Quick summary of previous idea:
2900-3030 key resistance on the SPX, first rejection looked like it was the real top but there was another strong push higher before it was rejected even more strongly again.
USD had 2-3% downside before going higher, but didn't drop enough as support held.
USOIL target was 25$, but it has popped even higher.
Gold was trapped below 1740 at the yearly pivot and my thoughts where that it would stay below that level for some time.
My current views are (multiple charts at the bottom):
All bonds are probably gonna go higher. US bonds look the safest (yields going down). Negative rates are coming no matter what.
USD is gonna go higher across the board. Shorting EURUSD, GBPUSD + longing USDCNH, USDZAR are some great ways to play this long term. Europe is a shit show and if EURUSD closes below 1.07 it is game over. China will have to devalue as it has too much debt and will need to export stuff. South Africa's economy is severely damaged and the chart is above its previous ATHs and forming a massive pennant.
Commodities like Palladium & Copper will go down (Palladium coming out of a bubble and Copper is an industrial metal with an ugly chart). The USD squeeze and all the deflationary pressures are gonna push them much lower.
Commodities like Silver & Gold might go higher as rates go lower and there is a lot of uncertainty. Gold could fall on the next USD spike, but before that there is some upside. Silver looks a bit more risky as it is right below key resistance, but the chart looks pretty good. Problem with Silver (Gold to a lesser extend) is that there are too many speculators already position long & a big part of its demand is industrial. Both will have strong rallies eventually and they might actually come while everything else is going down... However in another liquidation even I think Gold and Silver won't escape reality and get dragged down with everything else.
Oil has the potential to go higher for some time as economies reopen. Both demand going up, as well as supply cuts having an effect. Speculators where washed out and most are now short, while the structure of the market really changed. People started buying contracts that expire much later and there is also probably some arrangements to have some extra space for oil reserves. I am not ruling out a scenario of oil going to 0 again as there might be no more storage capacity and nobody wants to take delivery, but for now I wouldn't want to be short until I see it roll over.
For stocks I've been bullish US stocks for some time. I've bought into the Milkshake Theory for quite some time and it keeps playing out nicely. The Fed can print much more than the rest and the US economy is much better than others, so especially big US tech/growth/pharma stocks have done pretty well and I believe they will keep outperforming the rest. Now in my opinion the best things to short are the French & Spanish indices + any bank stocks in Europe. Airlines + Car manufacturers are also in the shorting list. This is because both the EU is a mess for many reasons and the banking systems were already not in a great shape. Bank charts look really ugly and I think many might go under and get nationalized.
On the next drop I think Nasdaq100 could retest its old ATHs, as will the SPX too (around 1600). If the SPX closes below its 200 WMA then the real pain begins... It has been clear that very few stocks have driven most of the returns on these indices while everything else has been shaky. This could continue as large companies can weather the storm and actually benefit from this mess (i.e Amazon). Personally I don't think Central banks have anything under control, but will do everything they can again and will end up buying stocks. My view is that a 50% on the SPX or Nasdaq will be the bottom or will give a least a massive short term bounce.
QQQ (NAS100) hasn't broken down yet, while everything else has. Having a hedged play with short EU & long QQQ has been performing pretty well... Now I think volatility will pick up again and the VIX will break its ATHs as economies reopen. The damage is massive and no amount of QE will be able to fix it. Societies will collapse and things will start burning... It isn't going to be nice for sure.
2900-3030 key resistance on the SPX, first rejection looked like it was the real top but there was another strong push higher before it was rejected even more strongly again.
USD had 2-3% downside before going higher, but didn't drop enough as support held.
USOIL target was 25$, but it has popped even higher.
Gold was trapped below 1740 at the yearly pivot and my thoughts where that it would stay below that level for some time.
My current views are (multiple charts at the bottom):
All bonds are probably gonna go higher. US bonds look the safest (yields going down). Negative rates are coming no matter what.
USD is gonna go higher across the board. Shorting EURUSD, GBPUSD + longing USDCNH, USDZAR are some great ways to play this long term. Europe is a shit show and if EURUSD closes below 1.07 it is game over. China will have to devalue as it has too much debt and will need to export stuff. South Africa's economy is severely damaged and the chart is above its previous ATHs and forming a massive pennant.
Commodities like Palladium & Copper will go down (Palladium coming out of a bubble and Copper is an industrial metal with an ugly chart). The USD squeeze and all the deflationary pressures are gonna push them much lower.
Commodities like Silver & Gold might go higher as rates go lower and there is a lot of uncertainty. Gold could fall on the next USD spike, but before that there is some upside. Silver looks a bit more risky as it is right below key resistance, but the chart looks pretty good. Problem with Silver (Gold to a lesser extend) is that there are too many speculators already position long & a big part of its demand is industrial. Both will have strong rallies eventually and they might actually come while everything else is going down... However in another liquidation even I think Gold and Silver won't escape reality and get dragged down with everything else.
Oil has the potential to go higher for some time as economies reopen. Both demand going up, as well as supply cuts having an effect. Speculators where washed out and most are now short, while the structure of the market really changed. People started buying contracts that expire much later and there is also probably some arrangements to have some extra space for oil reserves. I am not ruling out a scenario of oil going to 0 again as there might be no more storage capacity and nobody wants to take delivery, but for now I wouldn't want to be short until I see it roll over.
For stocks I've been bullish US stocks for some time. I've bought into the Milkshake Theory for quite some time and it keeps playing out nicely. The Fed can print much more than the rest and the US economy is much better than others, so especially big US tech/growth/pharma stocks have done pretty well and I believe they will keep outperforming the rest. Now in my opinion the best things to short are the French & Spanish indices + any bank stocks in Europe. Airlines + Car manufacturers are also in the shorting list. This is because both the EU is a mess for many reasons and the banking systems were already not in a great shape. Bank charts look really ugly and I think many might go under and get nationalized.
On the next drop I think Nasdaq100 could retest its old ATHs, as will the SPX too (around 1600). If the SPX closes below its 200 WMA then the real pain begins... It has been clear that very few stocks have driven most of the returns on these indices while everything else has been shaky. This could continue as large companies can weather the storm and actually benefit from this mess (i.e Amazon). Personally I don't think Central banks have anything under control, but will do everything they can again and will end up buying stocks. My view is that a 50% on the SPX or Nasdaq will be the bottom or will give a least a massive short term bounce.
QQQ (NAS100) hasn't broken down yet, while everything else has. Having a hedged play with short EU & long QQQ has been performing pretty well... Now I think volatility will pick up again and the VIX will break its ATHs as economies reopen. The damage is massive and no amount of QE will be able to fix it. Societies will collapse and things will start burning... It isn't going to be nice for sure.
Comment:
Commodities are popping. Very strong open and immediate rally for most confirming a break out...
For more certainty someone could wait for the Monday close to fully confirm the continuation.
Oil looks really strong and has the potential to fill the mega gap, Gold looks ready to take out the triple top at 1800. 1350-1400 is still possible in case of a really large USD squeeze, but for now we are seeing commodities have the upper hand as everyone could be trying to front run negative rates and potential inflation due to QE infinity.
Negative rates definitely benefit assets like Gold and QE is an extra bonus as people don't want to see their value being diluted.
For more certainty someone could wait for the Monday close to fully confirm the continuation.
Oil looks really strong and has the potential to fill the mega gap, Gold looks ready to take out the triple top at 1800. 1350-1400 is still possible in case of a really large USD squeeze, but for now we are seeing commodities have the upper hand as everyone could be trying to front run negative rates and potential inflation due to QE infinity.
Negative rates definitely benefit assets like Gold and QE is an extra bonus as people don't want to see their value being diluted.
Comment:
US equities also open strong. The overall cash is trash sentiment remains strong. Or maybe should I say the whole world other than the US remains trash... Below it can be seen very clearly in the trend between US and Europe is very clear (i.e DJI vs CAC). Looks like this is going to continue for some time... Being long US and short the rest of the world looks like a safe strategy, which you can turn into being short Europe alone ones US equities turn.
For now the monthly pivot is still intact on the SPX and the QQQ trend is very clean and strong. No signs of real reversal, despite some stocks like airlines, automanufacturers and banks being absolute garbage.
I will keep on repeating that new ATHs on the SPX or QQQ are possible, as these indices aren't the economy. Big companies benefit disproportionately, especially US giants.
For now the monthly pivot is still intact on the SPX and the QQQ trend is very clean and strong. No signs of real reversal, despite some stocks like airlines, automanufacturers and banks being absolute garbage.
I will keep on repeating that new ATHs on the SPX or QQQ are possible, as these indices aren't the economy. Big companies benefit disproportionately, especially US giants.
Comment:
This is gonna my last comment on this idea as it is getting too long.
With the comments from Powell, the news for a vaccine, more liquidity coming on the markets from Central banks (i.e Fed buying corporate bonds) all after a decent correction, and everything is popping left and right.
So far EU markets are bouncing, metals have gone nuts with insane gains in just a day and the dollar has had a significant drop. We might actually be just before a massive drop on the dollar for a few weeks, but I still have no clear view.
USDTRY had its trap and once its Central bank stepped in and talks for swap lines were on, it started dropping. USDNOK is getting stronger as the Norwegian Central bank is buying NOK instead of printing (through its massive wealth fund) + Oil is going up. USDMXN looks like a massive distribution and it could fall any time.
Palladium strong bounce on the 300 DMA, broke its down trend.Silver looks like it has completed the spring phase on a Wyckoff accumulation, Platinum on a similar phase with a spring after taking out a 20 year triple bottom. Gold/Silver ratio back down to 100 after a mega blow off hitting new ATHs. Like USDNOK falling, which both might mean the spike is done and we will see a weak dollar for quite some time. I doubt it, but it isn't impossible at least short term.
The Euro is still strong and holding 1.08 and without a break of 1.07 it has the potential to get up to 1.16, especially if there is some good news on the EU. The dollar is holding well so far, but I wouldn't be surprised if things really reverse... especially if commodities keep going up.
Stocks are going for what I think is the final 2-3% move up. From my previous ideas 3030 on SPX and 9600 on the Nasdaq 100 are like the top. The resistance combo in that zone is quite large and I think a short term drop is possible, if not a top.
Rates could actually go up here which would really affected many things negatively, but I have no idea if that's gonna happen. With the US issuing so much debt, I don't think it is impossible. Bonds selling off might be the catalyst for the next move down as most bond holders try to enter other markets like metals.
In my opinion this might be a sucker's rally for everything, alhough it seems to have legs. I am more bullish on precious metals than I am on anything else right now. Stocks are expensive and have risks. I still believe many companies will go under and the pain will be seen in a few weeks once economies are open again.
With the comments from Powell, the news for a vaccine, more liquidity coming on the markets from Central banks (i.e Fed buying corporate bonds) all after a decent correction, and everything is popping left and right.
So far EU markets are bouncing, metals have gone nuts with insane gains in just a day and the dollar has had a significant drop. We might actually be just before a massive drop on the dollar for a few weeks, but I still have no clear view.
USDTRY had its trap and once its Central bank stepped in and talks for swap lines were on, it started dropping. USDNOK is getting stronger as the Norwegian Central bank is buying NOK instead of printing (through its massive wealth fund) + Oil is going up. USDMXN looks like a massive distribution and it could fall any time.
Palladium strong bounce on the 300 DMA, broke its down trend.Silver looks like it has completed the spring phase on a Wyckoff accumulation, Platinum on a similar phase with a spring after taking out a 20 year triple bottom. Gold/Silver ratio back down to 100 after a mega blow off hitting new ATHs. Like USDNOK falling, which both might mean the spike is done and we will see a weak dollar for quite some time. I doubt it, but it isn't impossible at least short term.
The Euro is still strong and holding 1.08 and without a break of 1.07 it has the potential to get up to 1.16, especially if there is some good news on the EU. The dollar is holding well so far, but I wouldn't be surprised if things really reverse... especially if commodities keep going up.
Stocks are going for what I think is the final 2-3% move up. From my previous ideas 3030 on SPX and 9600 on the Nasdaq 100 are like the top. The resistance combo in that zone is quite large and I think a short term drop is possible, if not a top.
Rates could actually go up here which would really affected many things negatively, but I have no idea if that's gonna happen. With the US issuing so much debt, I don't think it is impossible. Bonds selling off might be the catalyst for the next move down as most bond holders try to enter other markets like metals.
In my opinion this might be a sucker's rally for everything, alhough it seems to have legs. I am more bullish on precious metals than I am on anything else right now. Stocks are expensive and have risks. I still believe many companies will go under and the pain will be seen in a few weeks once economies are open again.
With rates probably going lower, while more money is printed and more debt is created... Looks like metals could perform really well. Palladium could have a short term break out, while Platinum is about to complete its reversal after taking out this crazy triple bottom. Silver pushing into resistance, but looks incredible strong coming off a massive accumulation zone.
Oil looks incredibly strong. No idea where this could top, but filling the mega gap at 40-42 seems quite possible.
Rates might consolidate here a bit longer as more debt is being issued. Low rates and defaults are killing banks, which are definitely the ones hurting the most.
The SPX had a decent close, with the Nasdaq no breaking down one bit. Don't forget that with rates going negative and more QE we might see stocks go higher and higher. For now my opinion is that we could take that double top and hit the upper resistance zone I've mentioned (2900-3030, so 2970-3030) before going lower.
Until I see the 200 WMA or the mega trendline broken I wouldn't be really bearish on indices. My opinion on troubled businesses like banks is very clear, especially as negative rates will hurt them substantially.
The USD still hasn't broken out and we'd need to see that to get bearish on metals. Before that happens, USD and metals can go up together. It is fiat currencies that lose value constantly and the beneficiaries long term are Gold and the USD.