US500 TradeAfter the down trend and the liquidity Taken of the sell side we will see a change of trend towards Supply Zone it's just idea
Us500
S&P500: One last pull back is possible before a new High.The S&P500 is pulling back following yesterday's July 4th holiday and seems to have reached a temporary top similar to May 1st. That was nearly a 1 month consolidation phase, which after testing the 1D MA50, it initiated the new bullish phase. Technically that was also the Higher Low of the four month Channel Up pattern.
The 1D technicals remain bullish (RSI = 67.005, MACD = 54.870, ADX = 30.096) and as long as they do, buying is favored. We expect this short term correction to test the S1 (4,330) and then rebound, which we will buy, to the R1 (TP = 4,500), which was the April 21st 2022 High.
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US500 - KeyLeveles for next weekIf you wanna take a trade on US500, maybe before that, you need to conisder this KeyLevels of support and resistance areas.
Careful with longs until the resistance are on daily was rejected and the RSI looks very overbought!
S&P500 Potential UpsidesHey Traders, in tomorrow's trading session we are monitoring US500 for a buying opportunity around 4370 zone, US500 is trading in an uptrend and currently is in a correction phase in which it is approaching the major trend at 4370 support zone.
Trade safe, Joe.
A trader’s week ahead playbook – just roll with it Risky assets continue to climb the wall of worry, but the reality is we’ve seen conditions ripe for equity appreciation. Granted, the global central bank balance sheet is falling but the rate of change is contained, and US bank reserves are not falling as fast as feared.
Liquidity is currently not the bearish catalyst for equity drawdown that many thought it might be.
Economic data continues to frustrate those positioned portfolios for a recession - US consumer confidence, new home sales, and durable goods all come in hotter-than-expected. At the same time, US core PCE inflation was a touch softer at 4.6%, with softer core inflation prints also seen in Japan (Tokyo), Europe and Canada.
It seems good economic news is truly good news for stocks and high beta FX – case in point, on the week, we saw the market’s expectations for the peak fed funds rate (currently seen in November) increasing by 7bp to 5.4%. Amid tighter expected Fed policy, US 2yr Treasuries gained 15bp on the week (to 4.89%) and yet despite the rise in bond yields the NAS100 gained 2.2% - closing out the best first half ever, with a remarkable gain of 39%.
We’re also seeing bullish breakouts in the US500, and EU equities, with the SPA35 breaking out, while the skew is risk is that the FRA40 retests the 17 April highs.
As we see in the calendar below, there is a heavy focus in the week ahead on the labour market. Unlike recent months, as long as the growth and jobs data stay firm and highlights that a US recession is a 2024 story, and with inflation grinding to target, then the equity (and risk) bulls will continue to buy dips. The risk bulls will want a solid nonfarm payrolls report, but any goodwill will be conditional on average hourly earnings (AHE) holding below 4.3%
In FX markets, the USD has been frustrating and just when the bulls we’re hoping for a break of 103.38 resistance (in the USD index), the sellers reversed the goodwill. We remain on intervention watch in Japan, notably with the trade-weighted JPY falling 0.5% on the week, and well below levels since in Sept 2022, when the MoF bought Y2.8t. We’ve seen clear signs the PBoC has reached its tolerance level on USDCNY and is pushing back. USDCNH remains central to all USD moves.
Let’s see if the new month brings a new trend – but knowing that the NAS100 has rallied in the last 15 consecutive months of July, it feels like the pain trade is still to the upside and the odds are skewed for higher levels – an open mind will always serve us well in trading, but for now, I am happy to just roll with it.
Tactical play of the week : Long NAS100 (stop orders) above 15,220. A new month, but nothing changes – Ride the momentum, and the strong get stronger.
Rearview alpha plays:
• G10 and EM FX play of last week: Long NOKSEK (+1.8% last week), long USDRUB (+5.4%)
• Equity indices play of last week: Long SPA35 (+3.5%) – to the highest levels since Feb 2020
• Commodity plays of last week – short corn (-16%), long Cocoa +4.6% (strong uptrend)
• Equity plays for the radar – Bega Cheese (BGA.AU) – shares have fallen for 8 days in a row. Apple (eyeing $200 with a market cap over $3t).
The key event risks for the week ahead
RBA meeting (Tuesday 14:30 AEST) – It's hard to recall a time when making a call on an RBA policy decision was so finely balanced. One could make just as good a case to hike, as they could to hold. The economist community are evenly split (14 of 27 economists are calling for a pause), and Aussie rate futures are pricing a 40% chance of a hike. Given this dynamic, the RBA may lean on the path of least regret and hike. On the week I see AUDUSD trading a 0.6750 to 0.6580 range. AUDNZD is the cleanest play on the RBA meeting and relative policy divergence, and on the week, I would look to sell rallies into 1.0950/60.
US ISM manufacturing (Tuesday 00:00 AEST) – the market expects a slight improvement in the pace of decline with the consensus set at 47.2 (vs 46.9 last month). We may need a reading above 50 to get the USD fired up, although a read above 50 would certainly surprise. Good data seems to be a positive for risky assets despite the move higher in bond yields, so expect equity to rally on a stronger-than-expected print.
US weekly jobless claims (Thursday 22:30 AEST) – The economist consensus is for 245k weekly claims. Last week, we saw a strong reaction to the lower-than-expected claims print, so we know the market is looking at this data point closely. That said, we’d need a big increase/decrease from last week’s print (of 239,000) to move the dial this time around.
JOLTS job openings (Friday 00:00 AEST) – the consensus here is for job openings to fall to 9.98m (from 10.1m). A pullback below 10m openings would be further relief for risky assets. A big upside surprise may see US treasuries rally (yields lower) and USDJPY should find sellers.
US ISM services (Friday 00:00 AEST) – the market consensus is for slightly stronger growth in the US service sector at 51.3 (50.3). Again, we look for extreme reads vs consensus, but above 52.0 would really push back on the idea of a near-term economic slowdown.
US non-farm payrolls (Friday 22:30 AEST) – the marquee economic data point of the week, where the market consensus is for 225k net jobs (the economist’s range is seen between 263k and 124k). The unemployment rate is eyed to fall back to 3.6% (3.7%), with average hourly earnings seen at 4.2% YoY. The form guide suggests the risk is for a number above 200k, having beaten expectations for 14 straight NFP prints. A big upside surprise should see USDJPY rally hard and push the BoJ/MoF a step closer to JPY intervention.
Canada employment report (Friday 22:30 AEST) – the consensus is for 20k jobs to have been created, and the unemployment rate to lift a touch to 5.3%. With 13bp of hikes priced for the 12 July Bank of Canada (BoC) meeting, the outcome of the jobs report could influence that pricing and by extension the CAD. There has clear indecision on the USDCAD daily of late, subsequently, I would look to buy/sell a break of 1.3285 or 1.3116.
Mexico CPI (Fri 22:00 AEST) – those that sit in the camp that Banxico cut rates in Nov/Dec will be closely watching the CPI print. The market expects a further dip in headline inflation to 5.07% and core inflation to 6.87% (from 7.39%). Carry traders are still drawn to the MXN and happy to jump on any weakness, subsequently, USDMXN seems likely to test the recent lows of 17.0227.
Central bank speakers
ECB – Villeroy, Guindos, Lagarde (Sat 02:45 AEST)
BoE – Catherine Mann (Sat 00:30 AEST), Bailey (Sunday 17:30 AEST)
US – FOMC minutes (Thurs 04:00 AEST), Williams and Logan
US 500 Analysis. Good opportunity.Hello Everyone. I want share my idea about US 500.
On that chart we have pretty bullish trend which is going up well. I think who trade with trend, at the moment this is the best moment to open their long positions, but also we need to be carefully.
Trend is bullish but chart show us Head And Shoulders which is bearish movement. in my opinion we need some confirmations, this is aggressive rejection from Fibonacci and support LVL, and also brake this little resistance which have us at 4385.
This week we will see actually if us500 can continue bullish movement, but I think its still bullish.
BE PATIENT!
S&P500 Holding the 4hour MA50 is criticalS&P500 / US500 crossed back over the 4hour MA50 and so far today is holding it.
For this level to stay as Support is critical as a 4hour candle close under it can delay the uptrend and send it to the 4hour MA200, 1day MA50 near the Rising Support.
In that case sell and target 4300.
As long as the 4hour MA50 holds, be bullish and target Resistance A at 4500.
The 4hour MACD is on a Bullish Cross, favoring a buy.
Previous chart:
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US500 waiting for a shorting opportunity US500 is making tracks to the upside-breaking daily structure, but I have eyes for a deceleration and shorting opportunity.
S&P500 (US500) -06/29/2023Preferred direction: BUY
Comment: This week the buyers managed to reverse the price near the level of 4337.2, thereby resuming the buying priority. A good entry point is located at the current levels, but one need to be ready for re-entries. The growth target is located near the resistance 4440.7.
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S&P500 Short term sell signalS&P500 is pulling back after the March Channel Up topped on an overbought RSI (1d).
The MA50 (1d) has been intact since March 29th and is the support of this strong uptrend.
Trading Plan:
1. Sell on the current market price and/ or the June 16th High.
2. Buy on the bottom of the Channel Up at 4310.
3. Sell if the price closes a (1d) candle under the MA50 (1d).
Targets:
1. 4310 (bottom of the Chanenl Up).
2. 4640 (Resistance 2).
3. 4110 (bottom of the long term Channel Up).
Tips:
1. The RSI (1d) is on a Channel Up indicating that the momentum on a 3 month basis remains bullish. If it breaks below, it will confirm the sell signal.
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Notes:
Past trading plan:
S&P500: First buy conditions following the top are emerging.The S&P500 is close to a -2.89% pull back, same as the April 26th, with the 1D technicals turning neutral (RSI = 56.566, MACD = 43.450, ADX = 27.595) for the first time since June 1st. This is a standard technical pull back inside the March Channel Up that is aiming at the bottom of the Channel and the 1D MA50, which is untouched since May 4th.
We will use both 4,330 and 4,270 for a double buy entry, targeting the R1 (TP = 4,500). Pay attention also at how the 1D RSI is on the HL trendline since March, an additional buy signal.
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A trader’s week ahead playbook: playing defence into quarter-endAfter a dramatic weekend in geopolitical news flow, we revert to areas more closely aligned with our expertise; the ebbs and flow of economic growth dynamic, inflation, central bank liquidity and month-/quarter-end flows.
To set a platform for the week ahead – The USD rallied on 4 of the past 5 days (gaining 0.6%), while it was a rolling sea of red in our core equity indices last week - the HK50 (-4.7%) and GER40 (-3.2%) faring worst on a weekly percentage basis. US equity indices are grinding lower into quarter-end, but it’s the US small-cap plays that need to be on the radar with the US2000 the weakest index – US regional banks once again in the spotlight and finding sellers easy to come by, and the KRE ETF now targets $36.00.
Banks take a central focus
US Treasury Sectary Yellen’s comments that she expects further consolidation within the banks, while the higher cost of deposits is impacting bank profitability have put these institutions back on traders’ radar - we subsequently mark the Q2 US earning calendar on the map once again when JPM kick off proceedings on 14 July.
We can cast our net outside of the US and see banks on a global basis remain key shorting candidates. Notably in the UK and Australia, where Lloyds and NatWest are in freefall, and many are questioning the asset quality and lofty ROE guidance of these institutions amid the unfolding UK mortgage and rental crisis. For AUS200 traders, BoQ and ANZ look particularly vulnerable to further downside, although, tactically, I would consider long CBA/short ANZ as a pairs trade.
Will the GBP be impacted by reduced growth expectations?
With UK banks in focus, on the data side, there will be focus on the Nationwide house price data (-4% YoY decline expected) and mortgage approvals (+49k in May) this coming week – the market has priced another 50bp hike from the BoE on 3 August, with a peak bank rate of 6.2% by February 2024. However, despite calls that the GBP should now face headwinds as the currency morphs from carry to a relative growth play, we’re not seeing that play out in the price action.
Granted, the UK gilt curve has collapsed but GBPAUD, GBPNOK and GBPNZD all look like they’ve got further upside here. I’d be looking for GBPUSD to test 1.2680, where this could run into buyers here.
In the US we’re seeing signs of reduced system liquidity with bank reserves falling $102b last week and starting to do more of the heavy lifting in supporting the massive US Treasury TGA rebuild. We get further significant US T-bill and bond issuance this week, and we should see an increased decline in the Fed’s US Treasury holdings, but with rebalancing flows a key factor let's see if this issuance has any impact on risk assets.
US data to navigate
The US economic data is mostly tier 2 releases – durable goods, regional manufacturing, new home sales and consumer confidence. Core PCE is the highlight (due Friday at 22:30 AEST) and the market sees an unchanged read at 4.7% - again, this could affect pricing for the 26 July FOMC meeting, where the market prices 18bp of hikes here.
The USD has found signs of form with the DXY pushing 103. The USD bid a function of falling growth momentum in China and Europe, so the US data points, EU consumer confidence and inflation, and China’s manufacturing/services PMI data (Friday 11:30 AEST) need close attention.
It seems the market just can't get enthused by China’s current range of stimulus measures and we see USDCNH another FX cross-rate that has become a trend-followers dream and trades north of 7.2100 – let's see if the PBoC start to push back on the move this week (through its daily CNY fix), as higher levels should accelerate USD buying vs the AUD and the EUR.
Staying long USDJPY, for now
USDJPY remains well traded by clients, and eyes a move into 144.00 and as we posted last week is coming ever closer to potential jawboning from the BoJ/MoF (pepperstone.com) – traders have pointed to the elevated RSI’s, however, this is not a major concern for me, as it’s the rate of change that the MoF look at more closely. We also see the price at a 4.3% premium to the 50-day MA which is not wholly extended, and where a 5%-7% premium (to the 50-day MA) would be where I’d have a higher conviction of mean reversion trades playing out.
Aussie CPI to influence the July RBA pricing
In Australia we get monthly CPI and retail sales this week – the market prices a 40% chance of the RBA hiking by 25bp on 4 July, so this data could easily influence that pricing. There will be a concerted groan from households if we see CPI (due Wed at 11:30 AEST) fail to come down to the consensus call of 6.1% (from 6.8%). If we look at the economist’s range of estimates we see the distribution ranging from 6.9% to 5.6%, which is incredibly well dispersed. A 5-handle should see hikes priced out of the July RBA meeting and see the AUD under pressure.
On the central bank speeches, there will be focus placed on the Sintra Conference where Powell, Lagarde, Ueda and Bailley will be speaking.
The case for gold upside
Commodities get a close look too – my preference for gold is to place sell-stop orders below $1912, with the aim to play bearish momentum into and below the figure. Gold bulls will want a close back above $1938, and if the growth concerns that we saw late last week extend into the new week, then gold should benefit as a hedge, but we’d also need to see inflationary pressure ease.
Crude found buyers into the range lows of $67.00 – huge support and one that should be on all radars, especially those who want to scalp off big levels.
Dow Jonex Index (US30): Top-Down Analysis & Trading Plan
Dow Jones Index is testing a peculiar zone of confluence on a daily:
we see a perfect intersection between a horizontal support and 382 retracement
of the last bullish impulse.
Analyzing 4H time frame, I see a falling wedge pattern.
To catch a pullback with a confirmation, I suggest looking for a bullish breakout of the resistance of the wedge. 4H candle close above will confirm a violation.
A bullish continuation will be expected to 33970 / 34040 levels then.
Alternatively, a bearish breakout of the underlined blue zone will push the price lower.
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US500 Is Very Bullish! Long!
Here is our detailed technical review for US500.
Time Frame: 8h
Current Trend: Bullish
Sentiment: Oversold (based on 7-period RSI)
Forecast: Bullish
The market is approaching a key horizontal level 4352.6.
Considering the today's price action, probabilities will be high to see a movement to 4438.5.
P.S
Overbought describes a period of time where there has been a significant and consistent upward move in price over a period of time without much pullback.
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US500 My Opinion! BUY!
My dear followers ,
This is my opinion on the US500 next move:
The instrument tests an important psychological level 4366.6
Bias - Bullish
Technical Indicators: Pivot Points Low anticipates a potential price reversal.
Super trend shows a clear buy, giving a perfect indicators' convergence.
Goal - 4441.3
About Used Indicators:
By the very nature of the supertrend indicator, it offers firm support and resistance levels for traders to enter and exit trades. Additionally, it also provides signals for setting stop losses
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WISH YOU ALL LUCK
S&P500 Buy opportunity approachingThe S&P500 crossed under the MA50 (4h) and is approaching the bottom of the 1 month Channel Up.
That would complete a -2.60% decline from the top, which is consistent with the pull backs of late April and May.
Trading Plan:
1. Buy at 4340.
Targets:
1. 4515 (Resistance 1).
Tips:
1. The RSI (4h) gives the most optimal buy entry when it crosses under the 30.00 oversold level. If that happens near the bottom of the Channel Up, it will be an additional reason to buy.
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Notes:
Past trading plan:
S&P500 - Long active ✅Hello traders!
‼️ This is my perspective on US500.
Technical analysis: Here we are in a bullish market structure from 1H timeframe perspective, so I am looking for longs. I expect bullish price action from here as we can see that price filled perfectly the imbalance and rejected from bullish order block.
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Daily Market Analysis - WEDNESDAY JUNE 21, 2023As US stocks decline, the market retreats while investors eagerly await Powell's testimony.
Key events:
UK - CPI (YoY) (May)
USA - Fed Chair Powell Testifies
The trading session on Tuesday witnessed a decline in US stocks, marking a shift from the previous sustained rally as investors opted to secure their profits. This decision was influenced by concerns over weakening global demand, which contributed to a cautious sentiment prevailing at the beginning of the holiday-shortened week.
One of the key events that investors are eagerly anticipating is Federal Reserve Chairman Jerome Powell's scheduled testimony before Congress on Wednesday. The outcome of this testimony has the potential to significantly impact market dynamics and serve as a major catalyst for market movement.
All three major US equity indices concluded the session with negative results, although they did manage to recover slightly from the lows reached earlier in the day. Notably, the decline was influenced by the performance of oil super-majors such as Exxon Mobil Corp and Chevron Corp, which exerted downward pressure on both the S&P 500 and the Dow.
The broader sell-off that occurred follows the Nasdaq's impressive winning streak, which had been the longest since March 2019, and the S&P 500's longest winning streak since November 2021.
Despite the setback experienced on Tuesday, it is important to note that the benchmark S&P 500 has still achieved a notable gain of 14.3% year-to-date. This highlights the overall positive performance of the market thus far in the year, even with the temporary downturn observed in the recent trading session.
S&P 500 daily chart
Federal Reserve Chair Jerome Powell's upcoming congressional testimony presents a platform for him to expand on the discussions surrounding monetary policy that took place during the recent Fed meeting. However, given the relatively short timeframe between these two events, it is improbable that Powell will introduce substantial new insights during this testimony. It is important to note that the Federal Reserve follows a data-dependent approach, making decisions on a meeting-by-meeting basis. Therefore, their next decision, slated for July 26, will likely be influenced by a range of factors, including the release of the Consumer Price Index (CPI) on July 12 and the employment report on July 7. These upcoming economic indicators will play a significant role in shaping the Fed's decisions regarding monetary policy moving forward.
GBP/USD daily chart
The GBP/USD currency pair witnessed a substantial surge of 60 pips, propelling it above the key level of 1.2800. However, the pair later retraced to 1.2760. This price movement unfolded as market participants engaged in reassessment of the UK inflation data ahead of the London open on Wednesday.
In May, the Consumer Price Index (CPI) in the UK surpassed market expectations by reaching a year-on-year figure of 8.7%, surpassing the anticipated 8.4%. This strong inflationary reading garnered attention and influenced the initial upward momentum in the GBP/USD pair.
On the other hand, the Core CPI, which factors out the impact of volatile food and energy prices, aligned with analysts' predictions. It indicated a more modest inflation increase of 6.8% year-on-year, in line with market forecasts.
The contrasting figures between the headline CPI and Core CPI may have contributed to the subsequent retreat in the GBP/USD pair, as market participants carefully considered the implications of these inflation data points. Such evaluations and reevaluations are common as traders and investors digest the latest economic indicators to adjust their positions in the market.
As the trading session progresses, market participants will continue to monitor developments and additional economic data releases to gauge the potential impact on the GBP/USD currency pair.
UK CPI
The GBP/USD buyers are currently facing challenges as the US Dollar continues to exhibit strength, extending its upward trend for the fourth consecutive day, despite recent lack of significant action. This poses a hurdle to the bullish outlook on the GBP/USD pair, even with the positive UK inflation data that supports the Bank of England (BoE) hawks.
At the same time, the US Dollar Index (DXY) remains relatively stable around the 102.60 level, maintaining its four-day uptrend without displaying a strong inclination to advance further. The recent resilience of the US Dollar can be attributed to the hawkish remarks made by Federal Reserve policymakers, particularly the nominees, as well as robust housing data from the United States. Additionally, concerns regarding geopolitical tensions between the US and China are weighing on market sentiment, further bolstering the safe-haven appeal of the US Dollar.
In light of these factors, the GBP/USD buyers are encountering resistance in their efforts to drive the pair higher. The prevailing strength of the US Dollar, supported by hawkish comments and positive economic data, poses a challenge to the bullish sentiment on the GBP/USD pair. Traders and investors will closely monitor further developments, including central bank communications and geopolitical developments, to assess the potential impact on the GBP/USD pair moving forward.
US Dollar Currency Index
Furthermore, during the course of the night, the Australian dollar experienced notable and noteworthy fluctuations, which consequently led to a substantial decrease in the AUD/USD exchange rate, edging closer to the critical level of 0.6800. The downward trajectory of the Australian dollar was triggered by the release of the minutes from the Reserve Bank of Australia's (RBA) most recent policy meeting held on June 6th. To the surprise of market participants, the RBA opted to implement an additional 25 basis points hike, thereby elevating the policy rate to 4.10%. This updated guidance on the likelihood of future rate hikes was specifically aimed at attaining the desired inflation target.
AUD/USD daily chart
Nevertheless, the recently disseminated minutes of the meeting have given rise to an array of uncertainties with respect to the Reserve Bank of Australia's (RBA) forthcoming stance on augmenting interest rates. Within the aforementioned minutes, it was brought to light that the RBA extensively deliberated on the prospect of temporarily halting any rate increases during their most recent policy meeting. However, after careful consideration, the RBA concluded that the arguments presented were intricately poised, yet slightly inclined towards implementing a rate hike.
S&P500 On the 4hour MA50. Sell if this breaks.S&P500 / US500 almost touched today the 4hour MA50 for the first time since June 1st.
This is a Support and as long as it holds (along with the Channel Up), buy and target Resistance A at 4500.
If the price crosses under the Channel Up, sell and target the 1day MA50 at 4235.
If the 4hour RSI makes a Bullish Cross before 4235 gets hit, then book the profit on the short earlier and switch to buying again.
Previous chart:
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US equity traders playbook – all-time highs or a 10% drawdown?The pain trade in US equity markets remains to the upside, and with the US500 only 9% from the all-time highs, if we are to get test 4800 it will be because the bears fully capitulate.
That is certainly a possibility, especially if the market strongly believes the Fed pause again in the July FOMC meeting. Subsequently, if the S&P500 breaks 4450/4500, it will be call options buyers and momentum (some FOMO) players that lead us further higher, as funds aggressively chase the market higher.
We can scratch around for positive catalysts, and there are many we can point to; volatility remaining low, a mountain of cash still on the sidelines, the Fed potentially at peak rates, and China ramping up stimulus. However, the list of upside catalysts seems scarce relative to the list of tier 1 triggers that could feasibly lead to a 10% move lower.
As we’ve learnt throughout 2022, an open mind will always serve you well, and a momentum-driven market is one not worth fighting, and positioning and flow mean everything.
A checklist to assess the risk-to-reward trade-off
When assessing the risk-to-reward trade-off, we can go into huge depth drawing up a varied checklist that can often lead to significant complications. These will include any or all, of the following:
Liquidity, positioning, valuation, sentiment, technical indicators, options hedging activity, gamma exposure and breadth.
They can all have a place in our understanding of where the skew of risk sits – price is, however, always the arbiter of truth.
We can be early to a trade, but we must be able to handle drawdown, and in all cases, just knowing when to take a loss is key. Timing the market is key when trading with leverage, but so is knowing how to take a loss.
At this juncture, positioning in US equity futures is rich, especially when we see the net long position of the highly influential CTAs (trend-following funds) and volatility-dynamic funds.
We can see the market has cut portfolio hedges dramatically, with S&P 1-month ‘skew’ at the lowest levels since 2018 and the CBoE equity put/call ratio at 0.46x – the lowest since April 2022. Hedges cost money in a bull market. But when volatility ramps up, aggressive re-hedging can send risk lower.
Valuation is rich, with the S&P500 trading on 20.2x forward earnings, and the Equity Risk Premium (ERP) at the lowest since 2002. This shows how little compensation investors get for taking on equity risk, so again this reduces the attractiveness of equity.
Sentiment is near extremes – one can look at the CNN Fear and Greed index and see this moving to 79 – extreme levels, but again, one wouldn’t take a short position in the US500 or NAS100 on extreme sentiment in isolation, but it is a big consideration.
Central bank balance sheets about to turn sharply lower
Perhaps the biggest factor the bears have at the centre of their thesis is the expected turn lower in liquidity, and specifically an impending decline in the major central bank's balance sheets.
The US is at the heart of this concern, where we know the Fed’s FWB:95B per month QT (Quantitative Tightening) is coming in late June. At the same time, the US Treasury’s massive net T-bill issuance to rebuild its depleted cash levels is about to ramp up. So far, the USTs bill issuance has been funded by capital from the Fed’s RRP facility, which is seen as a positive for US equity markets. However, the risk is now skewed that the TGA rebuild is to be funded by bank reserves - where falling reserves would be seen as a liquidity drain.
EU banks are due to repay E470B in TLTRO loans at the end of June, and with QT playing out in Europe and the UK, the prospect of the aggregated global central bank balance sheets about to turn lower is a major risk - with well over $1t of liquidity due to come out of the market in the coming weeks.
China is also a growing consideration, and we watch the price action in the HK50, CHINAH and USDCNH. China has started to ramp up its policy easing and support and has been increasing liquidity - but it has been underwhelming. Recall, Shanghai came out of lockdown in June, so the Chinese reopening data impulse is about to face serious headwinds – will the PBoC and govt be able to put the right mix in place to counter this weakness?
Core inflation is an ongoing concern
Another key risk markets are focused on is inflation. Central banks have made it clear their concern lies in targeting core (sticky) inflation and they are incredibly worried that inflation has become entrenched. We can look at the UK, NZ and Australia and see rising risks that the central banks may have to keep lifting rates and actually cause a recession to bring core inflation down to target. If we see core inflation readings stay firm, then this will be a big headwind for equity markets.
An inflexion point
The bottom line is we may be at a clear inflexion point for equity markets – either the central bank balance sheet rolls off and heads sharply lower in the coming weeks, and equity reacts with the US500 falling 5-10%, as per the bear's thesis. Or, prices remain firm despite the central bank balance sheet contraction. In which case, rising prices may see a capitulation from the bears, resulting in new highs playing out as momentum kicks in once more and funds chase into Q3.
Which way do you see it playing out?
S&P500: 1D RSI hit the 7 month Resistance. Sell signal.The S&P500 is trading inside a Channel Up since the March 13th low with 1D technicals heavily overbought (RSI = 72.465, MACD = 71.880, ADX = 42.303). That is a first bearish flag, with the second alert coming from the 1D RSI which hit on Thursday the HH trendline that started back in November. That is a major sell signal, calling for a pull back near the 1D MA50 (TP = 4,270). If the candle closes under S1, we will extend selling to S1 (TP = 4,105). If not, we will buy the first pull back and target the R1 (TP = 4,500).
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Nasdaq100 Big Picture Short Monthly ResistanceNasdaq100 Big Picture Short Monthly Resistance:
First, there is now big and strong Resistance and I expect the price imminently to drop under 14,500, if you look at the highs of months 2-3-4 of 2022, we are there now + the trend line of the 2 must-high prices at top.
Second, the price structure of the last Rally that we see now should make a down movement now according to the history of this symbol and how he acts.
Even if he gonna do a new high first and from here a down movement should come.
Also dont forget the Fed says that by the end of the year, he expected a recession.
There are few options to out in a profit, see photo.
the less risky one is to close 90% on take profit 1 and move stop loss to zero.
Here Are Your Key Items to Watch Through Next WeekTraders,
I am not worried yet. In fact, if anything, I have become more bullish. But there are some key items we have to watch on these charts tomorrow, through the weekend, and into next. I'm going to show you what they are.
Stew
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Content
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00:10 - Intro
01:15 - Bitcoin Chart
03:00 - The Dollar
04:27 - The VIX
04:40 - US500
08:15 - Bitcoin
10:50 - Bitcoin Futures
11:00 - Back to BTC Daily
