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Recession

NASDAQ | HOW SMART MONEY MOVESNasdaq (NDx) has been trapping retail investor for multiple time in the past. Case01: In Nov'21 the benchmark index holding 15530 key level of support and with 3rd time, it marked a low at 15162 and retail investor thought "THIS IS A BEAR TRAP" and our stoplosses got it and market is going up. "LET'S LONG" and we saw market going down by 18% Case02: In Mar'22 the benchmark index holding 13000 as key level of support and with 3rd time; it marked a low at 12750 nd retail investor thought "THIS IS A BEAR TRAP" and our stoplosses got it and market is going up. "LET'S LONG" and we saw market going down by 18% Case03: In Jun'22 the benchmark index holding 11100 key level as a support and just recently on 30th Sept it falls below it and made a low at 10871. The retail investors is again long in the index thinking this was 'Bear Trap' or 'Under Cut Low' but smart money know how to moves. We are expecting the index will be down by 18% when first red candle is made. Let us know what do you think of the idea.
SKILLING:US100
by TradeTrio
SPX vs DXY Pointing to Deep RecessionEvery time the DXY has peaked, SPX has hit a trough and vice versa, either near the exact same time, or within a period of months. I previously posted this same comparison as it relates to Bitcoin vs. DXY: And, if you zoom out and look at the 3 month DXY chart, we've broken out of a giant falling wedge, re-tested the top and continued up: If we are in fact about to enter a long-term recession, the charts can be shown to support such a prediction.
SP:SPXShort
by dudebruhwhoa
9
Will SPY hold 3500, a 50% Fib level from pandemic low to ATH?SPY as of today, like in the 2009 parallel in my post before this, also had a daily deathcross. Then price made a June low at 3636, bounced up to retest dma200(wma50) but was also rejected similar to 2009. SPY also gave up all gains & even broke below the June low. Twinkle of HOPE: if entailment this week changes to positive, It is still possible that SPY may make a slightly lower low at around 3500 to create the divergence for an oversold bounce. 3500 happens to be the Fib 0.5 retracement from the pandemic low to January ATH. BEARISH CASE: if 3500 will not hold, then the 312 to 320 zone will be the next support at Fib 0.618. Further waterfall will see 3000 & 2800 specially if wma50 crosses down wma200 (deathcross). Then probably the midterm election rally into new year. Not trading advice. Proceed with extreme caution!
AMEX:SPY
by xtremerider8
S&P 500 RECESSION ANALYSIS!1. LOWER HIGHS-LOWER LOWS: price action says the actions or pattern formed by the price itself. and the people who trade in the stocks makes up the demand and supply. therefore, this affects the inflation, and there could be a major correction, if recession is announced. 2. 3200 level is getting support by FIBONNACI RETRACEMENT(0.618 AREA) 3. RSI ANALYSIS: first i thought its a rsi divergence, but it looks like rsi is yet not completed its action fully, if the markets falls further, then RSI will correct itself, and will go in the around 22 level. to make my point prove, i have drawn one more resistance line, showing RSI's resistance towards it. the arrows what i have drawn in RSI, is to say whether it is a pullback of RSI or not, but to say so, it does not looks a like. 4. DEMAND ZONE: after a recession, the next phase is depression or expansion. it does not looks like, US markets will face a depression, so i will go with the 2nd option itself(expansion), which is also know as demand zone. so the indices will enter the demand zone, which says that markets would have reached its bnottom, and can have a fresh entries. 5. FIBONNACI RETRACEMENT & WAVE THEORY: supporting the wave theory with the fibonnaci, it looks greatly the index is supporting the fibonnaci levels, and thus forming a good corrective waves. the 5th looks way clearer, and no need to comment on it furthermore. FINAL STATEMENT: hence concluding my analysis, if theres a recession being announed, S&P will reach 3200 LEVEL. AND MY STATEMENT WILL THEN BE CONFORMED IF THE INDEX WILL ENTER THE LAST AREA OF FIBONACCI, AND GOES BELOW 3500(GOING TO TOUCH THE BOTTOM OF DEMAND ZONE)
SP:SPXShort
by raghavchoudhary2016
2
NASDAQ RSI DIVERGENCE, FIBONNACI!!Nasdaq has reached its crucial support. information is spreading about a recession in us markets, but technical like supports, rsi are saying to rise. although inflation is too high in us, and the markets too have corrected about 35% from its top, it do looks like, markets will not correct further more. same saying in the fibonnaci indicator. the index is lying in 0.618 zone. lets see if the stock do gives a gap down, and gives a breakdown, or rise. although last one statement, that NIFTY IT too have reached its last support and should not fall further(still it is been rising very slowly this days, but its in the same zone, unless us markets will stop falling). therefore i dont think much like there would be a further correction. ofcourse i could go wrong but lets further watch how markets do perform.
NASDAQ:NDXLong
by raghavchoudhary2016
US30 - Recession Outlook - Con'tI adjusted wave 6 on the current chart to the current downside move. Haven't been looking at US30 for awhile, but been focusing more on the S&P chart. Either way, the pattern is the same. Market is playing out, kind of as forecasted based on charts published months back. Are we there yet? At wave 5, the market was going "are we there yet?" Then the market shown that it is still strong. We had a bear rally where retail traders/investors continued to buy into. The buying-the-dip movement was still still going strong strong too, and the economy was declining but still not as bad as it seemed to be. There was still some optimism in the market. But all of that was perhaps short sellers taking profit at a key level where price broke a fairly strong resistance. The rebound above strong resistance on 1W above 31,450. Damn, this shit is real Now wave 6, it looks to me as the "oh shit, things are not actually getting better" phase. We continued the downtrend, posting a 2nd negative month consecutive bearish candle with a top wick that didn't break above previous candle body, a huge bearish body and very small lower wick. Are we going up? Looking at the 2008 crash pattern, we do see some ranging before the final drop, then recovery. It looks to me like a "we going up?" phase. Then price dips further to a "value price point", and market pivots, it will then be time to buy on a higher low, close back within the previous ranging price points. Just on charts, probably looking to see how markets react around 26,600, if the market finds a bottom. But I'm also expecting this time to be different as we had so much money printing. We're in an environment where we are rising interest rates to try to combat inflation, yet faced with a recessionary outlook. Also, with a pandemic which just passed, geopolitical events, war. Truly uncertain times.
OANDA:US30USDShort
by geneAnalytics
USD Index Recession Depression and TransgressionGood Morning All , It has been a long while since I posted, but it has also been along time since I have been active in trading as well. i squared off my positions and just been speculating and watching the craziness that continues to unfold. For some of the OG Traders out there you might have come across my stuff in the past, but for some of the new guys new to trading what a time to be alive. To re-itterate some points I have made in the past I am not political I consider myself a centralist with right sided tendencies. (because of my views about business and taxes) . this post will be rudimentary in aspects for people that live here in the US. So if not interested then skip the italicized section. okay, what we have here is the dollar index, and its basically a measure of strength of the US' economy against 8 other countries. Now, I live in the US and here is a very basic political breakdown of our political system republicans- it's the political conservatives of the country and business liberal. Meaning that they hold traditional values when it comes to policies and encourages borrowing for business growth and borrowing for political agenda. Democrats- it's the political liberals of the country and business conservative. Meaning they hold progressive policy values and encourage high taxation to fund their political agenda. We need both in the US to keep the balance to much right sided-ness we fall into a communists like state and too much left sided nss and we fall into the hands of socialism. so a health mix of both is needed to keep us in check. Now, the world is coming into hard times because of the US' liberal fiduciary policies as of late and now we are trying to reel that back. The US is the world reserve and will continue to be for the foreseeable future, and the reason i say that is I don't see the world entrusting China to report the truth of the Yuan's value if it were to become the reserve currency of the world. I know a lot of people think that china is the next super power to rise and become the reserve status of the world, but until they become more transparent i don't see it happening. The only country I see rising to take that spot is the UK. They have the second largest FREE trade economy of the world, and could potentially return to the reserve status. The EU stands a chance, but I don't see Germany being able to support the world economy that would be required to make the EU possible. Basically, which demon do you want to deal with, because none of the options are ideal. Now, if some of the EU countries that takes from the Euro really step their game up and produced for more the euro instead of take then they could become a viable option too, but as far as china I just don't see the world entrusting them to hold that type of power. I mean their housing market is currently a Ponzi Scheme, and their having to use military force to keep citizens from breaking into the banks to get their money back out. The US' SEC a year or two ago placed harsh restrictions and banned a lot of Chinese companies from the US open tradable market, because they were cooking their books and inflating earnings and deflating expenses, and rumor has it that the chinese government knew about it and allowed it, to continue to boost their economy via foreign monies. Back to the Dollar, the Dollar index has an inverse relationship with the NASDAQ, S&P 500, and the Dow Jones Industrial Average. Why? Because, the DXY is a visual representation of the current status of the Economy. When the dollar was in the 8X's the last two years times were good, people were making a lot of monies while spending and living the good life? Why? because the Fed made money cheap. So, the cost of doing business was cheap profits were just as large as the margins. So, business operations got fat in the sense of a CEO or C-Suite personnel needing 2-3 assistants and having bean counters to double check the primary bean counters. Now, Powell has consistently held to his target inflation rate of 2% its all over the FED's website and echoed in his speeches. which is the reason of his 75 base point interest rate hikes. What I see coming is another Great Depression. Because for many of the technical traders in the world there is more to a company than numbers on a chart. Investors large and small make monetary contributions to these companies in return for returns. well during COVID-19 money flooded the market and business were able to continue to run. Since the beginning of COVID I knew a lot of businesses were in trouble because they were publicly reporting inflated numbers to the SEC, and the SEC TOOK THEM?!?! So it looked like these businesses were doing way better than they actually were, and now their board of directors and shareholders expect them to continue to run at that level. Now, that money is drying up and these businesses are about to lose their funding from both ends. On one end their investors (already starting) are squaring off their positions. So, one way to prop up the facade of success is to do massive layoffs to trim the fat. Run the business very lean. That doesn't boost revenue that really just stabilizes the load. putting a plug in a hole on a boat as it were. These massive layoffs lead to lower GDP and two consecutive reports of shrinkage equals a recession. The Fed Continues to raise interest rates making the dollar expensive to do business. When someone looks at a business' 10K and finds their balance sheet or earnings they will see massive amounts of debt. this debt is typically owed to a major lending institution. These loans, though not designed for the purpose, they are used to fund operations and growth. good businesses have cash on hand to pay off loans in times of hardship and inexperienced leaders are frivolous with the tax-free money. When this money becomes more expensive businesses can no longer afford to take loans out and are forced to remain the same, shrink, sell-out to a competitor, or go out of business all together. part of the problem is that it now keeps people working because they lost 10-12 years out of their 401k due to the stock market correction, students coming out of college with massive amounts of student loan debt and are forced to take a job making 10-15 dollars an hour with student loan payments being around 300-1000$ a month which will lead to defaults because they cant afford to live alone, and are going to move back in with their parents. and hopefully their parents are not retired, because if so they're going to have to help their family with utility bills and mortgages and care less about their student loans. much less if their parents don't make the cut at work due to the layoffs. Now, this causes a major problem because those once employed people are now jobless and can no longer keep their payments to their mortgage company. And now these mortgage backed securities are going to start imploding on the people that bought them and repeat 2008. This is just the inherit fallout of these type of securities. I mean i understand their purpose, which is used to get back money to keep the velocity of money up, but no matter the credit score if a person loses their job and can not find work then payments are going to be missed. this will ultimately lead to a depression. what saved us last time from a depression was the US " FOUND " weapons of mass destruction and we launched an all-out attack on Iraq. and then when we finally "FOUND" said weapons we then decided to focus our attention on the people that attacked us on 9/11. But, this is not the only time the US used war to re-bound out of a depression, WW1 aka the great war ramped up our economy and we were magically out of a depression and then shortly aft Dub Dub 1 we found ourselves in Dub Dub 2. the pattern is repeated over and over in our history. the cold war got us out of the stink in the mid 80's with the cold war, and gulf war in the 90s. will the US find Hillary Clinton's Emails in China and now we go to war with china? Who Knows. (this was sarcasm) I think we need a business savvy executive whether man or woman to be elected as president and get the country back on the rails. We need good monetary policy in place, we need to support small business here in the states to keep big businesses from becoming monopolies and drive prices down. we need more diversity in the economy. Because a more diverse economy = a cheaper place to live. with all of that being said I forsee dollar to continue to get more and more expensive with the minimum being 12X.xx, median being in the 14X.xx and the maximum being somewhere around 15X.xx. I see interest rates forcing everyone's hand to show what their hiding. I see weak businesses going under, smart strong businesses staying afloat and will grow exponentially when the storm passes. another potential thing is that the FED might think they over extended and might bump interest rates down or keep them the same for a brief time (this is a temporary fix), but I still see them raising rates to get back to 2%. this is not financial advice, but my play book is to continue to sit on liquid cash and I would say a good indicator for me to jump back in is to see 4 or 5 maybe even 6 Fed meetings where the interest rates remain unchanged or begin to drop consecutively. So gather all your pennies, begin to live lean, and when the fed begins to keep interest rates unchanged begin to look at who is still walking around Wall St. and think about investing with them. i do think if the US votes with their intelligence and not their emotions we can avoid all of what I wrote. and I truly do hope I am wrong! @TayFx crazy to see man how two years ago we were called perma-bears and crazy and now we look like Wall St. prophets. LOL Hope all is well bud! HMU when you get a chance!
TVC:DXY
by ARegularGuy
Capitulation soonWhere do I start? Since the beginning of this bear market, I have observed every single leg down. And we reached a price level ($17k), where one could argue that this is the bottom. And for a good reason. The pattern for a lower low during summer got invalidated, lots of blood on the streets, so called ''tourists'' gone from the market, oversold metrics etc etc. What we got is accumulation between $18-25k. We could potentially say that accumulating around our low is not necessarily bad, but I'll shift this monologue towards the real economy. The real world. It's ugly guys. It's super duper ugly. Last couple of days have made it clear to me that this can't be the bottom. Too much pressure all over the board. Check FX, check bonds, check macro, check geopolitics. Something must break real soon. Presure is not sustainable and cannot be absorbed for much longer. Central banks must kill the economies and protect them at the same time. The BOE is a brilliant example. They stopped purchasing bonds, til they realised that their pension funds are about to get wrecked. They changed their policy in a day with a direct market intervention. Mind here, that inflation ranges between 10-12% in the UK. This hurts the reliability of policymakers, but at the same time, there is literally nothing else to do. Other CBs will follow in this panic mode. Japan is already there. The reason I'm writing these events is because in my eyes, there is nothing bullish to boost markets. Anytime soon. Risk is huge, and reward seems at question. As you can see in the chart I've been observing since December 2021, CMF has been my ''friend indicator'' during this downtrend. Along with some very basic technicals, nothing too complicated. What does CMF tell me now? Leg down. If this gets triggered by a credit event, I don't know. If it does, I'm afraid lots of what we've taken for granted will be questioned. It will be ugly, and I'm not even sure about how the market will look like after this. I would bid around $10-13k, and pray this is it. Lastly, one thing you shouldn't forget is that crypto has never been through a bear market in equities, a recession in global economies, and most worryingly a market collapse equivalent to or maybe worse than the financial crisis in 2008. Stay safe. I'm out. I hope I'm wrong.
Short
by koun_the_wolf
6
Almost done with Intermediate 3 down Thinking we may have ended Minor wave 4 (yellow numbers) today with a strong jump. Expecting the GDP report to confirm for everyone we are in a recession tomorrow. The yellow lines are the historical quartiles for waves ending in 535, while the light blue lines are the same for waves ending in 35. The slightly longer lines are extensions of Intermediate wave 3 from wave 1. I tend to favor the more specific data so I am considering the 535 data slightly more than the 35 data. We are looking at strong data for this fifth wave to last 2-4 days. If we do not go higher than today’s high, tomorrow would be day 1. Our original projection for Intermediate wave 3 had it ending on October 4. That would mean this wave could last for 4 days. I think Monday is most likely but we will count the waves down as we go. From a day’s perspective, waves 1 and 3 were equal in length. From an hourly perspective, wave 1 was 30 trading hours while wave 3 was only 27. This could put a maximum length of wave 5 at no more than 27 trading hours which is October 4th at 1430 eastern time (meaning until 1530). I think getting done before this is easily doable. The levels to watch for Intermediate wave 3 based on Intermediate wave 1 are between 3477.78 and 3595.96. The levels to watch for Minor wave 5 based on Minor wave 3 are between 3483.30 and 3585.24. These Minor wave levels likely help narrow our target zone for the bottom to be less than 3585 and greater than 3525. I would plan an exit around 3550 or see how we move along the way.
SP:SPXShort
by StockSignaler
5
SP500 vs M2When comparing the performance of the SP500 to the expansion of the money supply, you get a completely different picture from a traditional SP500 chart. Instead of a lost decade, try 2 1/2. We're below the levels we reached in 1995, before much of the dot com bubble. A little TA suggests we could fall 10% (3200) to 30% (2500) before this is all over. I'm definitely getting a lot of 2000-2003 vibes from the economy right now, while others are comparing it to 1929-33.
SP:SPXShort
by CapnBigPain
EUR/USD Down may we continue...The USD continues to be favourable among other currencies during these questionable times, the Euro not looking half as weak as the pound, but I am still expecting to see new lows here this week. Entry was taken at 0.96650 looking for 100 pips and fresh lows. Bare in mind though people, there was a huge down move on Friday. Trading early in the week would not be my best advice, sit still until the moment arrives. I am staying away from GBP right now as we are very much in unknown territory. It will be interesting to see whether these lows can hold, however with the way the economy is going here in the UK, nothing would surprise me. Best wishes Jake
Short
by jmw2000
2
Crude Oil Inflation SpiralWith crude oil prices declining, one might expect that the Federal Reserve's monetary tightening is working and that perhaps a pivot may be on the horizon. However, if we dig deeper, charts are sending warning signs that perhaps crude oil prices, and inflation in general, might remain elevated for much longer than expected. The chart above is a monthly chart of Brent Crude Oil adjusted in price by the Japanese Yen. In the chart, we see what appears to be a double top. However, unlike during the Great Recession, in the current situation, the price of crude oil has fallen much less quickly after peaking. Compare the two charts below. When priced in Japanese Yen, crude oil is 80% higher today than where it was after peaking in 2008 (the red ghost bars below show the 2008 price action). In other words, crude oil prices have declined much slower after their current peak than after their peak in 2008. Ominously, a bull pennant appears on the monthly chart. Although I do not have Fibonacci levels applied to this chart, the bull pennant structure is a perfect golden ratio retracement. Such a perfect bull pennant pattern could suggest that crude oil prices (adjusted in Japanese Yen) may break above resistance and continue higher, rather than decline at all. Why might this be happening? The Bank of Japan continues to maintain negative interest rates. Negative interest rates is just an obfuscated way of saying it continues to produce more and more money. Negative interest rates result in limitless money being produced through credit. Negative interest rates therefore cause money to become less and less scarce over time. Less scarcity of money always ultimately results in inflation. This continued monetary easing in turn weakens the Yen relative to currencies of countries with higher interest rates, especially the rapidly strengthening U.S. dollar. Since Japan is too highly indebted to hike interest rates at all, let alone at the pace that the U.S. Federal Reserve is hiking rates, Japan is facing a crisis whereby the value of its currency is rapidly weakening. Instead of hiking interest rates to mitigate its weakening currency, the Bank of Japan has chosen to sell U.S. Treasuries to increase its supply of dollars, and to buy Yen with those dollars. While this action may help Japan avert an energy shortage by providing the U.S. dollars needed to ensure a steady flow of crude oil, by increasing its supply of U.S. dollars, Japan also perpetuates commodity inflation. More supply of U.S. dollars keeps crude oil, which is priced in U.S. dollars, higher for longer. The more U.S. Treasuries Japan sells, the more U.S. dollars it will have to continue paying high crude oil prices, which in turn keeps inflation higher for longer, which in turn causes the U.S. Federal Reserve to hike rates more for even longer to bring commodity inflation down. Since the Bank of Japan is unable to hike rates the Yen in turn slides further. This negative feedback loop can spiral into a monetary and economic crisis if unabated. How bad could the situation get? To find the answer to this question, we can examine the yearly chart for Brent Crude Oil. Below is the yearly chart. Notice that the Stochastic RSI is indicating that Brent Crude Oil prices have strong upward momentum on the yearly chart. When oscillators push strongly higher on the yearly timeframe, this can lead to a prolonged period of sustained higher prices. The best way to hypothesize a potential peak is to use Fibonacci extensions on the yearly chart. If commodity inflation persists, then price may undergo Fibonacci extension on the yearly chart. This process will be slow and insidious with periods of commodity prices coming down as they retrace on lower timeframes, such that bull rallies trap unsuspecting market participants who believe that the era of limitless monetary easing will soon return. Monetary easing cannot return or else the commodity inflation spiral worsens. Indeed, spiraling inflation puts central banks in a Catch-22 whereby any action they can take results in economic decline. Only time will tell how this Catch-22 will end, but I will leave you with one final chart, shown below. This chart shows a regression channel that measures how far above or below its mean crude oil is currently priced when compared to its entire 160-year price history. What's alarming is that despite the rapid rise in crude oil prices, we are merely just now reach the mean (red line). If history repeats itself, price could double, triple or more from current levels in the years to come...
TVC:UKOIL
by SpyMasterTrades
7
AUD/CAD 700 Pips Bargain: AUSSIE's Plight Deteriorates FurtherFundamentals : The China Factor : Australia's economy is intimately linked to trade with China. (1) China's lack of demand for iron ore as their economy undergoes a recession. " Disaster looming in Australian economy as iron ore demand falls " (Daily Telegraph: www.dailytelegraph.com.au ) www.imf.org fred.stlouisfed.org markets.businessinsider.com (2) Deterioration of China's economy due to a zero-covid strategy (3) China's property sector is cooling (4) Aussie's Housing data becomes " haunting ": stockhead.com.au Technicals : Past support becoming future resistance Weekly BBT Monthly BBT Hit Bollinger Band 2nd Deviation in a slightly ranging market with a downward slope Medium-term trend direction is downward dHd
Short
by Rocketman
Real yields vs. Gold | Convergence of the DecadeFor the first time since April 2010, the yield on a 10-year US Treasury note hit 3.9%, as expectations of higher interest rates to control sky-high inflation continued to make people less interested in buying government debt. In September, the Federal Reserve raised interest rates for the third time in a row, to a target range of 3% to 3.25% . Money markets now expect another 75 bps hike in November. Policymakers have also cut their expectations for economic growth in 2022 by a lot. In June, they thought the GDP would grow by 1.7% , but now they think it will only grow by 0.2%. In the meantime, the 2-year Treasury yield went above 4.3 %, which is the highest it has been since 2007. This made the difference between the 10-year yield and the 2-year yield even bigger and flipped the yield curve even more. On Tuesday, the price of an ounce of gold went up toward $1,630, recovering slightly from a recent low as the relentless rise of the dollar slowed down. The yellow metal , on the other hand, stays close to its lowest levels in almost two years because people think that the US Federal Reserve will tighten money even more to stop inflation from rising. Monday, a lot of Fed officials said they were committed to fighting inflation, even if it meant some economic pain and more market volatility. Investors also looked at an OECD report in which the organization lowered its prediction for global economic growth in 2023 from 2.8% to 2.2% , citing aggressive monetary tightening in advanced economies and the length of the Russia-Ukraine war. Gold is often seen as a way to protect against inflation and economic instability. However, higher interest rates make it less appealing to hold non-yielding bullion , so investors continue to choose the dollar as a safe haven. The dollar index fell below 114 on Tuesday. It had hit a new 20-year high of 114.5 the day before, but investors took some profits and took a break after a sharp rally. The US dollar is still at a historical high against its major trading partners because people think that the Federal Reserve will tighten monetary policy even more to stop rising inflation. Monday, a lot of Fed officials said they were committed to fighting inflation, even if it meant some economic pain and more market volatility. The dollar continued to be supported by investors' rush to it as a safe haven in the face of a very uncertain global economic outlook and growing fears of a recession. When compared to the euro and the yen, the dollar was close to multi-decade highs, but when compared to the pound, it was close to an all-time low because people didn't trust Britain's budget plan.
U
by TayFx
2
What would you have on a date night? Chicken or steak? We’re going to go out on a limb here and say your date night budgets and recessionary risk are likely inversely correlated! As recessionary risk starts to weigh on investors’ minds, purse strings for date nights are likely to be tightened, which spells trouble for the date night classic, wine & steak pair. Cattle Futures have joined the broad market selloff over the past few days as investors remain on edge. This recent move lower has confirmed a break below the neckline support for a double top pattern observed on a shorter timeframe, which is noted as a bearish reversal pattern. On a longer timeframe, the decline has also broken the 4-month long uptrend for Live Cattle. With not much in the way of support, it’s quite possible to see another leg lower, similar to the pattern we observed in May 2022 where prices corrected around 4.5% once the uptrend was broken. Using this as a reference, the 143 range marks the next potential stop for live cattle prices if we were to extrapolate a 4.5% decline from the breakout point. The broken uptrend followed by the confirmation of the double top pattern spells trouble for live cattle prices. As such, we lean bearish on live cattle futures and will likely swap the date night steak for perhaps chicken… Entry at 148.550, stop at 150.325. Target at 144.850 and 143.075. 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.
CME:LEZ2022Short
by inspirante
8
Risk Off: Dollar Up, All Else Falling CBOT: Micro 10-Year Yield ( CBOT_MINI:10Y1! ) Last Friday, U.S. stocks plunged again as soaring interest rates and FX market turmoil fueled investor fears of a global recession. The Dow fell below 30,000 and closed at 29,590, down 486 or -1.6%. S&P 500 broke through 3700 and settled at 3,697, down 1.72%. Nasdaq Composite lost nearly 200 points and closed at 10,868, down 1.80%. Russell 2000 finished at 1,679, down 2.48%. On Wednesday, the Fed raised Fed Funds Rate by 75 basis points to 3.00-3.25% range. Market expected two more rate hikes totaling 125 bps in the November and December FOMC meetings, bringing it to 4.25-4.50% by year end. U.S. Treasury yields surged this week after the Fed's move, with 2-year rate topping 4.2%, a 15-year high. 10-year Treasury yield is currently quoted at 3.687%. Meanwhile, US dollar index ( ICEUS:DXY ) exceeded 113 points, its highest level since April 2002. Euro currency fell to 0.9688 against the dollar, a 20-year low. British pound closed at $1.08, a new low in more than three decades. Global Market in a Risk-Off Mode On August 29th, I pointed out that global financial markets are in a paradigm shift triggered by runaway inflation and high interest rate. All major assets would undergo “repricing”. The recent US CPI data and Fed rate hike help speed up this process. The title chart at the top of this analysis shows year-to-date returns from major financial assets: • US Dollar Index ( ICEUS:DXY ): +17.73%, at 20-year high • S&P 500 ( SP:SPX ): -22.72%, in a bear market territory • WTI Crude Oil ( NYMEX:CL1! ): +3.05%. In March, crude oil gained 60% in response to geopolitical crisis. It turned south ever since the Fed began raising interest rate • Gold ( COMEX:GC1! ): -8.95%. Under a strong dollar, gold has become a risky asset being disposed off by investors. • Euro ( CME:6E1! ): -14.07%. With geopolitical risk compounding a recession, the economic outlook of the Euro-Zone countries is very gloomy • High Grade Copper ( COMEX:HG1! ): -23.77%. Copper demand will decline in the event of global recession. Futures market has fully priced this in • Soybean ( CBOT:ZS1! ): +6.54%. Corn futures was up 25% in June. But the gain was largely given away as the fear of recession outweighed the risk of food crisis In a “flight to safety”, investors shift their assets out of stocks, bonds and commodities, into US dollars instead. With strong exchange rate and high interest rate, US dollar appears to be the only “safe haven” in market turmoil. How to Invest in Dollar? If you are holding financial assets in foreign currency, converting them into US dollar is a logical first step. A risk-averted investor may put dollars into a flowing rate bank account, or purchase money market fund. In a defensive move, you park money in US dollar account until market stabilizes and new investment opportunities emerge. Don’t tie up your money in long-duration deposit, as interest rate is almost certainly going to rise. An active investor may consider trading risk-free US treasury bonds. Other dollar bonds such as corporate bond, convertible bond and municipal bond are subject to repricing. Bond price and bond yield are inversely related. As we expect yield to go up, a trade could be constructed by shorting a cash treasury bond, or shorting CBOT treasury bond futures. CBOT Micro Yield Futures list for two consecutive months. They are more intuitive to trade. If you hold the view that treasury yield would rise, long the micro yield futures. November contract will begin trading next week. Why do I prefer 10-Year ( CBOT_MINI:10Y1! ) over 2-Year ( CBOT_MINI:2YY1! )? We are currently in an Inverted Yield Curve environment. October 2-Year Yield (2YYV2) is quoted at 4.196%, but the 10-year contract (10YV2) is quoted at 3.739%, 457 points lower. In my opinion, rate hikes are fully priced in on the 2YY quote, but 10Y may still have some upside potential. The next FOMC meeting is November 1-2, and the rate decision would be announced at 2PM eastern time on November 2nd. The 10Y November contract may trade till the end of November. Financial market is extremely volatile this year. Getting an information edge increases your odds of success in managing risk. I suggest leveraging real-time market data for a better gauge of market situation. TradingView users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation. 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.
TVC:DXYLong
by JimHuangChicago
33