30 Mar – 3 Apr 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.

From last week:
Another crazy week, markets were up and down all over the place.
US unemployment claims reached a all time high, bigger than 2008.
Tensions between Saudis and Russians got worse.
Boris (BOJO) tested positive for covid19.
Europe is in turmoil because of the corona bonds.
If on the previous week insiders were buying like crazy, this week they are not buying this rally.

Insiders Buys/Sells

The market is officially broken Several ETFs are trading below their NAV. Last week I shared a list. Here is an updated one.

In midst of all this, I have been reducing the amount of trade I do per week, I am adapting my trades in a way I can be more “comfortable” with them.

On last week prep post, I said the market I am watching is the FX market,
the action will be here for the future months.
I shorted EURGBP @0.9156 and closed it @0.90138 ~134 pips.
I also shorted AUDJPY @66.508 which is a little bit under water but is still open, my target is 65.213 at least.

My macro opinions for long term:
Lets review this.

  1. We are heading lower, much lower on stocks.
    SPX had a nice rally but wasn’t able to breach a key level.
  2. US bond yields are going to zero.
    Short term US bonds are already negative
  3. Gold and silver will go a little bit lower before acting as safe heavens.
    Gold rebounded nicely, It surfed the market green mood. I think when the next sell off happens, gold will sell too
  4. Commodities will behave like gold, specially grains.
    CRB Index is off the lows but still “dead inside”

Next Week:

Bearish sentiment is starting to rattle the markets. Although this week, after a Dow rally WSJ announced that a new Bull market started.
In my opinion we haven´t even properly started a bear market.

US Market Sentiment AAII Survey & NAIIM Survey | Euro Zone Sentix & ZEW

Market safe havens started to rebound and closed strong on Friday

Market Safe Havens JPY, CHF, GOLD & US10Y Note

Technically SP500 is setting up a perfect bear setup:
Weekly chart, rejected the 0.5 fib level and key resistance zone. A bear MACD cross is in play.
On the Daily chart, look for a clean break off the trend line. Friday closed with a bearish Harami candle.

SP500 Weekly Chart
SP500 – Daily Chart
SP500 – 4h chart
SP500 – Daily cloud & candles chart

Another important note on SP500 clearly rejected the mean/ geomean lines.

SP500 – Mean and Geomean lines

The charts look really bad. The Geopolitical chaos is killing the price.
The rivalries between producers crushed the price and covid19 the demand.
The good trades are all on the spreads.

Crude Prices WTI / BRENT / OPEC oil basket
WTI Monthly Chart

Another Notes

Stocks / Commodities ratio chart looks like a rocket ship. I will be watching this chart every day for the next months, a break of the trend line can start a commodities bull market.

SPX = Cyan | Stocks/Commodities ratio = Pink

US10Y-US2Y spread correlation with SP500 is uncanny. be aware of the gap closing.

US10Y-US2Y spread correlation with SP500

EUR has been the biggest bad boy in town. the amount of negative correlations are increasing, maybe is acting like a new safe haven.

Correlation table

CHF – KOF Economic Sentiment
GBP – Net Lending to Individuals / GFK Consumer Confidence
JPY – Unemployment Rate / Prelim. Industrial Production / Retail Sales

CNY – Manufacturing PMI / Non Manufacturing PMI
GBP – Final GDP
EUR – Flash CPI
USD – Chicago PMI / CB Consumer Confidence
AUD – AIG Manufacturing Index
JPY – Tanken Man. Index Tankan Non Man. Index

JPY – Manufacturing PMI
CNY – CAIXIN Manufacturing PMI
EUR – German Retail Sales / Manufacturing PMIs / Unemployment rate
GBP – Manufacturing PMI
USD – Manufacturing PMI / ADP – Non Farm Employment Change / ISM Manufacturing PMI
CAD – Manufacturing PMI

USD – Unemployment claims / Factory orders

EUR – Services PMIs / Retail Sales
GBP – Services PMI
USD – Services PMI / Avg. Hourly Earnings / Non farm Employment change/Unemployment rate / ISM Non Manufacturing Index

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