19 – 24 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.
https://eod-notes.com/shared-content/

From last week:
Last week I only took a trade. Short USDCAD.
Here is my thesis. USDCAD correlates negatively with WTI. I am bearish crude but I will explain why on the Crude section.

Correlations between USDCAD and WTI

CAD technically and fundamentally looks very weak. Canada´s economy is falling into shambles and the CAD relies on crude prices to be stable.

CAD Currency Weekly chart

It was a crazy week overall, sadly the corona virus situation isn’t improving.
Markets are still rallying acting as everything is fine. This is insane.

My macro opinions for long term:

  1. We are heading lower, much lower on stocks.
    This week bulls swing for the fences, the SP500 rallying but is inside a rising wedge, maybe a retest of ~2900 is possible because Its the YTD mean reversion.
    Still believe we are heading much lower.
  2. US bond yields are going to zero.
    Shorter terms are already negative.
US Gov Bond Yields

3. Gold and silver will go a little bit lower before acting as safe heavens.
Gold corrected lower last Friday. News on stability and GILD treatment relived market sentiment. When everything stabilizes for good, old will correct much lower.
4. Commodities will behave like gold, specially grains.
Grains started to suffer, corn is already reaching 52W low price per bushel.

Next Week:
I don´t believe It´s time to go long.I am mostly in cash with four trades open, long gold, long $GOLD(Barrick Gold), long $AG and short USDCAD.
At the same time, I don’t believe It´s time to short the market, SP500 is showing a lot of power. We need to have a reversal event in order to trigger shorts.
I will keep watching the FX market for plays. Special note to grains and natgas, Corn is almost at a 52W low price per bushel, It might be worth a shot. Natgas ripped but is still inside a falling wedge, pay attention to a possible breakout.

Earnings season is steaming up ahead. Online companies will do good, home delivery services will do OK, everything else will do poorly. If you play earnings, be safe out there. It´s going to be a roller coaster.

Earnings week 19 April 2020

CRUDE
Oil markets are absolutely insane. Futures curve are in a super contango.

Oil futures contango – https://themarketear.com/

This is not enough to drive oil prices up. The supply is much bigger than the demand and while this doesn’t change, the price should go down. Even with massive OPEC+ cuts and Trump saying he will pay producers to not produce, the oil prices are driven by supply / demand laws.
Last Friday crude closed below the trend line and below support,It looks bad.

Oanda CFD WTI weekly chart
TANOS Market Gauge Crude

This is not all bad, in shore storage is reaching it´s capacity limit, so off shore storage is being contracted. BDI index is starting to turn positive and some tanker stocks are printing big green candles. I am not playing this, I arrived late to the party. If a new pullback happens I will look into it.

Baltic Dry Index

GOLD
Long term, I am very bullish gold, that´s why I am long from the base ~13xx level. This being said, Short term I believe gold prices will catch up with reality once the supply chain issues are resolved.

Gold monthly chart

The orange box on this chart is the level I am looking into adding to my gold bags.

Gold Daily chart
TANOS Market Gauge – Gold

SP500
Still inside a rising wedge. A new leg up to test the YTD mean reversion at ~2900 is still possible before rolling over. There´s the space and momentum for a last push higher.

Oanda SP500 Daily chart
Oanda SP500 Cloud chart
TANOS Market Gauge SP500

Another Notes
Insiders are not buying the fed printer trigger, and buybacks are at the lows.

Insiders transactions
https://themarketear.com/
https://themarketear.com/

Sentiment is still mostly bearish but the market keeps rallying, some people call it a bear market rally, others are saying the bottom is in. Pick a side.

TANOS Market Gauge Sentiment

Nasdaq is being the top performer, Tech is ripping on this bounce. When and If a sell off happens this stocks may provide great buying opportunities.

TANOS Market Gauge NASDAQ Perfs

Events:
Monday
EUR – German PPI
CAD – Wholesales m/m

Tuesday
GBP – Avg. Earnings Index / Unemployment rate
EUR – German ZEW Economic Sentiment / ZEW Economic Sentiment
CAD – Core retail sales / Retail sales
USD – Existing home sales

Wednesday
GBP – CPI / CORE CPI / PPI
CAD – CPI
CNY – CB Leading Index
EUR – Consumer Confidence

Thursday
AUD – Flash PMIs
JPY – Flash Man. PMI
EUR – Flash PMIs / German GFK Consumer Sentiment
GBP – Flash PMIs
USD – Flash PMIs / Unemployment claims

Friday
GBP – GFK Consumer Confidence / Retail Sales
EUR – German IFO
USD – Durable Goods / UoM Consumer Sentiment




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