 4 times the Fed's inflation target), which is now bleeding into goods and services, punishing the working class, while being masked as healthy inflation, and an economic rebound. It's horse sh*t, folks.
The US Dollar rose slightly to a 91 handle revealing signs of weakness elsewhere. We look to commodities which are notably down across the board. Gold, Silver, Platinum, Lumber, Sugar, Soybean Oil, Corn, Wheat, and Oats, were the hardest hit, and down around 2-3% on average, with Lumber down a shopping 10%. BMO sees lumber crashing in the second half of the year, with an estimated correction to the tune of 61.8%, bringing the price to $415/mbf as we approach 2022.
Crude was up around 1% with WTI sitting at 63.59, and Brent at 66.98. We're seeing the price of gas rise to recent high's once again, as global supply chains struggle to catch up with demand, and OPEC (Saudi) relentlessly price fixes oil to keep their profits rolling in. The blatant cuts in global supply chains, and the neverending synthetic demand created by printing GDP across global markets, is doing little but distort the economy, and prices, while making the working class poorer. Fiat is on fire, and it's all the bottom 45% of people in the US have. It's criminal. And it's all going essentially unnoticed by the majority of households. We may be witnessing the greatest ponzi in history, straight up dwarfing the response to the 2008 Great Recession. Trade accordingly.
*I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
US10Y Yield Poised to ExplodeAfter a strong 7Y YST auction, the US10Y yield just broke out above the 21 day EMA. We're back at 1.615%, and poised to blow up as the week progresses. This recent buying frenzy in bonds may be exhausted, and yields could be poised for a solid spike higher (potentially on Powell remarks about future monetary policy tightening tomorrow). Fed QE bond purchases are still running at $120 Billion per month, so any hint of tapering could send markets into a tailspin. Especially as the Treasury will increase bond supply simultaneously. Don't even mention an increase in the IOER, or banks will close credit lines faster than you can blink...
Is UVXY About to Blow Up?UVXY is testing critical support as we speak. We're approaching oversold levels on the hourly time frame, and coming off oversold levels on the daily. The US Majors are overbought across the longer time frames, and sitting at their ATH's. Hmm. Double up, or triple up?
GME at Critical ResistanceThere's a possible trade here on GME. We're at critical resistance, and seeing an initial rejection. The daily RSI, as well as the MACD are looking bullish. We may see a breakout above the triangle, leading to another epic short squeeze near the ATH. Having said that, this would be a good time to trade extremely tight stops, as the broader market is potentially on the verge of a correction, and GME would take a hard hit toward the lower band of the triangle, if one were to materialize.
US10 YAND US30YBoth US 10 year and 30 year charts looks identical and in a downward spiral - great for PM sector
50DMA Support Held, Bounce in Bonds Over?The US10Y yield has seen persistent support at the 50DMA since August 2020. Let's see if the 21 day EMA converges with the 50 potentially reversing the recent rise in yields, or if we see a strong bounce off the 50DMA, and continue toward the 2% level, putting pressure on growth oriented equities.
