Hello Traders and Analysts, A Note before reading - this is a forecast quick analysis - based upon our trading strategy. This is tagged long, due to purchasing further increments upon imbalances. Please do not take this as face value and conduct the relevant investment strategy to successfully trade the probabilities. Master Key for zones Blue = Monthly ...
Idea on Macro: - China's Credit Impulse has turned negative. - Credit impulse is the change in new credit issued as a % of GDP. - China's Government Bonds 10 YR Yield are correlated with China's Credit Cycle. - The Credit Cycle taking a downturn signals deflation. Bond prices will rise as borrowers (issuers) will expect to pay back the principal at a loss, and...
Idea for US10Y: - Cup and Handle with bull flag. - TP1: 2.8 Interesting stat: since 1985, 10Y yields have never been below 4% with a 3% Core CPI y/y% GLHF - DPT
Idea for USD (DXY): - DXY has been on a decline. - However, Trade Weighted DXY has yet to decline, such that it is difficult to tell what exactly it will do next. - This means that the dollar has been losing strength mostly against the Eurozone. - It is possible that the dollar will continue its decline: - However, in a shorter time frame, it is looking...
Idea for US10Y, Credit Cycle, and Equities: The Bottom Line: - There is no monetary inflation, because the money created does not enter the economy... however there is credit inflation because credit is created with that money as collateral. - There is PRICE inflation, ASSET inflation, CREDIT inflation, NO monetary inflation, oil deflation. - When credit can no...
Idea for Macro: - Oil is in a downtrend, at the resistance. - Current price inflation and USD devaluation is an attempt to inflate it over the resistance. It will fail. - When Oil reverses, USD will reverse. - Talking heads talking about beginning tapering talks, talking about inflation, talking about deflationary shocks EOY or next year... No, it is already...
Idea for Macro: - Inflation? Deflation? Both exist. - The bottom line is that there is deflation in demand. The price of Oil/CPI is on a clear decline. - The Fed and Central Banks do not control economic inflation and deflation, only asset inflation. - Inflation exists in assets, as made clear by the parabolic prices of nearly every asset class. - The USA is...
Idea for MBS: - Mortgage Backed Securities bubble is about to pop. GLHF - DPT
Idea for SPX: - Stock market is at a 100 year old resistance. - Can it really continue its parabolic bull run? - Here is an interesting fractal of the 20s to 50s, which closely matches with the current market conditions from the late 90s. - Right as the market hit the resistance, it did see a minor pullback and slowed for a year, but then continued its way up...
Idea for Oil: - Oil seems to be setting up for an inflationary shock event in the longer timeframes. - Understanding the trend of oil prices can help in market selection and portfolio construction. - Oil has broken out of a falling wedge. - There was a Wyckoff Spring from Hades as price went negative! - However, lower highs, lower lows, and volatile sell-offs are...
Speculative Idea for MBB (Mortgage-Backed Securities ETF): - Why is there a speculative housing bubble in the middle of a crisis? - "A major catalyst of the general financial crisis of 2008 was the subprime mortgage crisis of 2007, when a rising wave of defaults on home mortgages sent the value of mortgage backed securities plunging." - "They're in trouble right...
Sentiment Sunday: - Eyes are on gold this week, gold bugs are buzzing about a possible explosive breakout. - Rising material costs signaling consumer inflation, yet Fed's monetary inflation model has not indicated inflation yet. - Mixed sentiment, as Fed is likely to maintain dovish monetary policies. - Energy, Industrials, and Industrial/Capital Goods-related...
Metals (DBB) are stronger than the dollar (UUP). So the market is heating up and despite the local correction there is still potential for growth. It also predicts inflation, which might force the Fed to raise rates. But last time it took them 7 years to react. Inflation (below) is also rising. It can fluctuate within some acceptable band for years. Yields on...
"What If?" Wednesday: - It's still Tuesday, but I wanted to post this early. CPI: - Speculated CPI to beat expectations. - Bullish breakout of resistance, 2X ATR volatility. Yom Kippur War II: - "The Yom Kippur War, Ramadan War, or October War also known as the 1973 Arab–Israeli War, was fought from October 6 to 25, 1973, by a coalition of Arab states led...
Speculation for US Government Bonds: "If you want to learn how to trade, go down to the beach and watch the waves." - Ed Seykota After reading this, I went down to the river and watched the waves for a bit, and came up with this model. If you think of a river, the riverbanks are made of sand and pebbles... Each pebble and grain of sand are underlying...
Speculative Idea for USOIL/Macro: - Tensions in the Middle East gaining momentum, as Isareli security forces clash with Palestinian protestors on the Temple Mount holy land. Al-Aqsa Mosque, built upon the remnants of the Temple of Solomon. - Iran progressing their space program, allowing ICBM technology. - Israel blamed for cyberattacks that sabotaged Iran's...
Idea for Macro/Tesla: - We speculate a coming crisis, similar to the energy crisis of the 1970s-1980s, not with oil, but machinery, minerals, semiconductor chips and semiconductors/electronics materials. - We expect the tech bubble to crash in the nearest future. - This crisis will only be the first domino piece to fall in the Imperial Circle of the US financial...