We made quite a bit of money last night being long $ZT_F and short $ZF_F and we're putting the trade back on right now. We think there's a ways to go here - too many people caught way offsides by this bond dump.
$RTY_F: as absurd as it sounds from a fundamental point of view given that 40% of the companies in the index are unprofitable and it's carrying a 65x forward P/E, the technical picture is very clear: small caps are putting in a medium-term rounded bottom vs. $NQ_F.
We like being long $ZW_F vs. short $ZC_F as both a short-term trade and and longer-term play. Corn has experienced a resurgence thanks to the huge rally in $CL_F prices while wheat have found rock-solid support at $490 per bushel and reclaimed an uptrend line going back to last March. Ratio should be 3:2 in favor of corn contracts.
The copper/gold ratio is traditionally viewed as a good proxy for bond yields, and that relationship has held mostly true of late. That said, we do not agree with all this exuberance over a topside "breakout". The ratio is sitting right in the middle of the recent range with heavily overbought RSI levels. Could go either way.
We're going long $ZN_F early in the Asian session for a run back up to the middle of the regression channel. We think the rise in yields today was a total headfake - they won't stop sinking until they're negative.
We confess to being Dollar bulls (although only in a general sense) given our bearish outlook for the global economy, but the greenback smash the Fed has orchestrated here over the last four weeks has been truly astounding.
What now? We're still long Dollars - too late to flip now. The 61.8% Fibo should prove formidable resistance but if it gives way a path to 99...
10-year Treasury futures took a good whack today but still remain in a bullish consolidation phase going back to March. I'd be very wary of selling into weakness here - the economy remains in deep, deep shit.
$GC_F: the Point of Control since 3/23 (which was the bottom for $ES_F) has been a key pivot for five weeks. As long as it holds, the bulls are in charge. Swing lows as $1,680 provide secondary support. Fundamentals remain massively bullish.
S&P 500 futures have stalled out multiple times now above 2,950 and given the ultra-low put-call ratio and the ultra-high retail long position the conditions are ripe for a rug pull. For the next day or so, the bottom of the Wedge comes in around 2,895-2,900. A sustained break below that level would unlock downside potential to the 50% Fibo at 2,780. Given the...
Stocks have totally decoupled from reality, but copper and gold have not. This is as pretty a chart as you'll see and the fact that it's a chart of a RATIO testifies to just how "smart" gold and copper both are. The last two uptrends have been presaged by highly symmetrical wedge patterns and if history is any guide we're only a few weeks away from another topside break.
55x forward earnings? Yikes. Expect small caps to lead the way down if we do indeed roll over into a risk-off environment in the next few weeks. The 50d should catch-up with the 38.2% Fibo relatively soon. We'll cover our short when we hit one of them.