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EURAUD I Weekly Forecast & How to Trade ItWelcome back! Let me know your thoughts in the comments! **EURAUD Analysis - Listen to video! We recommend that you keep this pair on your watchlist and enter when the entry criteria of your strategy is met. Please support this idea with a LIKE and COMMENT if you find it useful and Click "Follow" on our profile if you'd like these trade ideas delivered straight to your email in the future. Thanks for your continued support!
Short
by BKTradingAcademy
39
Big Four Macro Update: CommoditiesThere are extensive fundamental comments, context, and observations in the prior commodities pieces linked below. The 2022 Midyear Conclusion was that commodities were making an important top and that I intended to be a better seller of weekly perspective strength over the last half of 2022. For most of the last 20 years commodities have been trapped in a wide range between the pre and post great financial crisis extremes. Primary Chart Features: Macro lateral support and resistance zones are wide but well defined. Last March, the appearance of supply across a wide variety of commodities and with the GSCI within 5% of the major resistance left suggested that the 2020-2022 rally has run its course. The show of weakness removed any doubt. An overthrow of top of the trend channel, a near classic buying climax that occurred near macro resistance, the break of the channel uptrend drawn from the 218 Covid low and the rollover in the MACD oscillator are all consistent with a new bear. Generally speaking, commodities tend to produce long trends as they move higher and lower with business cycles that typically last several years. Recent weakness is consistent with a weakening of the business cycle. The fiscal stimulus related to the pandemic has ended and the lagged results of the Fed's rapid tightening campaign is becoming evident. Commodities weakness has alleviated some of the goods sector inflationary pressure but it will have little effect on service sector pressures. Daily and weekly perspective rallies should become selling opportunities. Weekly: While monthly charts and macro both suggest weakness, the weekly chart has moved into a zone that may produce a counter trend rally. MACD is trying to turn higher and the market is holding over the midpoint of the channel. But a rally appears premature to me. Particularly since the low volume lateral movement over the last several months doesn't appear to be accumulation. Not only are there few signs of demand in the shorter-term price volume relationships but the market isn't near compelling support, particularly the kind of support confluence strong enough to typically turn momentum. None the less, a weekly close above the downtrend A1-A2 would strongly suggest a near term momentum change. A rally, while perhaps representing a trading opportunity, should ultimately provide a significant selling opportunity. I think a much better opportunity for support is found at the 494 - 536 zone where I would be interested in taking a trading long on a bullish setup. Commodities Triple Screen: The triple screen suggests a similar story. A trend reversal in the monthly with an initial decline that is becoming oversold in the weekly perspective. Rallies in the weekly perspective are likely corrective to the weakness in the monthly. Bottom Line: I am a better seller of strength and bearish setups. I believe that this chart continues to support the idea of a weakening/topping business cycle. Many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
SP:SPGSCI
by CMT_Association
16
The Ethereum Ecosystem: A Look into the Leading InnovatorsThe Ethereum Foundation, a Swiss non-profit organization created in 2014, aims to promote and support research, development, and education on the Ethereum platform. With a treasury of around 336,000 ETH, the foundation regularly awards grants to projects that make a significant contribution to the development of the Ethereum ecosystem. In 2021 alone, they allocated $26.9 million to 136 projects! 🔥👀 ConsenSys, a leading software development company, builds decentralized solutions on the Ethereum blockchain. With over 2,000 corporate clients and partners worldwide, ConsenSys collaborates with giants such as AWS, Microsoft, EY, WWF, P&G, and Hitachi. Their flagship product, MetaMask, is the largest non-custodial wallet for storing and managing crypto assets, with more than 30 million active users. ConsenSys invests its own funds in crypto assets within the Ethereum ecosystem and manages a corporate venture fund to support young projects. 💼💰 The Enterprise Ethereum Alliance, a non-profit consortium established in 2017, aims to provide organizations with the opportunity to implement and use Ethereum technology in their day-to-day business operations. The EEA connects Fortune 500 companies such as Microsoft, Intel, and JP Morgan with Ethereum experts, startups, and academic circles. Ethereum is the largest programmable blockchain in the world, leading in business, developer community, and DeFi activity. 🌐💻💰 With a strong management team in the form of the Ethereum Foundation actively working on improving the Ethereum blockchain, the future of Ethereum and its ecosystem looks brighter than ever. 🚀👨‍💼 Ethereum's Transition to PoS Reduces Energy Consumption by 99.95%! In September 2022, Ethereum successfully transitioned from PoW to PoS, resulting in a 99.95% reduction in energy consumption and alleviating environmental concerns. Additionally, block rewards decreased by nearly 90%, significantly lowering ETH inflation. As of 2022, the number of validators in the Ethereum network has grown by 79%, reaching 495,252. The amount of assets staked has exceeded 15.85 million ETH, with an inflow of around 7 million coins in 2022 alone. Currently, Ethereum is transitioning from a monolithic structure where all transactions are processed at layer 1 to a modular model. More and more decentralized applications are launching on layer 2 networks like Arbitrum, Optimism, Polygon, and others, solving the problem of expensive and slow transfers on the Ethereum blockchain. Many blockchains like Hedera, Celo, Avalanche, Binance Smart Chain, and Filecoin, which have been in existence for several years, are betting on compatibility with the Ethereum Virtual Machine (EVM). According to Hedera's report, "research shows that EVM is the default starting point for new Web3 developers." It is highly likely that the future of blockchain will resemble other operating systems like Windows and Android, with one dominant ecosystem and one or two secondary ones, rather than a fragmented market of many different chains. The older Ethereum becomes, the harder it is to displace from the market. In other news, Ethereum currently has around 122.4 million coins in circulation, with an inflationary model where new coins are emitted daily. Previously, when the network used the PoW consensus algorithm, mining produced around 13,000 ETH per day. Since transitioning to PoS in September 2022, the emission of new coins has been reduced by almost 90% to 1600 ETH per day. Despite this, EIP-1559 is still in effect, which means that a portion of ETH coins are burned daily (referring to network fees on Ethereum). If the average gas price in the Ethereum network exceeds 16 gwei per day, more than 1600 ETH will be burned, leading to deflation of the asset. Ethereum is set to undergo some major changes in 2023. Here's what you need to know: 🔥 Keep up with the daily burning and changing of ETH coins on this resource. 💻 The Shanghai hard fork is expected to take place in March 2023 and will allow for the withdrawal of ETH from staking. 💰 The implementation of EIP-4844 in 2023 will drastically reduce transaction processing costs in second-layer solutions such as Optimism and Arbitrum by 10-100 times, opening the door to non-financial transactions in gaming, social media, and other industries. 🔥 Deflation may be in the cards for Ethereum as the total number of ETH coins in circulation may decrease by 1% in 2023 due to the swift growth of Layer-2 solutions like Arbitrum, Optimism, and Polygon. 📈 The number of unique addresses in the Ethereum network is growing rapidly year over year. 💻 After the Shanghai hard fork is implemented, staking ETH coins will become more accessible. Currently, only 13% of ETH coins are locked in staking, whereas in other PoS networks, this figure reaches 60%. With the growth of staked coins, the market supply of ETH will decrease. 💰 2023 will be the first year in which the number of ETH coins in circulation will either remain practically unchanged or decrease (deflation). 🚀 Stay tuned for more information and analysis on these exciting developments!
BITSTAMP:ETHUSDLong
by UnknownUnicorn285026
14
The Bubble Obituary The Fundamentals - Many investor favorites in the late 1960s & early 1970s were companies such as IBM, Xerox, and Disney which enjoyed PEs of over 35 in the nifty fifty bubble. In this latest stock market bubble, there were dozens of mid & large cap companies trading at over 10x revenues. Many unprofitable businesses even garnered over 6x Price/Sales ratios at the peak in 2021! The US stock market is extremely overvalued relative to historical valuation averages. Conservative earnings expectations for 2023 would place earnings dropping 10%-20% this year, in-line with mild recessions. The problem with mild forecasts is that the current recession gives no indication that it will be mild. GAAP Earnings for Q4 2022, excluding energy, are down over 8% YoY with companies issuing even gloomier forecasts for 2023. Earnings are likely to fall at least 33% from peak to trough using an average of the last 4 US recessions. - The subprime auto bubble is popping, with dealerships and lenders heavily exposed to subprime loans beginning to default. American Car Center, a subprime lender and auto dealer, recently closed its doors, highlighting the mounting pressures the industry faces. More defaults and business closures should be expected as interest rates stay high, vehicles fall in price, and car loan deliquinces rise. Subprime auto loan delinquencies are extremely high relative to their historical average even before unemployment has began rising precipitously. - Layoffs have spread to every sector of the economy, as evidenced by 2022 Q4 conference calls. The decrease in consumer spending globally is leading to lower exports and imports globally. High interest rates are decreasing business activity and profit margins are falling due to inflation & weakening productivity. The business cycle has turned and every sector of the economy is entering cost-cutting mode. These are all reasons for layoffs continuing in increasing volumes throughout 2023. - The US housing bubble is imploding. Sales volumes have declined over 35% from the peak. Mortgage purchase applications are the lowest they’ve been in over 25 years. Using data going back to 1952 from the University of Michigan, consumer sentiment surveys indicate that this is one of the worst times ever to buy a home. Home price declines are occurring nationwide. High office vacancy rates & high interest rates are leading to large bankruptcies in the commercial property market as well. This is already very acute in the mall segment of the commercial property sector. - The FED has been raising interest rates within an economic contraction which has historically always magnified economic downturns. The FED typically tries to raise interest rates in the early - middle stages of economic expansion, pause their hikes as the economic cycle matures, and begin cutting rates when the economy begins declining. In this latest hiking cycle, the FED waited until the economy began contracting before quantitative tightening and interest rate hikes even began! - America has one of the highest Private & Public Debt to GDP ratios in US History. The only other similar levels of debt in American History in the past hundred years were in the late 1920s & late 2000s. The economic contractions that followed were especially severe because of the high levels of malinvestment and debt which were deleveraged in those contractions. The level of malinvestment engendered by the FED’s suppression of interest rates in the 2009-2022 business cycle created one of the largest credit bubbles in history. Over 22% of the Russell 2000 are unprofitable and over 20% of the S&P500 are zombie companies. Many of the IPOs since 2017 (and especially since 2020) were/are unprofitable and are beginning to run into funding issues. This economic contraction is likely to eventually be classified as depression due to the continued declines in business activity and living standards for years. The Technicals & Correlations - Healthcare, Industrials, Consumer Staples, and Utilities have all underperformed since December 2022. Inflows and buying from large money seems to have mostly dried up and retail investor inflows, short covering, and call buying are making up a much larger portion of the market than is typical. This led to a bounce back rally in Financials, Technology, Real Estate, and consumer discretionary stocks which also began topping out in late January. In late February 2023, all sectors of the market have topped out, show falling underlying momentum, and are trading at very weak volumes. This is a similar pattern that played out prior to the march 2020 crash, where many Industrials, Staples, Healthcare, and Utility stocks peaked out prior to January 18th, 2020; whereas many overvalued & unprofitable stocks didn’t peak until February 21, 2020. - Stock markets globally have peaked and are in the process of finishing their topping formations. Topping patterns began showing up as early as November / December 2022. Downside momentum is picking up now that interest rates globally are also beginning to breakout. The positive correlation between bonds and stocks has continued to remain strong since late 2021. - Commodities peaked in the first half of 2022 as price inflation continued rising and economic activity was still high. Commodities enjoyed a large bounce in Fall 2022 as financial conditions eased due to the bear market rally in stock & bond prices. Commodities have been exceptionally weak thus far in 2023, which is another negative signal for stock markets & business activity globally. - The bankruptcies of FTX & the Genesis lending desk, as well as increasing regulatory oversight, have continued to pressure crypto. With interest rates moving higher and the economy falling further, the speculative bubble that is crypto will collapse, likely back to being under 100B market cap for the total market with many altcoins going to zero and bitcoin dropping below 10K. Crypto has been a leading indicator for the market ever since their correlation began tightening in late 2020. The confirmed false breakouts and breakdowns all over the crypto sector are a negative forward signal for the stock market. - Total margin debt outstanding is still at an extremely elevated level. In real terms, margin debts outstanding are at comparable levels prior to the October 2008 crash & March 2020 crash. Insider selling is at the highest point that it has been in the entire bear market. The US dollar index’s negative correlation to the stock market was strong in 2021 but it became very pronounced in 2022. The US dollar’s rise against almost every other currency around the world since February 2nd is yet another negative leading signal to stocks. -Alexander Lambert I study over 30 countries’ markets and economic data releases. I also track the daily movements of over 750 companies and 15 different sector indexes. I have spent a tremendous amount of time on historical & economic research, as well as technical and fundamental analysis. I have been doing this for over 3 years and I generally spend between 65-80 hours a week on my work. Thank you for reading!
SP:SPXShort
by Alexander_C_Lambert
32
SPX should have every chartist out there conflicted...The SPX consolidation around the orange downtrend line is confusing every chartist out there for good reason. Why-because it is giving off conflicting signals and history really isn't much of a guide. Typically when you draw a monthly downtrend line using 3-6 months of a trend line and then you have an monthly open or close ABOVE the downtrend line (orange line on my chart) you see continued follow thru. However Nov 2022 closed above the orange line but then December bearishly closed below it (no follow thru). Jan then closed bullishly above it and now Feb looks to be closing above it but have see-sawed around that downtrend line with rather large open/close monthly ranges. This tells me, at this point, neither the bulls nor the bears can claim victory. The bulls see a "inverse H&S" on the monthly line chart however there's no break of the neckline thus far and therefore it's just a "what if" at this point. The bears see one big bear flag on the monthly but again that too is just a "what if" at this point. Here are past SPX charts using the same downtrend line analysis: For me, I'm staying patient & neutral with most of my trading cash sitting in my IBKR account earning decent interest income until I can see a clear winner. After studying the above you can see that "bull" breaks of the orange line typically last many months to many years BUT the bulls IMO have not proven themselves at this point so for me it's better to stay in cash; earning a decent risk free yield. It's worth noting-there are so many examples of bull breaks of the downtrend line with follow thru but only two examples (1975 & 2002) of breaks in the downtrend line WITHOUT immediate follow thru so you have to respect that we are in a conflicted market. What I am watching: VIX (my read of this chart is saying a spike above 30 is not in the cards for a bit-you can read my recent VIX posts as to why) DXY (The ROC in how this thrusted downwards is telling me, in the very short term, the chart is rather weak and we are currently experiencing a countertrend to the downward trend than begun in Oct 2022) 2YR/10YR yields: The thrust from the breakouts of the downtrend & horizontal lines are not the same type of thrusts we saw previously so IMO slowing yield thrusts are telling me the bond market seems to think yields might be starting to "level out" before they possibly reverse course (to the downside) but only if we actually experience a recession. I do believe that yields topping & coming down is actually bearish for the market near term so I am watching them very closely for a reversal sign to the downside. Why-because that means the economy, on it's own merit, is actually not too strong without stimulus, QE & ZIRP. I also think the topping process of yields will play out over weeks/months...it's not going to be a sharp pivot and this topping process could cause markets to chop for weeks/months...
SP:SPX
by Vixtine
111
Nvidia -> Breakout TimeHello Traders, welcome to this free and educational multi-timeframe technical analysis . On the weekly timeframe Nvidia stock just recently created a very obvious inverted head and shoulders and I uploaded a lot of analysis always pointing towards this bullish pattern which will lead to a longer term bullish move. The past couple of weeks Nvidia already started this bullish move, we now just broke about a weekly resistance area so I simply do expect the continuation towards the upside from here. With earnings coming out yesterday, the market today gapped higher 15%, breaking also a daily resistance area so I am now just expecting a retest of the previous resistance, now turned support, and then the continuation towards the upside. Thank you for watching and I will see you tomorrow! You can also check out my previous analysis of this asset:
NASDAQ:NVDALong
by basictradingtv
57
Controlling Bitcoin: The Composite Operator?The Composite Operator. "…all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory, sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it." Most market people tend to scoff at the idea that there is some kind of illuminati running the markets. They say "you're never bigger than the market". I will just deal with one piece of evidence, in the image cap. Just 2204 accounts, a lot of which are owned by the same people, CONTROL 41.87% of the supply. =============================================== So, even if you don't think the Composite Operator exists, you have to admit that it is very definitely doable, isn't it? They could use just 10% of that to push the price where they want, like water in the bath. Give it a bit of a shove when it is running nicely, stop and reverse when they know it's right. If they don't know how, I could show them. In fact, call me guys, I'm open to offers. Read this next: Follow me for more, please. Get the right side of the trade.
COINBASE:BTCUSD
by Paul_Varcoe
22
On this day, 13 years ago, Satoshi Nakamoto updated the BTC logo🎯 Today marks the 13th anniversary of an iconic moment in the history of Bitcoin. It was on this day, 13 years ago, that the creator of Bitcoin, Satoshi Nakamoto, updated the Bitcoin logo by embedding the symbol '₿' within a gold coin. This logo has since become synonymous with the world's first cryptocurrency and has become an iconic symbol of the digital currency revolution. 🎯 The logo update not only marked a milestone in the development of Bitcoin, but it also cemented the currency's status as a legitimate form of currency. The use of the gold coin design was a nod to the currency's potential as a store of value, while the '₿' symbol within it represented the currency's digital nature. 🎯 Today, we can still appreciate the elegance and simplicity of the Bitcoin logo. The logo has become an iconic symbol of the cryptocurrency movement and is recognized around the world. It has become a visual representation of the power of blockchain technology and the potential of decentralized finance. 🎯 As we look back on this momentous occasion, we are reminded of the incredible journey that Bitcoin has taken since its inception. From a white paper to a global phenomenon, Bitcoin has come a long way in just over a decade. Today, it continues to be a leading force in the cryptocurrency space, inspiring new innovations and driving forward the adoption of blockchain technology. 🎯In conclusion, the Bitcoin logo update of 13 years ago was a defining moment in the history of cryptocurrency. The simplicity and elegance of the logo have made it an iconic symbol of the digital currency revolution. As we look ahead to the future, we can be confident that Bitcoin will continue to lead the way in transforming the world of finance. Happy 13th anniversary, #Bitcoin! Let's continue to drive innovation and adoption in the cryptocurrency space. #cryptocurrencies #blockchaintechnology
by Crypto2AF
14
Solid Level for AMZNI have been stalking NASDAQ:AMZN share prices for months now watching as it retraced from the All Time High down to a full 50% Retracement from the All Time Low. This is a pretty epic pullback level that took decades to create. The 6 month downtrend from 146 > 81 created its own 50% Retracement at 114 as Resistance. February earnings popped to this level and confirmed it. As the January bull run fades AMZN comes back again to test the broader level. Even as we drill lower to the intraday timeframe we can see the 50% Retracements begin to setup. The volatility around today's FOMC minutes shows respect for the level. This sets up a low risk opportunity to play the decadal Support.
NASDAQ:AMZNLong
by norok
26
Microsoft -> It's Now Or NeverHello Traders, welcome to this free and educational multi-timeframe technical analysis . On the weekly timeframe Microsoft stock just recently created an awesome double bottom and also already broke above the neckline confirming the weekly pattern. As we are speaking the market is retesting the neckline of the double bottom which is now turned support so from a weekly perspective I just do expect the continuation towards the upside from here. On the daily timeframe however the market is currently massively bearish and I definitely don't want to catch a falling knife so I am now just waiting for some bullish structure on the daily timeframe before I will look to enter longs to capitalize on the continuation towards the upside. Thank you for watching and I will see you tomorrow! You can also check out my previous analysis of this asset:
NASDAQ:MSFTLong
by basictradingtv
69
SPX vs. Put/Call Ratio (2D) / Hidden Bearish DivergenceHidden bearish divergence. Disturbing for bulls. Please like and share if you appreciate this market update. We are algorithmic traders and certified Elliotticians. We publish Elliott Wave and algo technical analysis on a daily basis for indices, stocks, cryptos, commodities, VIX, DXY, in weekly, daily and 4-hour timeframes. Our counts are not drawn subjectively but backed by solid algo trading evidence. We also answer all your questions regarding the Elliott Wave Principle! Cryptos are updated every day of the week and on Saturday, if necessary. Traditional assets are updated every day of the week. Elliott wave & Fibonacci labelling: Common path in white, bullish count in green, bearish count in red.
USI:PCC
by TradingSurfers
9
SPX/SPY/ES: Probably a bear trapSo....I guess we got our high prob targets sooner than later. In typical SPY fashion it just gunned for all the targets right off the bet. So let's recap. The high prob targets for this week were 4011 on SPX and 399 on SPY. While SPY was mixed in terms of probability, SPX was extremely convincing, with the odds of upside being 0:5 and the odds of downside being 4:5. Yes, we sometimes hit those 0 targets, but ONLY the "small" 0 targets, like 0:3 or 0:2. Anything 5 or higher that is 0 I never see hit. So with that, know that this week our upside is probably capped. That said, we have removed all the bearish high prob targets. The 99% on UPRO, the high prob ones on SPX and SPY and the weekly bearish targets on IWM, SPY and So now, we are left with bullish high prob targets. And there was one that I completely missed going into this week. That is on SPX. SPX has a target of 4057. As well, ES has a TP of 4093. I did a video update, I attempted to long while I was simultaneously shorting expecting us to get halted at 400 and then recircle back, but we ended up dropping to the 399. To be fair, the probability said 399. I got too caught up with this whole "psychological level 400" which is nothing I ever cared about or thought about before my tradingview days, lol. So I have to remember to just go by the math projections and that is it. So for tomorrow, the ranges are in the chart. The probability is like so split. There is obviously a preference for bearishness, but that said the actual probability that we end up in the green box vs red box is exactly 6:11 for both. So my personal plan, for day trading, is to play the opposite. If we gap up into that green box, I would be inclined to be short biased. Vice versa for that red box (only long biased). I am swinging long. I re-entered long at EOD. The reason, pre-my realization that there was a bullish 99 on SPX, there was a bullish 99 on ES. However, after the damming PA we saw, I would never play to this target. But now that I realize we have 2 separate bullish 99s on various stocks, I am pretty inclined to believe that we will, at the very least, see upside. Even on the most bearish of times, we can expect retracements and pullbacks and I don't expect this to be any different. And while this is subjective, the whole day felt pretty ... bear trappy, you know? Every time we have seen this kind of massive sell on a Monday (or Tuesday after a STAT day) it was followed by some whipsaw reversal to the upside. So, yeah. Words of Wisdom Ohhh.. I haven't done this in a while! Bring back old memories lol. But yeah, so I see the bulls are being bulls and the bears are being bears. To the bulls, the PA today "CONFIRMS AFFIRMATIVELY" we will see more upside. To the bears, it affirms "ITS OVER, NEW LOWS NEXT WEEK!". As I read people's ideas on Tradingview, as someone with a clinical psych background, all I see is a site filled with confirmation bias. You notice how the Elliot wave believers flock to EWT analysts. The bulls flock to bulls. The bears flock to bears. The weirdo outcast (said with love and respect because I too am a weirdo outcast) who don't fit in anywhere and are more realistic about things flock to me (this is serious, everyone who has reached out to me have been the most down to earth, pragmatic people I have seen on tradingview). So I know that those who follow me probably don't need to be told, but be very careful. Try to separate fact from speculation and bias. I know I have said this before in other posts, but please be mindful about what you are in terms of permabear or permabull. Despite my attempt at always remaining unbiased, I am, always have been and always will be a permabear. I was a bear during the 2021 run, constantly trading TSLA because that was the only stock at the time rewarding shorts (but know, I made tons shorting AMC too, lol!!! Poor APES) and 2022 was great because I could short everything and be rewarded. That said, I always try to not let my own biases cloud my analyses and my assessments. And so, when I propose, as I am here, that long is probably the correct answer right now, know that this is the most unbiased and truly contrary attitude I can take to the situation. But I really think that we should see upside before we see a ton more downside. But why I say this, is know that most people are advancing their own narratives and justifying it with lines and charts that could be interpreted really any way you want. This happened with someone else's idea. It was a really interesting idea that they proposed and I wanted to back-test it. And it was something I could do with my math models, so I did it. It turns out, what they were proposing was not an entirely accurate assessment and so I mentioned it only to be told "well... I'm right anyway". Confirmation bias, I am telling you. Its a powerful thing. Also, don't wanna call out anyone, I just want to use it as a cautionary tale of the power of confirmation bias. So its great to take everyone's idea, mine included, with a grain of salt and really assess the situation and assess your own bias. Do not blindly follow ideas, or me, into trades. Right now we are in a very tempestuous time with the market, and it is difficult to trade and difficult to navigate. Despite finishing the day green and finishing the day with my analysis having been correct (the targets the probs told me were in fact correct), I ended the day being incredibly frustrated because the PA really threw me off. I wasn't expecting this to be so heavy so quickly and it really just took me off guard (I figured we would circle to those bullish TPs before removing the bearish TPs, because in my mind the market should tank with news and PCE). But because I was so biased, and had it in my mind that we should see some upside before we should see those high prob targets realized, I sloppily panic sold my shorts at open, just to have to re-open shorts within the first 10 minutes of open, and then attempted to long while I was simultaneously shorting. It was a mess. And it was an avoidable mess had I just read the data and not ascribed my own bias and my own interpretation to it. Anyway, those are my thoughts, messy messy. And messy day. But yeah moral of this story is: I do expect some upside. The ranges to watch tomorrow on SPX are in the cart. The probs for tomorrow are so split. And like across the board split. Futures Hi to Lo is 2:4 and 2:4. Spy Hi to Lo is 2:3 and 2:3. SPX hi to lo is 6:11 and 6:11. Crazy right? But also awesome. I love when this happens because it means that my prob models are doing EXACTLY what they are designed to do correctly :-). Safe trades everyone!
SP:SPX
by Steversteves
21
No Landing in the Twilight ZoneCBOT: Micro Treasury Yields ( CBOT_MINI:2YY1! , CBOT_MINI:5YY1! , CBOT_MINI:10Y1! , CBOT_MINI:30Y1! ) Is the US economy heading towards a “no landing”, as opposed to a “hard landing” or a “soft landing"? There is a heated debate among economists and market strategists. What is a "no landing"? It is a new term drawn up by Wall Street, which describes the economy continuing to grow while the Fed raises interest rates to fight inflation. Stock investors have a hard time making sense of the latest data from inflation, employment, and corporate earnings. The Fed’s future policy actions are unclear. As a result, the US stock market moved sideways in recent weeks. Treasury Market in Disarray With a widening negative yield curve, bond investors are convinced that a US economic recession is on the horizon. Let’s refresh our knowledge on this subject. Yield curve shows interest rates on Treasury bonds with short-term, intermediate, and long-term maturities, notably 3-month T-Bill, 2-year and 10-year T-Notes, 15-year and 30-year T-Bonds. Bond investors expect to be paid more for locking up their money for a long stretch, so interest rates on long-term debt are usually higher than those on short-term. Plotted out on a chart, the various yields for bonds create an upward sloping line. Sometimes short-term rates rise above long-term ones. That downward sloping line is called yield curve inversion or negative yield curve. An inversion has preceded every U.S. recession for the past 50 years. It’s considered a leading indicator of economic downturn. On July 21st 2022, the 2-year yield stood at 3.00%, above the 2.91% 10-year yield. Since then, we have been in negative yield curve environment for seven months. The 10Y-2Y yield spread has widened to -76.9 bps, but a recession has not yet occurred. Below are current yields indicated by CBOT Treasury futures as of February 17th: • 30-day Fed Funds: 4.665% • 2-year Treasury: 4.618% • 5-year Treasury: 4.014% • 10-year Treasury: 3.848% • 30-year Treasury: 3.883% We observe that the longer the duration, the lower the yield. The 5Y, 10Y and 30Y yields all price below current Fed Funds rate target of 4.50-4.75%. The US economy seems surprisingly strong, despite the Fed trying to cool it with eight consecutive rate hikes. However, negative yield curve contradicts the notion of “No Landing”. Trading Opportunities in Micro Yield Futures Investors currently expect the Fed to raise interest rates in March and June meetings, with the terminal rate consensus at 5.3% at the end of this tightening cycle. Clearly, Treasury futures market has not priced in the pending rate hikes. The most underpriced interest rate is the 10-year yield. At 3.85%, it is 90 bps below current Fed Funds target and 1.45% below expected terminal rate. On February 17th, the February and March 2023 contracts of CBOT 10-Year Micro Yield Futures (10Y) were quoted almost the same rate, at 3.850% and 3.853%, respectively. Investors apparently brushed off the upcoming rate increase in March. My trading rationale: US businesses continue to expand, which provides solid support for the long-term debt market. With short-term yield rising fast, borrowers would flock to lower rate debt, pushing up demand for the longer-term credit. In my opinion, a 10-year yield below 4% is not sustainable. For confirmation, let’s take a look at various market interest rates for 10-year duration: • US Corporate AAA Effective Yield: 4.61% • US Corporate BBB Effective Yield: 5.64% • US Mortgage Rate, 10-year fixed: 6.24% • Bank Certificate of Deposit, 10-year: 4.10% (Discover Bank) Monthly contracts for the 10Y are listed for 2 consecutive months. Contract notional value is 1,000 index points. A minimum tick of 0.001 (1/10 of 1 bps) is worth $1. This means that a 25-bps increase will translate into $250 per contract. It would be a 77% gain in contract value if we use the $325 initial margin as a cost base. April contract starts trading on March 1st. If it is quoted similar to the March contract, there is potential to gain. Whether we compare with market rates of debt instruments of the same 10-year duration, or with risk-free Treasury rates of different durations, a 10-year yield pricing below 4% is a bargain. Besides, the FOMC meeting on March 21st-22nd would likely give the contract a big boost, as long as the Fed raises rates. In summary, I would consider a long position for April 10Y contract at or below 4% yield. What about the idea of yield curve reversal and the narrowing of 10Y-2Y spread? It may still happen, but its timing is unclear at this point. Micro Yield futures are designed for shorter-term trading with contracts listing for only two calendar months. This is different from CBOT 2-year (ZT) and 10-year (ZN) futures which are listed for 3 consecutive quarters, currently through September. The traditional Treasury futures contracts would be better instruments for a yield spread strategy. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trade set-ups and express my market views. If you have futures in your trading portfolio, check out on CME Group data plans in TradingView that suit your trading needs www.tradingview.com
CBOT_MINI:10Y1!Long
by JimHuangChicago
6
Big Four Macro Overview: Dollar Index There are extensive fundamental comments, context, and observations in the two DXY pieces written in 2022. They are linked below. The 70.70 - 121.02 trading range has defined the Dollar trade over most of the last 4 decades. Even at the August 2022 high, DXY remained well within this range. Since correcting from the August 2022 high, the market is now in the upper center of this range. As I see it, moves inside the bounds of the range are primarily noise. While they present trading opportunities, they mean little in macro terms. 85.25 - 103.82 had defined trading since late 2014. Price managed to breakout last year. The subsequent rally found resistance at the top of the weekly perspective trading channel. After testing the top of the channel in October, price has set back to test the breakout point. Near term support is defined by the top of the broken range, the roughly 50% retracement of the most recent rally, and the center point of the upward sloping trend channel. It is likely that significant support will manifest in this zone. A show of strength from this position would strongly suggest an attempt to test the 114.78 high and, potentially, the very upper extremes of the range. A failure would suggest a move back toward the uptrend support and the low of the trading range (85.25). If the market does test the top of the broader range, my expectation is that a major shorting opportunity will setup. But it somewhat depends on why the market gets there. In earlier pieces I made the case that flight to quality or a Fed that is more aggressive relative to other central banks are the two most likely catalysts. Volatility: I believe that Vol is more cyclical than price. Periods of very low volatility set up conditions that often lead to explosive moves. Volatility has been gradually removed from this market over the last 30 years. Now the market may be breaking out of the pattern of ever lower volatility peaks. A breakout, particularly combined with a range break would suggest a disruption in the long term equilibrium and move DX from trendless to trending. Vol has broken above its downtrend but still must move above a prior peak to confirm. DX Futures Weekly: From the buying climax high in late September the market pulled back on high volume and wide price spreads. In this perspective you can clearly see the support confluence and the oversold nature of the weekly chart. Not shown is the trendline across the tops of the old trading range high (see the monthly chart) that also provides support in this zone. Volume is beginning to build again but the lower volume suggests that neither buyers and sellers are particularly active. Triple Screen Momentum: The triple screen isn't as useful in a ranging market, but the current setup does suggest an important momentum juncture. I have always found it interesting when, in a bull market, the faster momentum line moves on top of the slower line as is occurring in the monthly perspective. These tests of longer term momentum often mark important junctures. Fundamentally: Impetus for a test of last year’s highs could be provided by the Federal Reserve increasing rates significantly faster/slower than current expectations or faster/slower than other central banks. Externally, a flight to safety, a significant increase of the intensity of the Ukrainian war (particularly if it weakened the Euro) or a significant rebound in economic activity could all be enough to produce a rally. When thinking about the Dollar its worth remembering that currency is always relative game. It's not only the domestic economy and monetary/fiscal policy, but those factors relative to the same factors inside our largest trading partners. Finally: Many analysts suggest that weakness in DXY has created a rally in risk assets. I believe they have causation backwards. During periods when global risk assets struggle, weakness in risk assets and flight to quality creates flows into DXY. When risk assets do better the DXY weakens as flows reverse to risk. If/when risk assets begin to decline again, flows will again become DXY favorable. Many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
TVC:DXY
by CMT_Association
11
Long AI Short HypeFighting innovation is a fool’s errand. Getting entangled in hype is no less. Generative AI is drawing attention. ChatGPT skyrocketed in popularity since launch last November. With its intuitive responses, it has become the fastest-growing app in history reaching one million users in five days and 100 million in two months. In contrast, Google took 12 months and Facebook required four years to get there. The virality highlights the potential disruptive power of generative AI. Disruptive innovation is not new. Railways in 1800s to Blockchain in the recent past provide ample history. As observed before, innovation takes time to mature. Yet the hype cycle races ahead only to plunge in time to normalise. This paper uses iShares Exponential Technologies ETF (XT) as a proxy to cutting edge innovation. XT invests in global firms with exposure to exponential tech, which displaces older tech. It invests across nine themes comprising of firms in both developed and emerging markets that create or use exponential tech. This paper argues for gains to be harvested from sinking hype using a spread trade. A long position in CME Micro E-Mini Nasdaq Futures (MNQ) combined with a short position in XT will deliver a compelling 1.49x reward to risk ratio. HISTORY OF HYPED INNOVATION Gartner hype cycle graphically depicts disruptive innovation journey. First comes the climb to peak hype. Second, fall to trough of disillusion. Third, slope of enlightenment followed by plateau of productivity. Using Google Trends as a proxy for hype cycle, it shows that market mania around AI is not new. AI searches surged in 2011 with the launch of Siri, Cortana, and IBM’s Watson. With natural language processing tech still in infancy, practical applications were limited then. And soon, the frenzy fizzled. Innovation in new machine learning algo such as convolutional neural networks and deep learning led to the launch of ChatGPT. Its potential is clear. Yet the tech is in early stages requiring a lot more work before it can mount serious challenge to existing tools. Tech parity will take considerable time let alone the meaningful monetisation which requires legal and ethical AI use hurdles to be cleared. One of the foremost examples of Gartner’s Hype Cycle is the boom in US Railways between 1840-1860. Hopes of ever-increasing returns attracted large scale investments only to result in eventual disappointment. Illustrations from recent past (Crypto, IoT, and Blockchain) shows similar fate of over-hyped tech. CURRENT HYPE IN XT, C3 AI, AND BEIJING DEEP GLINT A 23% surge in price in iShares Exponential Technologies ETF since mid-October last year is emblematic of Gartner’s hype cycle. This is even more evident in the share price of C3.ai. Founded by legendary entrepreneur Tom Siebel, this company was named C3 Energy when formed. It changed its name to C3 IoT in 2016 and then renamed again to C3.ai in 2019 to ride the waves of hype. US equities cannot claim monopoly over hype. Equities elsewhere get swayed too. Shares in Beijing Deep Glint Technology also rallied 80% spurred by ChatGPT. However, last week, the company announced challenges in offering ChatGPT-linked products causing its shares to tank 10%. ROAD AHEAD FOR GENERATIVE AI Generative AI is here to stay. Infancy for now but the tech will mature. Competition will rise. Winners will emerge. But monetization is another story altogether. Favouring innovation while frowning on hype fuelled by inflated expectations, this case study proposes a spread trade. A long position in CME Micro E-Mini Nasdaq Futures (MNQ) combined with a short position in iShares Exponential Technologies ETF (XT) delivers a compelling 1.49 reward to risk ratio. TRADE SET UP Why a spread trade? In the short term, elevated levels of uncertainty have left experts puzzled on whether we are in a bull market or a bear market rally. Hence, to extract pure alpha (by neutralising beta) of securing gains from diminishing hype, this case study proposes a spread trade. The spread will gain in a bullish market when MNQ rises relative to XT. Similarly, the spread will gain in a bearish market when XT falls more than MNQ. CME’s Micro E-Mini Nasdaq-100 Index Futures expiring in June 2023 (MNQM2023) provides a notional exposure to $2 x Nasdaq-100 index. With MNQM2023 settling at 12,525.50 on February 17th, the futures provide a notional exposure of $25,051. XT settled at $52.58 on the same day. A spread requires notional value of both the legs to be identical. Therefore, this requires short selling 476 units of XT for a short exposure of $25,028. • Entry: 238.218 • Target: 255 • Stop: 227 • Profit at Target: $ 1,760 • Loss at Stop: $ 1,180 • Reward-to-Risk Ratio: 1.49x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description. REFERENCES www.cmegroup.com www.cmegroup.com
CME_MINI:MNQM2023Long
by mintdotfinance
18
A simple sell strategy for Heating OilWith price and “commodity premiums” that we track showing signs of a structural shift, we think these represents potential tradeable set-up in the mid to long term as supply and demand finds some way to normalization after the pandemic & war shocks over the past 2 years. Hence, we think commodities will continue to be where the actions at. With winter just about over, we thought it would be perfect time to look at the ‘talk’ of pre-winter, Heating Oil. After a staggering 600% run-up from the depths of 2020 to the peak pre-winter last year, Heating Oil might just be on the opposite journey now. On a weekly timeframe, Heating oil has decisively broken the uptrend established since 2020 and now sits on the support level for the 2011-2014 period of 2.75. Zooming closer on the RSI, the current level proves to be a pivotal point for heating oil’s trend, as each time the RSI crosses below the 40-level, it is followed by an accelerated move lower. In fact, taking a short position every time the RSI crosses below the 40-level would have netted an average of 27%, if you manage to catch the bottom! Even if you can’t catch the bottom, following the strategy, where we build a short position in heating oil when RSI crosses below 40, and hold it until RSI crosses back above 40, would still make a respectable 18.3% average return. On a shorter timeframe, Heating Oil seems to be trading within a descending channel, with the trend pointing lower. Another thing we like to look at is the relationship/premium between Heating Oil and Crude Oil. However, as the two types of contracts are quoted differently, we have some work to do to rebase the prices into a comparable format. Given that Heating Oil is quoted in US Dollars and Cents per gallon, while Crude Oil is quoted as US Dollars and Cents per barrel, we can convert Heating Oil to be denominated in barrels. 1 barrel equals to roughly 42 gallons, therefore, we can simply multiply Heating Oil price per gallon by 42 to get its price per Barrel. Given Heating Oil is 2.7505 USD per gallon, this works out to be roughly 115.52 USD per barrel. This allows us to see the relationship between Heating Oil and Crude oil. The former is trading at a premium to latter. Over the past winter the Heating Oil premium reached it’s all time high, toping out close to 100 USD per barrel more than Crude Oil. With Spring now in sight, it appears a new season has dawned upon this premium, with the Heating Oil - Crude Oil premium now falling below the previous highs in 2011-2012. Should this continue, then we can expect the price gap between the 2 types of oil to close, with Heating Oil being the likely culprit to drive it lower. The general downward trend in current Heating Oil prices, falling Heating Oil premiums and historical RSI-based sell trigger, all point towards a potentially lower Heating Oil. We would consider setting up the trade in the following 2 ways to express our view: 1) Wait for the RSI to cross below 40 and sell, setting the take-profit based on the RSI crossing back above 40 again to close the position. Each 0.0001-point move in Heating Oil Futures Contract is $4.20 USD 2) Trade the spread between Heating Oil and Crude Oil by taking a short position in the CME Heating Oil Futures Contract and a long position in the CME Crude Oil Futures Contract. Given that 1 Heating Oil Contract is for 42,000 gallons, which is equivalent to 1000 barrels, we can Short 1 Heating Oil and Long 1 Crude Oil to form the spread, in order to match the position size of the contracts. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com www.cmegroup.com
NYMEX:HO1!Short
by inspirante
4
SpreadEx Terminal Rate Part 2Hi there! In our last post, we referenced the terminal rate, what it is and why it’s important in this lovely concise post for you . It’s time to update that viewpoint dramatically! In the chart above, you can see the Fed Funds price term structure, which is effectively showing you interest rate pricing (y-axis) across different tenors (put simply, months denoted by the traded contract code on the x-axis). It might be confusing at first because the price makes no sense on the y-axis, but all you have to do to find the expected target range for that period is find the difference between 100 and the current tenor’s price. For example ZQQ3 (August 2023) is showing about 94.75, which means the expected interest rate there would be 5.25% (100-94.75 = 5.25). This is higher than what the market had priced for the last 5 months. September is then when the market expects cuts to enter into the picture… But here’s the problem. If we look at the interest rate pricing from earlier periods, we can see the shift in the term structure. Since November last year and more surprisingly from January, there has been a rapid repricing in the interest rate path, which has resulted in reflecting the ‘higher for longer’ interest rate policy, likely led by strong employment data and the shelter component of housing simply not budging. This is certainly a cause for concern for risk assets as models reprice equities into a new, almost micro regime. See, for so long, it was expected that 5% would be the peak rate, but we seem now to be repricing quickly for a higher terminal rate of interest, and Tuesday’s CPI number largely confirmed this. Interestingly, equities are remaining flattish - this is probably a reflection of employment staying strong and so the well overused term ‘Goldilocks’ being in full flow. But under the surface, the dollar is starting to perk up again, which is almost certainly in relation to the Fed being more keen than other central banks to remain hawkish (for example, the Bank of England is looking to stop their hiking cycle in March while inflation is still a good few multiples above target - make of that what you wish!). EURUSD is down ~300 ticks or so after it breached 1.10 in early February and many analysts turned uber bullish for no specific reason. Commodity currencies like the Aussie and Cad are similarly facing weakness through February. Key to note is that this has largely been driven by the blowout employment figure and the repricing of said terminal rate (the recent bottom for the dollar came on Feb 3rd, the day of the NFP). But those of you who are following will understand this already and see that the interest rate pricing expectations are the number 1 priority when analysing the next few months.
by Spreadex
1