Microsoft Reverses off All Time highs!MSFT saw a nasty reversal today. Closing down more than the Nasdaq.
All indices close negative = broad market selloff.
Powell comes out hawkish & sends market lower.
All eyes on Apple tomorrow!
Yields
Raising Bullish target on the EURUSD to the 78.6% RetraceLast week I put out this TLT trade setup that showcased a Falling Wedge with Bullish Divergence at the 0.382 retrace which targeted an upside move in the TLT that would recover at least 50% of the high:
In the time since this setup first formed the TLT has nearly reached that minimum target. In addition to the TLT, I expected the EURUSD to follow a similar path, however, the EURO has remained mostly flat and has not moved up with the TLT which is kind of unusual.
It is possible that the EURUSD pair is waiting for the FOMC but in the meantime the Bullish patterns on the EURUSD have gone from just being an intraday pattern to now being a daily pattern, with the Daily candle now printing a Bullish Hammer above the 200-day SMA while also slightly diverging on the RSI. Due to this improvement on the higher timeframe, I have decided to raise the Bullish price target to the 0.786 retrace, aligning with $1.107 as it catches up with the falling US Bond Yields.
Members Daily Analysis - Jan 28 2024Watching the Yield Curve inversion closely...10's - 2's is narrowing.
Weekly Reversal in the Semiconductors.
Oil massive breakout! Dollar next?
Tesla losing Mag 7 status...its now only 10th largest company.
EURUSD: Bullish Gartley at an 800-EMA Trading in a Falling WedgeEURUSD is trading within a Falling Wedge with MACD Bullish Divergence at the 800-period EMA. All of this aligns with the PCZ of a Bullish Deep Gartley that has developed on the 1-Hour timeframe. If this support zone holds I think EURUSD will attempt a Bullish breakout that will target the 50-61.8% retraces above which may align with short term upside I'm expecting in the TLT.
$VIX within range & bringing this chart back up againWe saw #yield, US #Dollar, & #oil looking decent & trading with some strength. #stocks are a tad weak but so is $VIX.
Want to show this chart again.
CBOE:VIX can trade in the ORANGE support vicinity for 2 years. Every so often it'll have a fast and furious rally.
Seldom does it hit YELLOW support area but when it does, it usually signifies that upcoming spike we just spoke about.
$DXY pumping as are Yields and OilPretty good calls on the following:
(see our profile for more info)
The US #Dollar maintains its upward trend.
The 10yr #yield is also looking pretty decent.
The 30 Yr bottomed before the others and has been leading #interestrates.
#OIL broke downtrend and has been looking better.
All time highs : MEMBERS DAILY ANALYSIS Jan 21 2024 The S&P500 broke out this week to new all time highs.
Finally playing catchup the nasdaq indices.
Semi-conductors continue to be the bright spot in the market.
10 year yield confims breakout.
many S&P sectors closed negative on the week despite the marekt making ATH's
30-Year US Gov't Bond Yields since 1977Here is a long term view of long term US Gov't interest rates. Long term is defined as 30 years and is a common bond owned by pension funds and insurance companies and other long term investors with long term obligations.
I highlight the various ranges of interest rates as shown in these 4 boxes and the few moves that temporarily moved interest rates outside those boxes:
1. 1987 Stock Market Crash on collapsing USDollar, hiked capital gains taxes starting in 1988, trade wars with Germany, S&L crisis brewing from 1986 real estate tax law change, and Congressional moves to eliminate interest rate deductions on takeovers.
2. Orange County Bankruptcy
3. Great Financial Crisis "GFC" - massive deleveraging of the banking industry forcing asset prices down in a collapse.
4. Covid reaction by Gov't to shut economy down and stimulate spending and handouts to keep economy afloat
5. Current over-reaction to over-stimulation during lockdowns and supply chain issues.
US Dollar, US Bond Yields, USOIL, and Volatility are Set To RiseFor the few years there has been a close correlation between the US Dollar Index, US Treasury Yields, US Oil, and The Volatility Index, as of right now all are forming similar accumulation patterns, with the DXY, and Oil both sitting at the PCZ of a potential Bullish 5-0 at the 50% Retrace after breaking above its trend and the US10 Year yield sitting at the 61.8 retrace of a potential deeper Bullish 5-0 aligning with previous support/resistance. If these Bullish 5-0s play out, I would expect to see the DXY, Yields, and Oil make higher highs. Meanwhile, the VIX is sitting at the PCZ of a potential Bullish Deep Gartley on the Log scale chart and appears to be double bottoming locally with a fair bit of lower timeframe Bullish Divergence. If the former 3 assets go up in price, I would fully expect the VIX to follow and potentially hit levels above $50.00 on an extra note, the WTICOUSD is also sitting at the 200-week Simple Moving Average and is testing a long term trend line, so this gives Oil even more support at these levels.
Silver might have bottomed outOANDA:XAGUSD has been sold heavily with yesterday's CPI numbers. Hotter CPI than expected numbers increased the probability of postponing the start of rate cuts to a later than March. With this expectation, OANDA:XAUUSD and OANDA:XAGUSD were sold with the initial reaction and then they saw some recovery.
Silver might have bottomed out. Why?
TVC:US10Y is struggling to pass 200D MA. This is good news for the metals since it indicates no more hike pressure. This will allow metals to go higher.
OANDA:XAUXAG ratio is returning from the resistance. At the current level, it favors Gold. But if it drops below 84, the price movement in Silver will accelerate.
Silver and NASDAQ:NDX have some correlation. Despite the bloods on the street yesterday, NASDAQ:NDX managed to stay positive. We may see a bull run until the first couple of rate cuts. This would bring the Silver along with it.
If this plays out, my target is around $30 for the first half of the year. Otherwise, Silver may fall into the bear trend and follow the purple channel.
If you like this idea please give a boost and follow me on Tradingview and X.
Disclaimer – WhaleGambit. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
December 27 Members Daily AnalysisQQQ / SPY New Closing Daily High
Semiconductors Mixed * Transports weak
DXY & Yields Continuing Lower
LONG a Falling Interest Rate! - TLTNASDAQ:TLT is an ETF that tracks value of United States Treasury Bonds in the time range of the 20-30-year bonds. With this ETF tracking the bond value it will rise with the decrease in these bond yields as the previous bonds offering higher % rates increase in value.
I am bullish on TLT for a few reasons that are summarized in the bullets below
- Interest Rates are at their highest levels in around 20 years and history would show that following these peaks in the 5.5%-7% range tends to be a sharp fall of interest rates usually due to a general moderate or severe economic downturn needing economic stimulus with low rates
- Along with the peak thesis, in the current economic state of America, it has been generally discussed by Fed Presidents that rate slowdown / rate hike pauses are starting. The FedWatch tool from CMEGroup shows that traders predict the highest rates will not go any higher, and actually start being cut in Early Spring 2024. Due to this data, it is definitely important to realize the risk/reward of this trade on how the downside is minimal with the current economic conditions proving interest rates will likely not move higher, and definitely not more than a last 25bps hike for this rate cycle considering no unprecedented events occur.
- Another staple to this bullish thesis is against the Federal Reserve. I strongly believe the Federal Reserve bluffs intentionally during their public conferences and talks. Recalling the inflationary period following COVID, the Fed repeatedly spoke out on this inflation being transitory while CPI rocketed to record highs in decades. I believe they like to not inform the public to the 100% truth and locked room talks. The Fed has came out and said they are quite against publicizing a rate pause officially / begin cutting rates and I believe this is a bluff. As the Fed claims to wait for data, I believe that data is showing, and will continue to show stronger economic struggle from the effects on high-interest rates. As unemployment just ticked up and probably will continue, rates will start to drop fast as soon as the Fed starts. Treasury Yields would likely dump prior to all of this as the anticipation begins to flow into the markets. Lastly, I think the Fed tends to deceive the public to try and not heavily move the markets in a short time.
- Overall the data should start to pour in on economic slow down as student loan repayments resume, credit delinquencies continue to rise, housing market cools, unemployment ticking up, and more can feed to a sharp drop in CPI as aggregate US demand settles.
The Fed will act on this slowdown and will need to sharply cut interest rates, especially if they wait too long.
- Technicals on NASDAQ:TLT also look strong with a major demand zone, a dailydouble bottom and a diagonal trendline supports the price level. TTM_Squeeze also backs up a possible end to the downside. Below 89 area could be a solid Exit area for risk-management.
Any Cut in Rates, or anticipation in rate cuts can send TLT flying with bond yields tumbling.
Bonus: NASDAQ:TLT also provides a safe hedge to a market collapse or recession. Because market recessions would spark a cut in rates to help fuel a recovery, while stocks may tumble, this ETF would rally on a decline of interest rates to help stimulate a falling economy.
Thesis : long Commons or 2025 dated Credit Spreads
Requested Update: Bond Yields Complete a 5-wave pattern higherWe have our first indication of a top in bond yields with price overlapping and losing it's impulsivity to the upside. However, a top is not confirmed until yields breach 3.40% which is our wave 4 of one lesser degree.
To do so should confirm the beginning of our wave 2 decline into the target box, and over time.
US10Y ~ Bullish Downtrend Reversal (2H)TVC:US10Y chart mapping/analysis.
US10yr bond yields finding bullish reversal off lower range of descending parallel channel (white) - further momentum pending upcoming 10yr auction + US economic data.
Trading scenarios into EOY:
Bullish reaction to macro economic news = continued momentum to break above descending trend-line (white dashed) towards 38.2% resistance zone.
Bullish extension target(s) = re-test upper range of descending parallel channel (white).
Bearish reaction to macro economic news = reversal back below 50% Fib / 4.10% psychological support level / lower range of descending parallel channel (white) / ascending trend-line (green dotted) confluence zone.
Bearish extension target(s) = Golden Pocket zone / 4% psychological support level / 78.6% Fib.
US10Y vs. SPX ~ Inverse Correlation/Ratio Indicator (Dec 2023)TVC:US10Y versus SP:SPX inverse correlation analysis.
Work in progress indicator for anticipating market trend switches.
Notes:
Emerging correlation identified within US10Y/SPX ratio.
Spikes in ratio (orange vertical line, dotted) aka bond yield ROC/volatility = higher probability of risk-off sentiment (ie big tech & growth stock rotation).
Correlation only valid when market is "hyper-sensitive" to bond market fluctuations, especially during recent US Fed undertaking rate hike cycle.
Should be used in conjunction with other confluence factors to provide conviction in swing/position trades.
EU 30Y Bond Yield to extend further into 2008 high in 2024Economic
Policy needs to remain restrictive or should tighten further, until clear signs of easing inflationary conditions are available.
Technicals
Favor: Strong yearly candle
Favor: Strong M BiMS
Favor: M BiMS after ATL
Favor: Multiple BSL Levels higher
Currently at 10Y High
Expectation
Downside Retracement Targets (careful Short Term)
1 - 2.057% (Y SIBI Inverted) - 95% Certainty
2 - 1.625% (Target (already traded to)) - 75% Certainty
3 - 1.330% (MT Recent Upswing based on Y H to L) - 65% Certainty
4 - 1.149% (MT Recent Upswing based on Y Bodies) - 55% Certainty
5 - 1% (Beginning of Grind upwards) - 25% Certainty
Upside Targets (After Downside)
1 - 3.160% - Y 2023 High - 95% Certainty
2 - 4.915% - 85% Certainty
3 - 5.738% ( Fib 1.618 Extension) - 65% Certainty
4 - 6.258% (23Y High) - 35% Certainty
Yields falling, Tech Falling!Are we seeing a divergence in the market?
Interest rates & yields have cooled off significantly in recent trading sessions thus providing the perfect tailwinds for tch to continue higher.
Todays price action saw Tech make a new nominal high as yields were falling but ended up reversing lower. The fact that tech appears to be selling off under falling yields will certainly have to be monitored.
US10Y ~ Nov-Dec Snapshot (4H Intraday)TVC:US10Y chart mapping/analysis for last week of November.
TBC further details/write-up via ideas section, cheers.
$US10Y -Important Close *Weekly- US 10 Years Government Bonds(Yield) TVC:US10Y experienced a pull back in the fourth
week of August,
after having rallied previously for five (5) consecutive Weeks,
printing only green *W candlesticks.
The Weekly pullback retraced to a Weekly price level of 4.09% for $U10Y
(key level marked on dashed green line)
We can clearly see TVC:DXY being dragged higher as well during Yields uptrend
(indicating a weak and fearful state of other Major Financial Markets).
Seen on Weekly Timeframe, we can easily spot a triangle pattern being formed
on $US10Y.
Triangle Pattern's Apex can be stretched as far as 238Days from where it
currently is.
In case Pattern is violated to the downside,
a considerable Support-Resistance zone lays just underneath dating back
ever since 1912.
Below that would be the catching up dynamic support of 200EMA on the Weekly,
as well the support-trendline coming from Pandemic Lows.
TVC:US10Y uptrend resumption seems very likely from here,
especially after bouncing at the key level marked on dashed green line.
What is more important to be monitored is the correlation of TVC:DXY going higher
in the same time with TVC:US10Y .
That would be a nightmare scenario for an investor, and a golden opportunity
for those who are on the sidelines and waiting to be heavily invested
in diversification .
Major Market Correlations Between Yields, Stocks And USDollarIn 2022, the stock market took a hit and the US Dollar gained strength due to higher yields in the US. Toward the end of that year, as yields eased off, the US Dollar lost some of its power, and this coincided with a rebound in stock market performance.
Now, as yields are climbing once again, the US Dollar is regaining strength, but it seems like stocks are beginning to lose their previous momentum. However, the situation might shift if these rising yields are in the process of completing their fifth wave and are on the verge of slowing down. In that case, the US Dollar could actually become weaker again, and the stock market might continue its upward trend. Of course a lot will depend on the FED policy decisions, where dollar can turn down if FED will stop the hiking cycle. Well, a lot will depend on the US data, so market participants will surely watch the NFP very closely tomorrow.
TLT: Bearish Bat with Bearish DivergenceThere is a Bearish Bat with Bearish Divergence on the TLT, which could perhaps be signaling that the 20-year Bond Auction is going to demand higher yield than the current level.
$DXY CRATERING furtherQuick update on some calls that we made not long ago.
Keep in mind that many were bullish on yields at the time.
We stated that TVC:DXY was topping.
We also believed that #yields topped, especially longer term.
What has happened since then?
US #dollar cratering.
TVC:TNX , 10 Yr, 2YR & shorter frames are also rolling over.
Last night we stated that #stocks still look healthy.
Please see profile for more info.
Gold: Shining Bright with OpportunitiesGold is once again in the spotlight, and here’s why!
Economic Cycles, PMI & Gold
The US Purchasing Managers Index (PMI) is a leading indicator often used to identify turns in the economic cycle. A below 50 PMI print indicates contraction in the US manufacturing cycle, while a print above 50 suggests expansion. Generally speaking, expanding manufacturing cycles spell a boost for industrial materials, like copper, while contractionary periods spell downturns in the economy and a preference for 'flight to safety', boosting gold holdings. An interesting observation from the chart above is the correlation between the Gold/Copper ratio and the inverted US PMI, moving in tandem over the last decade. However, looking at the current scenario, the PMI has turned lower, yet the Gold/Copper ratio has remained relatively muted, suggesting that gold may currently be underpriced. Similarly, the Gold/Silver ratio shows a less pronounced but similar effect.
Significant drops in the PMI below the 50 level have historically triggered notable increases in the Gold/Copper ratio. With the PMI currently below 50 for a sustained period, this might be priming the ratio for a potential upward surge.
Yields, Fed Expectation & Gold
As a non-interest-bearing asset, gold loses its appeal when interest rates rise, leading investors to prefer interest-yielding products. We covered the effect of a Fed rate cut on gold in a previous article here . While the Fed remains steadfast in holding rates, even the act of pausing rate hikes positively impacts gold. This effect is observed via the Gold/US10Y Yields ratio. The previous pause in rate hikes preceded a significant run-up in this ratio. Additionally, this ratio is currently near its resistance level, which it has respected multiple times over the last decade.
With the Fed expected to continue holding rates, now could be an opportune time to consider adding gold to your portfolio.
Gold Price Action
Gold’s current price action also shows a completed cup-and-handle pattern. With an initial attempt to break higher halted, it now trades right above the handle.
Additionally, gold could arguably be trading in an ascending triangle pattern, as noted by its price action as well as generally declining volume, potentially signaling a bullish continuation pattern.
In summary, given the Fed's stance on holding rates, the correlation between PMI and the Gold/Copper ratio, and the bullish technical indicators in gold's price action, a positive outlook on gold seems reasonable. To express our view, we can buy the CME Gold Futures at the current level of 1962. Using the cup and handle pattern to guide the take profit level, at 2400 and stop at 1890. Each 0.10 point move in gold futures is for 10 USD. The same view can also be expressed with greater precision using the CME Micro Gold contract where the notional is one-tenth of the regular size gold contract. Here, each 0.10 point move is for 1 USD.
The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description.
Reference:
www.cmegroup.com
www.cmegroup.com
www.cmegroup.com
