23 -27 Mar 2020 Trading week preparation

The content is now separated between markets/folders I track. It´s easier for me and I hope it´s easier clear for you too.
https://www.dropbox.com/sh/42emkdzpvw867i0/AAAHA9ljhEBgHkX63xNnWtesa?dl=0

From last week:
Not trading was the right decision for me. The market is a roller coast with huge swings up and down. Despite my macro ideas are working, I feel I would be straight up gambling if I was trading.
I like to think I am a confident trader, although this market conditions are making me uncomfortable to leave positions open at night. so I prefer not to trade my capital at the time and keep trading on paper.
Part of being a trader is to know your edge, I am working on it.

Last week despite not trading it was a very busy week. If you use my data / reports you will see I remade the Market Gauge dashboard entirely and added a new correlation Dashboard.
I also made a few paper trades on SP500. I think I am learning a lot in this market environment. Things are happening super fast and Central Banks(CBs) are trying to save everyone my making cash injections.
Reading about CBs policies I started to brush up my knowledge on CDSs (Credit Default Swaps) and this crises is looking more and more like a huge Junk debt explosion. (iTraxx Crossover Credit)
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Junk bonds are collapsing, CDSs are rising, Government bond Yields are all going to zero or negative and people are talking about MMT, a lot.

This are indeed scary times, I have no doubt that together we will beat Corona Virus but the aftermath will be another battle.

SP500
SP500 broke the yellow box, this is bad. We closed below 2018 Christmas correction. The volume on this sells are insane, this is historical volume levels.
More than 90% of the SP500 stocks are below any reference Moving Average.
Things are bad, I am eyeing the 2000 level.

SENTIMENT
Overall sentiment is bearish, some people cleaver then me are saying this will be worse than 2008. There are no safe harbors, all Safe Havens are diving too.

CRUDE
Well that’s a poo.
I love to trade crude futures but the amount of uncertainty in this market is insane. Supply is increasing by the day,demand is decreasing , Geopolitics and relations between OPEC, Russia and US are deteriorating. It´s chaos and mayhem.
That $10 crude idea is looking more real by the day. Spreads between Crude and Brent are really high which validates the uncertainty of the market.

My macro opinions for long term:

  1. We are heading lower, much lower on stocks.
    SPX made a new low, and the weekend trading is pointing for a bad futures open, maybe a limit down.
  2. US bond yields are going to zero.
    Short term bonds like 1/3 month are already at zero.
  3. Gold and silver will go a little bit lower before acting as safe heavens.
    Unfortunately this is still heading lower, the panic haven’t peaked yet, precious metals will only bottom when panic peaks.
  4. Commodities will behave like gold, specially grains.
    CRB Commodity Index is almost at a historical lows
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  5. EM, AUD, CAD fx will get destroyed vs USD and YEN.
    Major movements down on last week open and through last week, I expect this week to be the same.

For the trading week:
It will be another crazy week.
The only plays I see and I am willing to take are on the FX market.
AUD,CAD and EM currencies are weakening against de USD and JPY.
They are a very oversold and DXY are a bit extended so I expect DXY to retrace a little providing a better shorting opportunities. I am eying specially CADJPY, AUDJPY,USDCAD.

Special note for GBP, this week we have a BOE rate decision on Thursday. A new cut and with DXY strengh it could take 1985 lows of 1.10

Events:
Monday
CNY – CB Leading Index
EUR – Consumer Confidence
AUD – Flash PMIs

Tuesday
JPY – Flash PMIs / CPI
EUR – Flash PMIs
GBP – Flash PMIs / CB Industrial Expcectations
USD – Flash PMIs / Richmond Man. Index

Wednesday
CHF – Credit Suisse Economic Expecations
EUR – German Final IFO Climate
GBP – CPI/PPI
USD – Core durable goods / Durable goods orders

Thursday
EUR – Gfk Consumer Climate
GBP – Retail Sales / Rates
USD – Unemplyment Claims / Final GDP
JPY – Tokyo core CPI

Friday
USD – Core PCE Price Index / UoM data

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