Kumowizard
Short

update - Price retests 4H bearish support. Still a sell!

FX:SPX500   S&P 500 index of US listed shares
725 12 13
During bearish markets volatility is always increased and pull backs are always larger than in bullisg trends! This is due to natural human behaviour... and algo HFTs are programmed by humans too! They are still not AI :-)

- Price is reaching Kumo, Kijun and 100WMA
- Large HA candle, and next candle will be green as well, but watch if haDelta can stay above zero during next 1-2 candle prints. Also watch if next two candles can make a higher high or not.
- 2075-2082 is a bearish support area and optimal for a sell!
- HA Oscillator still red, EWO also far away from a bullish reversal.


Risk reward is better for shorts! Hang on, and add to your shorts!
Nicemate
a year ago
Wow! who would have thought! Do you think it is the same for the DAX?
I am long from the double bottom at 10640 ! Maybe for the german index it is slightly different because of the positive GDP results. However, it still is retracing from big downward move !
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Kumowizard PRO Nicemate
a year ago
well actually this story is mixed a bit. Do u know how much did the SPX drop yesterday compared to DAX??? EXACTLY THE SAME!!!! -> Calculated in USD! :-) I mean DAX drop = SPX drop x EURUSD spike!!!

What does it mean?
It means what we see is so far the unwind of the huge relative value spread trade by a lot of HFs and other mkt players who bet for long DAX (also long Nikkei) vs Short US equities, FX hedged via EURUSD. This trade suffers second time this year. It was an ECB QE frontrun idea.

However both indexes will suffer more technical breaks I think. Basically from now it is easy to read mkt ... at least now I think so: fundamentally nothing supports long equity positions globally at all! By all measures equities are way too overpriced in general. What keeps them floating here? The addiction of easy monetary policies presented by most of global Central Banks. However look only at the three major ones: ECB did not announce more stimulus. FED will hike for sure now. BoJ is not doing more either. -> net net less drog to the mkt.
2016 will be a choppy and bearish year.
Then maybe FED will cut back or announce QE4, I don't know. Then of course I will just blindly buy SPX and short USD, but for now I am increasingly bearish for equities.
+2 Reply
Nicemate Kumowizard
a year ago
I like your ideas, they must be coming from a sound background in banking and finance. However, the SP500 retraced almost to 100% of the downward movement, but the DAX didn't (or not at least yet). Why? It is the first time I have seen this happen.
Especially considering that yesterday the Bundesbank upgraded it's growth forecast (but only for the 2017 forecast). Why so? Is it possible that the german index will only rise if the EUR goes down further?
Your long term considerations are however right, as for sure equities are overpriced.
Thanks for your explanations, I really appreciate them.
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Farbenspiel Nicemate
a year ago
Just a side note from me - even if not asked :)
The EURO rose largely and my guess is it will not fall back to the origin.
That said its clear that the DAX has to readjust to the new situation, meaning DAX to SP correlation is lower than before (higher EURO = lower DAX).
So the DAX might wait for the next SP downleg to falter even further with it.
The new balance might change again some days later, depending on coming FED movement.
Beside that, some further unexpected turmoil in the markets are to be expected for the rest of this year.
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Kumowizard PRO Nicemate
a year ago
Sorry for late answer, but I had some busy days. More or less what you say is correct. DAX outperformance was mainly due to weaker ccy (EUR). Now in risk off times you will see further EUR gains and DAX selling.
SPX is in a major top building phase. One day I will post an ANNUAL Heikin-Ashi chart, which idea comes originally from Dan Valcu. There it is already obvious that the really long term picture is changing and that after 6 years of bull mkt the upside is extremely limited for SP500.
So far it is in a denial phase.
People believe this huge and utter bullsht about a "dovish hike". There is no such thing like dovish hike! A hike is HAWKISH! It means monetary tightenning. And in "old-School" pricing models that is defenately not good for equities in the long run! (Have you ever heard about CAPM and discount factor?)
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simonsays452 PRO Kumowizard
a year ago
Curious on your thoughts here: Draghi has a singular goal: a weaker Euro - even when it traded at 1.05ish. Weaker Euro is the only monetary policy that can reduce labor slack in Southern Europe - given the divergence in labor costs b/w North and South due to unions/labor laws, etc. in the Southern countries. Weidmann won the battle at this last ECB meeting and Draghi's credibility is wounded. This is exactly what happened at the last policy meeting prior to announcement of QE on 12/4/14: Market expected announcement of full-blown QE, Weidmann won the battle, but ultimately, lost the war and in Jan 2015, Draghi announced €1Tr of QE - far beating market expectations. Is Draghi just setting the stage here for another bazooka come 1/21/16?
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snapshot
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Oh, was this post out just in time around 2078? My timing is quite good in last two days... bit unusual :-D normally I enter first unit trades too early
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2use
a year ago
Is it still a sell?
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Kumowizard PRO 2use
a year ago
It is even a bigger sell! Well, hell knows why they buy this sht. But 4H closed below Kumo top and horizontal. Also Chikou is still below past candles. Short term extremely overbought. I think we see next leg down. If not, what is the worst that can happen? We get stopped :-)
If you traded all the ideas in last two-three days on eurusd, silver, gold, eurgbp, corn, wheat, spx, then this was the only one not working, so as a risk adjusted portfolio it shd still be ok... But I have to admit I have a lot more short risk in spx than I had long in gold and silver. Eurusd longs I closed already.
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2use
a year ago
So far line held nicely
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Kumowizard PRO 2use
a year ago
Bulls tried and failed at Kumo top. My call maybe was a bit early, but it worked.
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