Let me be clear, when it comes to the fundamental analysis about what is going on in the monetary world there are so many different arguments and points of view that I can't keep it straight. I am somewhat comforted by the slew of articles saying the Fed does't know what it doesn't know, because if those technocrats don't get the complexities of the Eurodollar, GC and EFF, IOER, repos and reverse repos, then I won't feel so bad. I'll just stick to technical analysis pattern recognition and try and make my money off that.
The chart has the key points: 1: Eurodollar futures bottom out. 2: S&P Exhibits topping behavior 3: EuroDollar Futures has a powerful breakout of the EMA Ribbon. Futures and S&P Diverge. 4: S&P Tests the bottom of the EMA ribbon and finally breaks through and bottoms out.
If we repeat the full pattern at least one more time the S&P is going below $2,500, and the move, looking at the progress of the Eurodollar futures through the ribbon means it will happen in 3-9 months. We are on the verge of completing Step 3 again and if that happens then it seems clear stage 4 will complete as well. I am not messing with anything Eurodollar, but I am looking to benefit from the S&P from dipping.
One of the things that is clanging around in my head is the possibility of GE1! going over 100 because actors want to avoid negative interest rates. I think the interest rate on the dollar is going to go negative and if you would lose less money in the futures market than holding it in banks then you buy the futures, or stores of value like gold and silver. This seems to be one of those posts I will be returning to for several years, especially if the GE1! goes over 100.
Please see the linked posts to see how this settles into a bigger worldview. I am trying to build a big picture world view that helps me catch macro moves so I can buy and forget for about a decade, until we come to times like this.
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The eurodollar continues to slog through the Moving Average Ribbon. Once we break through the chart suggest pretty strongly that the S&P will decline in a big way. I have mentioned I am taking an investment strategy into my "short" portfolio, and I continue to buy paper and physical precious metals, feed my SPXU position, so forth and so on. I plan on doing a new post to update his post, so it will borrow some from this. If you were following this post please follow the upcoming post.
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Eurodollar continues to pump
Really interested to see if it goes over 100 due to negative interest rates and how that will completely bugger the world economy.
@LoLBeach, Thanks, probably the best complement I have gotten on this site. And I do it for free.
CodedFlow
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@This_Guhy, we all do it for free - since the animal is so big and dangerous we all need to gang up !i have learned so much from few like you... that now i feel confident to trade even difficult trades... or not ... Keep it Up ! Intelligence should not die on this little dark planet...
This_Guhy
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@LoLBeach, Glad I can help, I always try and look at the big picture and then tunnel down. Only thing I think is a must need in trading so you don't get caught by the most powerful move, blindsided.
CodedFlow
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@This_Guhy, i this week is pumped to death even if I believe that Euro will actually drop further... and this is going to be the undoing of SPX
mmalaki
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Have a look at (100-GE1!)/TNX.
mmalaki
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The Eurodollar futures matches, more or less, the fed funds rate futures, ZQ1!. So basically what you are saying here is that the Fed funds rate change (controlled mostly by the Fed) starts to go down (GE1! or ZQ1! is basically 100 minus fed funds rate) starts declining right about the start of a recession and a SPX market crash. Thats mostly an established fact. And when you say that we need to watch for the rapid rise in the slope, what you are saying is that if the US Fed rapidly drops the fed funds rate (presumably because it sees an imminent market crash or a recession) the market eventually actually DOES crash. This is also an established fact. Just watch the US Fed funds rate meetings and see if they decide to drop it be 50bps in December or more in Q1 2020. But I do agree that it seems we are a few weeks or months away from this scenario.
This_Guhy
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@mmalaki, We are looking at maybe not established facts but high probability indicators of market crash and the more indicators get at the same time the clearer the signal of recession and people can take their positions. The repo market seizing up is a great signal for my SPXU and UGLD/USLV positions, and awful for the economy. I don't know if you saw my Federal Funds Rate and Gold post, but it details why I think the EFFR is going to about -1.5 by October 2020. People are going to be looking for a store of value and there is only so much gold and silver people can land on without disrupting the price. Central banks have been accumulating gold as a Tier 1 asset under Basel III so I feel quite comfortable taking a position for paper gold and silver in those leveraged ETFS.