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Where US30 Is headed to next?Us30 has taken bearish hits since the beginning of this year. If it stays below $33,480 and continues back to the lows at 29,670 and further, we could see further decline. Not only for US30, but for the stocks within the index. Before that happens price could pullback towards 32,500 giving the buyers some opportunity and hopes of recovery. That's just a thought until it happens. For now, the Dow is bearish and if there is hopes of true recovery price will have to push up pass 33,480 and continue up from there.
CAPITALCOM:US30Short
by ShaquanLopez
1
Interest rate ( DOLLAR )How high will the Federal Reserve ( FED ) raise interest rates? Here you can see how far. As you can see we still have a long way to go. We are on the verge of breaking a congestion of more than 40 years. The minimum rate hike will be up to 5 points. And that is at least, because we could revisit levels not seen since the 80s. We are in serious trouble, the economy of all citizens will suffer a lot. It is time to be cautious in the markets and not to make hasty decisions, as we may still have a long way to go before we see the end.
ECONOMICS:USINTRLong
by javieralcazarono
Ugly Markets - Embrace the TrendsThe trend is always our best friend in markets across all asset classes. While many investors and traders waste their time interpreting the new cycle and other factors, the path of least resistance of market prices is a real-time indicator of the current sentiment. Stocks and bonds fall in Q2 Four of six commodity sectors post losses Rising interest rates and a strong dollar Economic contraction- Copper tells a story Go with the flow Market prices rise when buyers are more aggressive than sellers and fall when sellers dominate buyers. The current price of any asset is always the correct price because it is the level where buyers and sellers agree on value in a transparent environment, the marketplace. The results for Q2 were ugly in most markets. Stocks and bonds fell, the dollar index rose, and four of six commodity sectors posted losses. The best performing sectors reflect the supply-side issues created by the war in Ukraine, sanctions on Russia, and Russian retaliation. Uncertainty in markets creates price variance, and markets reflect the economic and geopolitical landscapes. As we move into the second half of 2022, uncertainty is at the highest level in years. Meanwhile, market liquidity tends to decline during the summer vacation months. Lower participation only exacerbates price variance as bids can disappear during selloffs and offers often evaporate during rallies. It is a time for caution in markets across all asset classes, but the trends on a simple price chart tell us all we need to know about the path of least resistance of prices. Stocks and bonds fall in Q2 The stock market was ugly in Q2: The DJIA fell 11.25% The S&P 500 declined 16.45% The tech-heavy NASDAQ dropped 22.45% Over the first half of 2022: The DJIA was down 15.31% The S&P 500 fell 20.58% The NASDAQ plunged 29.51% As the Fed began increasing the Fed Funds Rate and reducing its swollen balance sheet, the US 30-Year Treasury bond futures fell 8.19% in Q2 and were 13.75% lower over the first half of this year as of June 30. The long bond fell below its technical support level at the October 2018 136-16 low and reached 132-09 in June before bouncing. Four of six commodity sectors post losses While the energy and animal protein sectors posted gains in Q2, base and precious metals, grains, and soft commodities moved to the downside. The quarterly results by sector were: Energy- +6.77% Animal proteins- +3.31% Gains- -3.46% Soft commodities- -4.12% Precious metals- -12.91% Base metals- -27.24% Over the first half of 2022, four of six sectors were higher than at the end of 2021: Energy- +43.86% Grains- +14.65% Animal proteins- +10.96% Soft commodities- +1.46% Precious metals - -5.43% Base metals- -13.07% The results reflect the economic and political landscapes. Energy and food prices rose as the war in Ukraine threatens the global supply chains. Metal prices declined because central bank policies and economic conditions led to rising rates and a strong US dollar. Rising interest rates and a strong dollar The US Federal Reserve blamed rising prices and inflation on “transitory” pandemic-related factors throughout most of 2021. The central bank waited far too long to address inflation and is now playing catch-up when the war in Ukraine and geopolitical tensions impact the global economy’s supply side. Central bank monetary policy can affect the demand-side, but they have few tools to manage supply-side shocks. The rise in energy and food and the decline in metal prices tell us that central banks are struggling to address the current economic landscape. The US 30-Year Treasury bond futures chart shows the pattern of lower highs and lower lows. While the long bond bounced from the June low, the bearish trend remains intact in early July. The US dollar index, which measures the US currency against other world reserve foreign exchange instruments, rose 6.21% in Q2 and was 9.28% higher over the first half of 2022. The dollar index settled at the 104.464 level on June 30 and rose to a new two-decade high of 107.615 on July 8. Since the US dollar is the world’s reserve currency and the pricing benchmark for most commodities, a strong dollar caused raw materials to rise in other currencies, putting downward pressure on dollar-based prices. Economic contraction- Copper tells a story The US remains the world’s leading economy. In Q1, US GDP fell, and it likely declined in Q2. The textbook definition of a recession is two consecutive quarterly GDP declines. Copper is a base metal that trades on the London Metals Exchange and the CME’s COMEX division. Copper has a long history of diagnosing the economic climate, earning it the nickname Doctor Copper. In Q1, COMEX and LME copper prices rose by around 6.5%. In Q2, they plunged, with the COMEX futures falling 21.82% and the LME forwards dropping 20.41%. COMEX and LME copper prices were down over 15% over the first half of 2022. The chart of COMEX copper futures shows the move to an all-time $5.01 per pound high in March 2022 and a decline to a low below $3.40 in early July. The descent below technical support at the August 2021 $3.98 low and nearly 30% drop as of July 8 are signs that recession is not on the horizon; it has already gripped the economy. Go with the flow Inflation remains at a four-decade high, and while raw material prices have declined, the economic condition is far higher than the current Fed Funds rate. The central bank has pledged to fight inflation with monetary policy tools. Higher interest rates could put more downward pressure on raw material prices and the stock market as the economy contracts. Time will tell if the Fed continues its hawkish path or reacts to current market conditions. Waiting far too long to address inflation in 2021 suggests the central bank will likely remain hawkish regardless of market conditions in 2022. It is impossible to pick tops or bottoms in any market as prices often rise or fall far beyond where logic, reason, and rational analysis dictate. A market participant’s most effective tool is to follow the trends until they bend. The path of least resistance of asset prices can be the most significant factor for future performance. In these troubled times, where uncertainty is at the highest level in years, don’t fight the trends and go with the flow. In early Q2, it remains bearish in many markets across all asset classes. Stocks, bonds, commodities, cryptos, and other asset classes are making lower highs and lower lows, while the dollar index is moving in the opposite direction. Markets are ugly, but nothing lasts forever. Trend following can be the best route for capturing the most significant moves. You will never buy the lows or sell the highs when following trends, as they will cause short positions at bottoms and long positions at market tops. However, trend-following allows for extracting a substantial percentage from a significant price move. Embrace those trends until they change. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
CBOT:ZB1!Education
by Andy_Hecht
Potential TLT Inflection and Notes onProcessWhat started as a short post describing a potential, but dangerous, weekly inflection in the TLT chart has evolved into a much longer discussion around process and how I organize and view the basic information. As I wrote, I realized how difficult it is to describe process, particularly the more nuanced aspects. 40 years spent staring at literally millions of charts and focusing on rates and credit have internalized much of what I do. But I hope this at least provides you with a place to begin. I have ordered the steps, but the order isn't particularly important. And finally, there isn't a right or wrong process. What process is and what it accomplishes is different for everyone. What is important is that you have a process, particularly surrounding your risk and trade management, and that you implement it consistently. Note also that there are different processes for different trend states. A market with bearish momentum that appears to have plenty of life remaining in its trend requires a different approach than one making a potential inflection. Finally, most markets only provide two to three good tradable inflections a year. TLT is showing many of the characteristics I monitor for in these inflections. I like simple things. I prefer to find confluences of support and resistance and then to monitor for price volume behaviors around those confluences. This is how I go about it. Background: Momentum and price trends in daily, weekly and monthly perspectives are clearly lower and the price volume relationships in the trend of higher degree (monthly) strongly suggest that rallies will prove counter trend. The three momentum trends pertinent to the analysis are covered in the “triple screen” section below. Identify and organize the major chart elements: Buying Climax and Failed Test: March 2020 produced a clear buying climax. The spike high, subsequent close near the low of the price spread and below the close of the prior weekly bar with volume at nearly 4X the average was unambiguous. Note that over the two week period the market roundtripped nearly 41 points or 23%. At the very least, this kind of volatility can be expected to exhaust the market. The market then spent 21 weeks moving laterally. Two attempts to rally with no sign of expanding volume strongly suggested a lack of demand. In my view, the break below TR1 strongly suggested that the test of the buying climax had been completed. Identify Horizontal Support and Resistance: The market is framed by major support at 111.90 (Nov 2018 low) and major resistance 179.70 (March 2020 Covid high). What were significant supports at 133.19 and 155.12 are now strong resistance. Price did violate the major support @ 111.90 but not to a meaningful degree and it certainly didn't post a weekly or monthly close below. PENDING A SUCCESSFUL TEST, I am tenatively viewing this as a weekly hold. It also demonstrates the danger of selling breakouts, particularly when the market has been trending for an extended period or the preceding move has been violent. Again, to be trusted, the recent low @ 108.12 needs to be tested. In lieu of a test, unequivocally bullish behaviors would need to develop. To this point, that has not happened. Identify Dynamic Elements: There are three dynamic elements in play. Price is pressing against the bottom of the large declining trend channel drawn across the 175.25 -155.12 highs with a parallel drawn from the 133.19 low. The supply or overbought line of the channel currently intersects price in the 148.00 area, but is constantly declining. You can think of the bottom of the channel as the oversold/demand line for price. It intersects in the 116.61 zone. There is also a broken uptrend (LT1) that had defined the trend for the last decade. The clear break of the TL in April moved the long term trend from up to neutral. The broken uptrend should now act as resistance. It currently intersects price in the 121 1/2 area. Of lesser interest is the steep downtrend drawn across the 155.12 and 142.33 highs. A break above would add confirmation of a short term trend change. Characterize Volume: Are the price/volume relationships bullish or bearish? Volume has been steadily rising/heavy on the B-C leg. This is consistent with a supply driven market. This increase in volume is particularly evident on the monthly chart. See the detailed volume breakdown below for a more in detailed look at the daily perspective chart. Categorize the Momentum State: Weekly perspective oscillators like MACD (shown) and moving average and volatility envelopes (not shown) are deeply oversold. I use deeply oversold/overbought conditions to help identify charts and time frames that should be monitored for bullish or bearish price behaviors and chart setups. I also use oscillators as a trend filter. But I rarely use them to generate actual buy or sell signals. Last weeks close nudged the weekly MACD oscillator onto an oversold buy signal. But, to be trusted the crossover MUST be coupled with bullish price behaviors. Evaluate the most important Fibonacci objectives and retracements: Fibonacci objectives generated from the 179 .70 - 133.19 - 155.12 sequence: Equality at 108.34, 1.38 @ 90.51 and 1.618 @ 79.49. The market found support at equality. Fibonacci Resistance generated from the X - C & B - C declines: I prefer to look for clusters. The most likely resistance cluster falls in the 132-135 zone. When it comes to Fib levels, I like to keep it simple. I hate to see charts with dozens of Fibs scattered about. In my opinion, it devalues the more important levels. Examine the price/volume relationships in the trend of lower degree: Volume Detail: The footprint of a subtle shift from supply driven to demand is evident. Two bars in particular, May 5 and June 13 (circled) drew my attention. It would have been easy to dismiss these two as supply, but on my charts I labeled them as demand. Both bars are large gap down days, but note that they closed well off the lows, in the upper portion of the periods range and on much higher than normal volume. Note also that volume pulled back on the decline from the May 27th high (rectangle). This reduction in volume represented a significant lessening in supply. In other words, selling was far less urgent than the selling that had characterized the earlier portions of the decline. Over the last few sessions signs of supply have developed but volume on the pullback has been modest compared to price spread. Examine the perspectives of higher and lower degree: Triple Screen: The chart of higher degree will help determine how aggressive trade positioning and risk management should be. The chart of lower degree is used for trade placement, tactical entries and stops. Monthly: Trend of higher degree is clearly bearish and not oversold. Rallies in the weekly perspective will likely be corrective/countertrend as opposed to the start of a new long term trend. A large head and shoulder top is visible in this perspective that projects as low as 88.00. Volume (not shown) has been extremely heavy, confirming the trend, but perhaps being a bit on the exhaustive side. Against this backdrop rallies will have a tendency to fail early and surprises will tend to be bearish in nature. This suggests that positioning in shorter perspectives should be conservative and stops should be raised aggressively behind trades. Trade management should be generally conservative. Daily and other: If the weekly chart supports positioning, move to daily and hourly perspectives to build trading and risk management plans. Other Considerations: Are there any seasonal tendencies in play? Bond prices have very strong seasonal tendencies, weak into the May - June time frame, stronger into the middle of September, and weak into the end of the year. TLT has entered a time of the year when bonds often transition from weakness to strength. Are the related markets supportive? Industrially sensitive markets like copper and crude appear to have made significant inflections as the market’s attention shifts from inflation to recession. The same can be said for TIPS breakeven rates. On balance, the related markets are supportive. Do the charts of other U.S. maturities and yield curves support the idea? 2s and 5s are testing strong yield resistance levels and momentum is threating to reverse, particularly in fives. Remember that the two year is very sensitive to the Fed, fives are a combination of market forces and Fed and Long rates (TLT is longer duration) are generally more responsive to the economy and inflation. Is positioning or sentiment offsides? In rates, Commitment of Traders, options open interest, open interest data from futures, TIC data and fund flows are all fair game. When trading was my job, I monitored all of the above. Now, in retirement, not so much. Breadth, % of stocks above or below moving averages and VIX fall into this category. Evaluate economic relationships that impact bonds: For example, are the slopes of the ISM and surprise indices consistent with the trade? With the ISM slope clearly negative, bonds are more likely to be bid. What are credit spreads doing? The widening in high yield and investment grade credit spreads is also supportive. Do I have the sense that there are systemic issues building that might impact the trade? Systemic issues are typically bullish for bonds. While I see less potential for dislocation in this cycle, rate increases of this magnitude usually wreck someone. Finally, I take a sanity check, am I falling prey to behavioral bias? Am I being dispassionate? Reach a Conclusion and Design a Trade: While monthly trends are unequivocally bearish, the market is testing a major support confluence generated by the combination of horizontal support, oversold channel and fibonocci levels. Weekly momentum oscillators are oversold and there are tentative signs of demand developing in the price volume relationships. Recent inflections lower in industrial commodities, TIPS breakevens, and energy are supportive and suggest a growing recession narrative. Bonds are entering a seasonally strong period of the year. While trends are clearly negative, the balance of the evidence suggests that conditions are conducive for a weekly perspective inflection/correction to develop. I will begin monitoring market behaviors in the daily and hourly perspective charts for opportunities to enter. It is likely that a rally into the third quarter will set up a very high percentage selling opportunity. Design the trade: For liability reasons the CMT Association precludes me from making direct recommendations. So, this is where I leave you hanging. My goal was to show you how I do the analytic steps leading up to designing a trade. But a few general thoughts: Trade entry should be timed using the charts of lower perspective (daily and hourly). Remember, the recent low has yet to be tested, and the market is far away from a logical stop loss placement. Since a long trade will be counter trend, strict attention to risk control and entry tactics will be required. Surprises are inevitably in the direction of the trend… plan accordingly. The Fibonocci retracements and overhead resistance zones outlined above can be used to ascertain if a trade has a reasonable reward for the risk taken. Look for confluences of horizontal, dynamic and Fibonoci resistances to build objectives. Which brings me to my final points in regard to process. I believe that simplicity leads to robustness. I consistently follow the same basic building blocks/process for all my trades, no matter the context or the market. Most importantly, most of the considerations described above are just details. Support, resistance, trend and the price volume relationships get you almost all the way there. I’m not going to pass a trade with a good risk reward because the seasonal is wrong or the trend higher degree isn’t supportive. Analysis paralysis is real. Decide what the most important elements are in your process of focus most of your attention there. And finally, most of the topics and techniques covered above 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.
NASDAQ:TLT
by CMT_Association
38
EUR/USD Approaching Multiyear Technical & ECB Intervention LevelStocks are doing quite well despite a recession risk which is in focus lately as CB is hiking rates despite the economic downturn in the last few months. But it seems that word “recession” is not in FED’s vocabulary now, and this may not be change so soon after today's NFP numbers came out above expectations, so FED will stick with hawkish policy. ECB is also trying to follow the FED and fight the inflation, which is a “must” as EURUSD moves towards parity and is currently trading at a 20-year low. We must keep in mind that a weak currency in the eurozone is making inflation even worse when you are a net importer. So I think that inflation can come down faster if the currency would be stronger. From an Elliott wave perspective we see pair trading in a higher degree complex correction down from 2008 high, now possibly in late stages with price approaching 78.6% Fib. level that comes in around parity. Technically I assume that Eur can be much higher in years ahead, but the question is what will be the catalyst; Higher EUR interest rates? Ukraine-Russia solution? Downturn of the USD? Maybe foreign exchange interventions? None of us can answer this question at the moment but technically I think that 1:1 Eur vs Usd is clearly an interesting level. However, I think if EURUSD pair moves below parity the ECB intervention may happen. The last time they acted alone was back in 2000 when EURUSD was trading around 0.9000. So firstly, they will try to bring down inflation with higher rates, but then I think intervention is also an option, especially if pair would approach that same 0.9000 level. Trade well, Grega
by ew-forecast
2
Gold Smashes Lower LevelsGold has fallen further, finding support exactly at our target that we identified yesterday at 1735. We are starting to see what could be the beginnings of a pivot, with a green triangle on the KRI suggesting we are finding support at this level. The Kovach OBV is very bearish, but has flatlined a bit which may indicate that the bleeding has stopped for now. If we do pivot from here, the mid 1700's should provide resistance with 1777 a likely ceiling for now. If we collapse further, we could find support at the base of the 1700 handle.
COMEX:GC1!Long
by quantguy
XAUUSD - KOG REPORT - FOMC!KOG Report FOMC: This is our view for FOMC today, please do your own research and analysis to make an informed decision on the markets. It is not recommended you try to trade the event if you have less than 6 months trading experience and have a trusted risk strategy in place. The markets are extremely volatile and can cause aggressive swings in price. What a great time we’re having on Gold at the moment with the moves playing out nearly to perfection into all our levels. We’ve done well on this and we’re not interested in giving anything back so we will wait for the levels shown to give us strong support or resistance before we attempt to take a trade, even then it will be with a small lot and a tight stop in place. Please don’t mess around with Gold when its like this, if you’re in the wrong way Gold can really cause you sleepless nights! So, moving forward we’re going to trade this with two scenarios in mind, looking at only the highs and the lows of the present range. Scenario 1: We have a target below which is sitting around 1720, this is also the weekly support level so potentially this can be a short term stop on the selling pressure we’re witnessing. If price spikes into that level during FOMC or in the coming sessions we feel an opportunity to long the market exists. We’re not looking for huge captures, simply the 1775 and 1785 levels initially. After this, take partials, stop to entry and let it run. Breaking the level to the downside and you can see what's next!! Scenario 2: They push the price up, the first level we’re looking for is 1775 and above that 1785-90. If we see resistance there we feel an opportunity to short the market back down in to the 1750 and below that 1735 and 1720 levels could be on the cards. Breaking above the 1795 level and holding above it then its likely we will see this go a little higher before then attempting to come back down It’s a dangerous market to trade and its not for the faint hearted. Please be sensible and don’t try to get rich quick, it won’t happen! Have a risk model in place and make sure your lots sizes are in accordance with your account size. Hope this helps in preparation for FOMC, we will update you as we go along as we usually do. Please do support us by hitting the like button, leaving a comment, and giving us a follow. We’ve been doing this for a long time now providing traders with in-depth free analysis on Gold, so your likes and comments are very much appreciated. As always, trade safe. KOG
OANDA:XAUUSD
by KnightsofGold
15
US Inflation.US inflation is very correlated with the extreme rallies we have seen in US stocks, Oil and crypto, FED are increasing rates frequently to counter this abnormal levels inflation show as the bar graph in my chart, one thing that is going to directly affect asset prices is rates, the dollar should look to gain strength too. So increased Inflation will see rising asset prices, and a falling inflation should drop asset prices from their highs. FED are beginning to try tackle the major inflation seen in the US, and the market conditions are going to change, so be prepared and manage your risk very safely, these coming market conditions are going to be a tough sea in my opinion.
ECONOMICS:USIRYY
by ZenFlo
Bear Market = Altcoin Season? BTC and ETH Losing Ground to AltsBoth stocks and crypto markets have been down in most of 2022 (largely due to inflation, rising interest rates, and talks of an upcoming global recession), but in the last month we've seen a few interesting patterns emerge: - Proof-of-Storage coins, particularly Chia Coin (XCH) and STORJ (STORJ) have seen very favorable gains. - The two major crypto coins, Bitcoin and Ethereum, has actually been performing worse than the majority of "altcoins" out there - a sign that crypto investors are reallocating their portfolios towards alts. - Weekends are usually when crypto investors typically make their move - and we see that coins that offer staking rewards (interest rates start to look more favorable during recessionary periods) have been gaining ground. (XTZ +4.5%, ATOM +4.5%, MATIC +3%) This is a PSA but beware of newly minted coins' "staking rewards" because a lot of them are based on the idea of certain assets (BTC, ETH, even fiat) always going up. When that inflow dries up, we're going to see a lot of services and platforms go through a LUNA-style collapse - if you don't DYOR carefully here, you may get caught up in the storm. Many coins that currently offer "staking rewards" have cut a lot of corners to keep up with last year's hype and is living on borrowed time. cobie.substack.com In theory, Layer-2 coins built on top of the EVM network operate independently of ETH's price, but we don't actually know all the details of what goes on behind the scenes - some of them may collapse just as well if their model has been reliant on speculative gains on ETH itself. (Something that the project teams will never admit to, even if true.) Time will tell whether it turns out this way or not, of if the Merge in August will stabilize or destabilize these economies as a whole. A lot of uncertainty in the big-name coins right now, either way - meanwhile, altcoins have been gradually chipping away at their lead.
Long
by RyanTanaka
Gold Smashes Lower LevelsGold has begun the month of July with a massive selloff, giving up the 1800's entirely. We saw support at 1815, but that was quickly faded and we broke through to the value area between 1795 and 1815. However, 1795 did little to provide support and we have collapsed further to support in a cluster of levels between 1784 and 1795. It does look like we are finding support here, confirmed by a series of green triangles on the KRI. Additionally, we look quite oversold as confirmed by the Kovach OBV. Watch for a relief rally back to 1795. If gold continues to sell off, then 1777 is the next target.
COMEX:GC1!Long
by quantguy
Relief Rally in GoldGold broke down into the value area between 1815 and 1795, but swiftly spiked back to 1826, where we are seeing resistance confirmed by a red triangle on the KRI. The Kovach OBV is still very bearish, but we are starting to look oversold as both Kovach momentum indicators are bearish. We will see if the spike back to 1826 can sustain, or if it is just a relief rally. If momentum sustains then 1836 and 1851 are the next targets. Otherwise, we expect it to stabilize between 1795 and 1815.
COMEX:GC1!Short
by quantguy
🔥 Has Inflation Peaked? A Century Old Trend Suggests YesWith inflation rising, the FED is applying quantitative tightening to the US market and the Dollar, which has caused chaos in the market of 2022. The market fears that the FED is not doing enough to combat this inflation, which will cause higher inflation, which will eventually cause further chaos in the markets. However, looking at the chart it seems that inflation is currently at a massive "resistance" which has developed over the last 100 years or so. If inflation were to adhere to the trend, we can assume that inflation has peaked and will move down from here onwards, which would result in much better (bullish) market conditions. I'm aware that applying TA on fundamental data like inflation is generally speculative at best. I think that inflation will rise further as long as the FED is unable (or unwilling) to rise the interest rates further. Nevertheless, I think this analysis can shed a different light on on the most important piece of data of 2022. Time will tell. Do you think think inflation has peaked? Share your thoughts in the comments.
ECONOMICS:USIRYY
by FieryTrading
20
My plan for deploying cash over the next six monthsNTSX is an ETF that holds 60% S&P 500, 40% leveraged bonds. This is a highly efficient portfolio composition known as "return stacking" (recently popularized on Twitter by Corey M. Hoffstein). You get the best of several worlds: the lower volatility of the 60-40 portfolio, and the higher returns offered by leverage. Since leverage is used on the relatively safer part of the portfolio (bonds rather than stocks), it doesn't add too much extra risk. Stocks and bonds have sold off together over the last several months, creating a rare situation where there's been a large drawdown in 60-40 portfolios and in NTSX. I think there's an opportunity shaping up, but the hard part is going to be timing it. I've been sitting on a fair bit of cash for several months (you may have noticed I haven't posted much!) and am debating when to deploy it. It's likely still too early, but I think we're nearing good levels at which to deploy anywhere from a quarter to a third of it, and NTSX is a good vehicle for that. I'll likely hang onto the remainder of my cash till October. Macroeconomic Considerations Rates are soaring, and there's no question that will be a bit of a drag on growth. But it's offset by a strengthening dollar. The US is hiking rates faster than other developed markets, which has the dollar index soaring. A strong dollar is generally very good for US stocks. In fact, stocks usually rise as interest rates do, and it's only at the end of a rate hike cycle that we tend to see a recession. There's probably a recession coming in the next couple years, but we're not there yet. Several parts of the yield curve recently inverted, which usually signals a recession in the next 18 months. You might think that means it's time to get defensive, but stocks often go up quite a bit after yield curve inversion and before the recession hits. (Plus, this yield curve signal has been a bit wonky, because parts of the curve are steepening while others flatten. So it's hard to know how to interpret this recent inversion.) For the last several weeks, the Leading Economic Indicators index and the ECRI Weekly Leading Index have been steadily improving, a good sign for near-term growth. Meanwhile, commodities prices have weakened somewhat, with the GSG broad commodities ETF breaking its uptrend: It's possible we could even see some disinflation, which would obviate the need for the Fed to get so aggressive. There are certainly headwinds: China lockdowns, war in Ukraine, and rising US Covid cases. These headwinds need to be taken seriously. But there's also the possibility that any of these situations could suddenly improve at any time, especially if certain policymakers in Asia come to their senses. So I think it's worth having some exposure here. Policy Considerations So with the macro picture looking not too bad, why would I hold onto 2/3 of my cash? Because the Fed is about to start selling assets in May, including treasury and mortgage bonds. And when one of the biggest holders of assets starts selling, you probably don't want to be exposed. Now, the market has been front-running this move for the last several months, and bonds have already have gotten a lot cheaper. It's quite possible that a lot of it is already priced in, and that we could see some counter-trend asset buying that will offset selling by the Fed. The market is also pricing in really aggressive Fed rate hikes, with a 50 basis point hike at the May meeting and 75 basis points in June. That expectation may prove to be too hawkish. The Fed's own dot-plot projections imply a somewhat slower hiking cycle than the market rate does: www.cmegroup.com Any dovish surprise from the Fed might cause bond prices to pop. But I still think you want to play it somewhat conservatively here. The ten-year yield is still much too low for this level of inflation, so on balance, there's probably more downside than upside ahead for bonds. Seasonality Considerations Usually, May inaugurates the bullish season for stocks. But this is a mid-term election year, and mid-term election years are usually bearish from May to October. This may be an especially bearish year, because we're likely to hear a lot of talk tough from candidates about how they're going to stop inflation. The chart shows one possible scenario for how NTSX might move between now and October. I'm envisioning mostly sideways price action through July-August, followed by a summer selloff as we approach the election. If I'm right, then NTSX might even complete a full round-trip to pre-pandemic February 2020 levels by the end of the year. If this scenario does play out, then I'd probably deploy the rest of my cash around October. That might be the bottom, with the rate hike cycle mostly complete. Or it might be the beginning of a recession, as rate hikes cause the economy to blow up. But if it does turn out to be the start of a recession, NTSX won't be too bad a place to hide out. Stocks will go down in a recession, but bonds will likely go up as the Fed lowers rates to stabilize the market. That's part of what makes NTSX such an attractive vehicle.
AMEX:NTSX
by ChristopherCarrollSmith
6
Gold Tests Lower LevelsGold is encroaching upon lower levels of support as we predicted yesterday. It has steadily trended downward, though spikes in volatility have tested higher levels. We are seeing good support from 1826, confirmed by green triangles on the KRI. The Kovach OBV has been steadily down trending, but appears to be leveling off, suggesting support may hold, but if not, 1815 is the next target. Recall that there is a value area between 1795 and 1815. If we break out, then 1836 and 1851 are the next targets.
COMEX:GC1!Long
by quantguy
3
The Battle for Interest Rates: Tezos (XTZ) vs Ethereum (ETH2)Been writing a few long articles lately but the tl;dr of it is that now that interest rates are going up, the asset speculation market (real estate, stocks, venture capital, crypto/NFTs) is largely over and money will start to flow into financial products that provide more "reliable" returns - mainly interest rates. Given that the banks are dragging its feet in terms of giving people interest in their savings accounts, coins that offer reliable staking rewards will probably start to gain more attention as time goes on. I've been promoting the coin Tezos quite a bit lately since it's the coin that I feel like has the biggest long-term promise. They currently offer: 1) staking rewards (4.63% on Coinbase but higher if you stake them yourself) 2) on-chain governance (which most don't have, including Bitcoin and Ethereum) 3) people building/minting lots of things on top of it all the time, despite the dips in the market right now You probably remember me stanning for ETH since that's how I got my first successes is crypto, but to be honest they may be in trouble longer term if they don't do their merge sooner than later - gas fees are one thing but their decision to stick to off-chain governance models (basically trusting its users to make decisions behind closed doors) has been causing major issues in some projects, especially in DAOs. (Look up Brantley and ENS for an example of what happens with coin-based voting systems.) Whether I give up on ETH completely (I did sell off a pretty big chunk of it recently) will largely depend on how the Consensys merge goes this August and if they move towards or away from the ideals that they're advocating for all the time. They have a lot of catching up to do because #XTZ right now has all of the things they like to talk about already running. For the average person out there, what they're going to see is banks and crypto competing against each other in something that more people can understand: interest rates. Right now crypto is winning since they have the capacity to offer people better rates than the banks are - and can definitely win if they play their cards right. NFTs are still confusing for most people but one number being higher than another number is something that almost anyone can understand. You might even argue that this is the first time crypto is competing against the banks in a very direct way. The markets might look scary right now but once it settles down we'll start to see new patterns emerge with new ideas and products taking the scene.
COINBASE:ETHUSDLong
by RyanTanaka
2
Btc potential moveif btc close below 19k this weekend, i can sey the next week will be historical. there are to supports waiting for the btc fist one is between 18k-16900 , and the second is between 13900 and 11800. Not forgetting what is going on in the global economy, the Federal Reserve continues to raise interest rates, which will cause investors to sell their positions in riskier assets ( crypto , stocks) and lead to a significant drop in these markets. These investors will prefer to put their money into bonds that the federal government will print at higher yields. that is my personal opinion.
Short
by moadsr01