From last week: What a crappy week, positions on gold CFD and GDXJ were hammered. $RGR and $SWBI are between ranges. $AG got hammered as a Silver proxy. Trading wise, It wasn´t a very nice week.
I finally finished the Z-score strategy, I am just trying to increase Its execution performance, It´s a huge time-series.
I played a bunch of cyberpunk 2077, because why not? Such a great game.
I am also making an application that I want to open source. A simple console application that runs on the command line where you can consult the options chains, company profile, metrics, news, etc for a specific ticker. It´s in development.
Next Week: I won´t make a fancy weekly post probably until next year. As the year is ending, I will take the next few weeks to review my trade log and meditate on what I did right/wrong, clean up my development backlog and visit some friends and relatives.
Taking some time from the market is important for me, helps me to reset my bias and reduce the stress levels.
Some thoughts about the market though: – SP500 last Friday close was insane, the dip was bought fiercely. – Gold is hanging in there, still bullish above $1800. – WTI is just insane, a 15M barrel build and it barely moved. – The dollar will probably retest the 91 level. I have a gut feeling that the rug will be pulled by the end of this month.
Word of “some” wisdom, take the time to enjoy the money you manage to extract from the markets. It´s important to have a market – life balance. Being a participant in the market can be like an addiction, It is for me, and the way I managed to detox is to take a break from time to time. 2020 was a rough year overall, and the perspectives for early 2021 are a little grim. Take care of yourself and your family, help each other, work on yourself and on your surroundings, your market skills will improve as you improve and a person.
Alerts! – Be aware It´s quad witching – Tesla inclusion on SP500, expect a lot of volatility (Friday´s close)
From last week: Trading wise everything remains the same. I am long the same positions: $AG: doing fine $SWBI and $RGR: Are okish, didn’t move much since I went long $GOLD: Doing fine too, It was a strong week. $GDXJ.MI: Being quoted on EUR is messing up the PnL a little, but It´s still good.
Started working on a new z-score algorithm, and will probably share a new report soon. The idea is to have a dashboard with all major us indices stocks, and also calculate average z-scores historically.
Next Week: I am planning just to watch and maintain the positions. I will focus mainly on development. In Portugal, we have a holiday on Tuesday, I will take Monday and Tuesday to rest and probably play some PC games. I will also keep this week´s post short and concise.
WTI It was a very strong week for WTI, the priced push nicely above some important lines. Last Friday’s close was above the year-to-date mean reversion which means we are in bullish momentum. The only bad thing to have in consideration, technically, is the candle close. It´s a bearish candle.
I am still bearish on WTI, the demand keeps on shrinking and last week´s OPEC meeting wasn´t insightful at all.
Gold Gold had a strong week, probably potentially propped by the Dollar weakness. Technically the setup looks nice, It´s still inside the pattern (pink lines). The next area of consideration is the orange box, if Gold manage to break above it, I will buy more on the retest. The last candle, It´s a mixed signal candle, some indecision exists on the market. Another consideration, the last time Gold broke the 200DMA, it quickly bounced back and had a huge rally.
SP500 It´s almost pointless to do any kind of analysis on the SP500, It just goes up and up. Technically the chart looks horrible, and an eminent crash looks very probable. It´s on the top of the purple trend line, and It´s printing a rising wedge, inside a megaphone formation. A revisit to the 3200 target looks possible, but who knows. This bull has a lot of strength.
Dollar Oh boy, this puppy looks ready to die. As it broke the 92 floor, the next solid one is at 90. Technically, the dollar looks super weak.
The dollar to Stocks ratio just gave up on life.
Other Notes The FX market is going insane with these dollar movements and Brexit
From last week: Bulls still dominate the market, everything is up, stocks, bonds, hedges … It´s a full-on bananas market.
I added to my GOLD at $1812. Created a new position on GDXJ (GDXJ.MI). Still long $AG, $RGR, and $SWBI.
The new gold related positions are a bit dicey, but they are the first positions on a bigger fill order.
Next Week: A lot of economic data will be released, PMIs, jobs, US ADP, etc. It will be a crazy week, be prepared for more vaccine news.
Trade wise, I will monitor my new positions and watch if Tech keeps rolling over.
WTI Technically, WTI seems extended. The near term target should be a retest of the $40 level.
On the fundamentals, inventories kept on building and the spread between Brent and WTI went negative. Usually this indicates a disturbance in the market.
On the futures, the spread between the front month, and #6 / #12 almost reached parity (0) which indicates an acceptance of the current price.
Overall, I maintain my bearish view on WTI. The price correlation with supply/ demand is just ridiculous. I wont fight the bull, but I am watching for when It caves. I expect WTI to revisit the $30 level.
Gold Starting with last week´s analysis. I wasn´t expecting gold to retest the $1800 area, so I decided to go against the plan and start adding to my long term position. It´s the first new position on a series of additions, I will buy more for each $50 drop, or on a clean break above $1850. Technically, the chart looks “ok-ish”, the trendline hold, and the buyers appeared to defend it.
Gold is still trading far from the mean reversion lines, and Gold Volatility ($GVZ) is a bit suppressed. The futures spreads are consolidating, but are still a bag of mixed feelings and indecision. The current level also offers some support.
Overall, I am bullish on Gold long term. I think every dip must be bought.
SP500 It feels like we keep stretching the elastic, and one day it will break and hit us in the face. Technically, looks like it is forming some sort of megaphone.
This formation supports a near term bearish view. Taking this and plotting DXY/SP500 chart, we can see the dollar is also trying to gain some momentum.
A few considerations about S&P500, overall this looks super bullish. Nothing changed momentum wise. Constituents are still trading above 250 DMA.
GEX is relatively high, It is acting as a brake.
It never revisited It´s YTD mean reversion of 3310, and the current Point Of Control is 3330.
PE´s are insanely high.
The correlation between S&P500 Futures volume and VIX, usually proxies the next S&P500 movement, it looks to be down.
Other Notes The bull mode is still on.
Insiders keep on selling.
One important correlation on copper is the correlation with the Australian dollar. They usually move intertwined. Copper had a huge rally, one of them need to catch up with the other.
From last week: It´s that time of the year, a lot of research is coming out for 2021, been reading a lot on that, especially FX. Living and trading in Europe and using dollars to trade can have a lot of impact on my returns.
So, I am focusing on adapting my trade and finding new ways to be less dependant on dollars. By doing this I am also finding a lot of nice ETFs listed on EU based on EUR.
The positions are still the same, $AG, $RGR, $SWBI, and GOLD (CFD). $AG and Gold are doing fine. The guns trade is very speculative and didn´t pay off, yet, I hope. Both are trading near my entry point.
Next Week: Last Friday we had OPEX and the market rolled off. I don´t think this was a massive event, It was just a regular OPEX with a pinch of salt that a lot of options were bought/sold because of the US elections, traders wanted protection. SP500 might drop a few points but will see a buy the dip event.
This week we also have the Flash PMIs results across the world.
I hope volatility comes back, I will probably go long VIX via $LVO.MI
All eyes on the dollar and commodities.
WTI Stocks have been rising for two weeks in a row, and demand has been decreasing. OPEC outcome was sort of “meh”, I guess the market was expecting heavy cuts.
Technically we are reaching a heavy sell zone. I believe WTI has no business being at this level, but It´s hard to argue with the market. I haven´t trade WTI for a long, long time and maybe now It´s the time to come back and start dipping my toes on a short, Let´s see how it reacts to the resistance.
Gold I really want to see Gold going to $1850 – $1800 but I don´t think I will see it. Maybe if stocks roll over a bit, gold breaks but every dip is being bought hard. I won´t build a new position on Gold (CFD) at his level for now, but maybe I will buy the gold miners ETF. By buying miners, I sort of guarantee my participation in a new gold rally.
Reasons to be alert on gold bullishness: – $GVZ (Gold volatility) dropped hard, which may raise a few flags. – We are far, far away from mean reversion levels. – The dollar took a beating and maybe is due for a bounce, pushing gold to head lower. – Gold futures contracts, the front month is trading at a premium relative to long-term ones.
SP500 There´s not much to say, technically It looks is due to a pullback. Long-term chart outlook, maybe forming an inverted head and shoulders. Overall It looks bullish.
Dollar Bears are showing no love for the dollar and the Fed ain´t helping. A lot of market outlooks for 2021 are pointing to as much as a 20% drop on the dollar, which is pretty scary for non-US traders.
COT report shows, asset managers are staking shorts:
Despite all of this bearishness, nothing goes down on a straight line, and the dollar looks due for a big bounce.
I am keeping an eye on this, I want to buy dips on commodities, especially commodity swaps ETF such as $EXXY. Another thing to keep an eye on is DXY/SP500 ratio, looks primed for a dollar bounce.
It´s a free repository for research papers for dozens of different areas. I just print them and seat on the sofa reading at my own pace. Or just binge watch some TV-show, whatever is rocking my boat at the time.
Next Week: More earnings, not just earnings but a lot of Chinese ADRs earnings. China is posting a record recovery, let´s see how ADRs behave. I personally don’t like to trade Chinese stocks, especially big names such as $BABA, $NIO, $JD, etc. They are too crazy and I can correlate the Tesla cult with the Chinese tech cult.
More “noise” is coming to the markets this week, I am alert and trying to clear my mind in a way I can see past the fog. SP500 will probably do a new record high because of the rotation between Growth / Value.
Being patient is also trading, and not to trade due to uncertainty is also ok. The urge to jump on the train is real, I have to persuade myself almost every day to stick to what I can understand and just play what I foresee.
WTI WTI is still trading inside the “magic” channel. Last week´s rejection of the $42 level and the following 3 red candles is pointing that market participants think WTI gone up too fast.
Current price is diverging from the current futures curve, long term #6 and #12 contracts are trading at a positive premium.
My bias on WTI is still bearish, the demand isn´t there and we probably are heading to another massive lockdown worldwide. We also have OPEC this week, some news may rock this market.
Gold Gold seems very fragile, and somethings that´s throwing me off is that despite all this chaos, gold isn´t moving, a lot. This probably indicates that people are ok living in chaos, and It´s not time to buy more gold, yet. Technically It looks weak, and a revisit on the desired $1800 level seems very likable.
Another thing to consider on the bear side, Gold #6 and #12 futures are trading at a negative spread related to the current contract, and $GVZ is below Its mean reversion.
Long term I am bullish on gold, I want to add to my paper and physical bags. At $1850 – $1800, I will definitely start adding to my positions.
SP500 Well, There’s nothing much to say, we probably are going to see new highs. The rotation between Growth/Value is adding new fuel to this rocket. Technically the chart looks like trash, It´s a parabolic move with some pretty insane candles.
What I learned this year about stocks: -forget the reason -forget logic -forget stock valuations. Stocks only go up and buy every single dip.
I don´t do this, I don´t understand this, that´s why I am probably wrong about SP500 a lot of times this year.
Dollar I am watching the dollar very closely. When shit hits the fan, market participants will start driving into the dollar for safety.
I think I already shared this, but here goes again. On an intraday basis I watch this dashboard:
As you can see, as the US 10 Year Yield goes up, and the dollar goes down, stocks go up, and vice versa. So, watch closely this correlation, a weak US10Y yield, and a strong dollar, will probably be the trigger a lot of traders are looking at.
Other Notes The market is in bull mode.
Insiders are keeping to date their insane selling spree:
From last week: Well, I couldn’t miss more plans than I did. US elections are sort of done, Biden won and Trump is out.
Historically the market didn´t behave as “normal” and pulled a huge rally.
My LVO position got stoped with profit, I can´t distress this enough, manage your trades. I am planning to get back in, volatility is still cheap.
Failed to add on gold, couldn’t cat a bid for $1850.
$AG is going fine.
Added two new positions on $SWBI and $RGR, took last Thursday’s dump to add with size.
I will give more details on the specific sections below.
Next Week: I am expecting a lot of drama due to the US elections and a shift of attention from the US election to Brexit and corona. This will probably trigger some kind of volatility, the trick is to know what.
Special attention to: – Rocket, business is booming – Corsair, gaming on lockdown probably boosted the sales heavily – Farfetch, a new deal with Alibaba – Palantir, the most mysterious company in the world that keeps operating on a massive loss, despite having huge contracts.
I am expecting volatility across equities and FX. I am betting on a bumpy ride till the end of the year.
WTI Had a failed break down the previous week and know It´s trading inside the channel again. It needs to break the $40 mark to enter a new trend. Fundamentally I think the narrative is still the same, lack of demand for such a huge supply. Technically, It bounced perfectly on the 0.38 Fibonacci.
The 90 days mean reversion is a little skewed but are behaving like support/resistance zones.
Gold Gold just broke out, again. As shared last week, I was planning on adding to my gold position between $1850 – $1800. Unfortunately, I didn’t get my bid. The uncertainty of US politics and the weakness of the dollar is boosting gold and this does not look very supportive for the long term, I would really like to see further consolidation. Gold is trading between a channel, and the next few days will decide what will happen.
Bare in mind that last time the markets sold off, the dollar jumped and primed as the safe haven to be, this will have consequences to gold.
I am also looking to the price of gold in YEN, Yen being one of the major safe havens currencies. Gold just broke out, which can support the bull narrative.
On the bear side, the exposure to the dollar moves is a very important thing to have in consideration. The $GVX (Gold volatility) proximity to It´s mean reversion of $24.
And last but not least, Gold futures are trading at a negative premium. The current contract is substantially more expensive than the two references for #6 and #12. Which points to a red flag on the current price.
SP500 S&P500 is playing a dangerous game, It´s again at the top of the channel and It´s decision time.
I was expecting a lot of volatility last week, but market gods played me for a fool. And provided a huge rally based on uncertainty and chaos. We are really on a multi-billion dollar casino.
Be prepared for a possible buy the rumor and sell the news event.
GUNS Last week based on the US elections chaos and indecision I decided to go long on two gun stocks. $SWBI and $RGR. I got sort of lucky, I took advantage of the Thursdays sell-off and market bought my positions. Technically they seem strong and fundamentally I think we will have a gun race in the US.
Volatility If you read my market preparation posts, you already noticed that volatility is always a core position for me. I do enjoy trading It and It provides sort of an edge to market down movements.
Last week, volatility imploded and I had to sell my bag. I am planning to get back in again but when It´s the great incognito. For the next week, I am looking at $GVZ, $VIX, and $EVZ. Gold, equities, and Euro volatility.
Other Notes Equities to Commodities ratio, It broke down last week. Let´s see how this plays out. The setup on the ratio was pretty bullish, we had a bullish continuation pattern. Next week will let If this was a rejection or a fakeout.
From last week: Crazy week ahead of US elections. S&P500 made some crazy moves. I was aiming for a retest of the ~3500 level but it didn’t cut it.
Earnings keep on coming out and a lot of companies are betting expectations. This makes me feel sort of uneasy in a way I don´t know if the numbers are cooked or not.
Current trades are doing fine: – $AG is consolidating with silver – $LVO finally ramped, you buy volatility when It´s low. When It pays, It pays hard. – Gold CFD, consolidating, and gaining weakness with the dollar momentum. more below on the gold section)
Next Week: US elections week! As I write this, markets are pointing for a red open.
I am expecting a lot of volatility this week with a relief rally when the US election results come out.
It will be a very hard week to trade, I am expecting big swings on equities and FX.
On top of this, we have another action packed week of earnings.
WTI We closed below the “summer box” I will risk saying this points to doom for oil in the short term.
Bare in mind that the US elections results will influence a lot the WTI price as Biden is against the oil industry and fracking.
Prepare for a lot of volatility, This week is a no trade on the oil market for me.
Gold The yellow metal is being highly correlated with the dollar these last few weeks. As the dollar gains strength, gold is pointing to retest the ~$1800. I am looking at these as a huge opportunity to add to my position, at $1800-$1850.
Last September supports area looks strong, It is also the 0 Fibonacci level.
SP500 The last two trading days were insane, the candles point to total indecision. Despite this, the movements and volume were clearly pointing to the downside. Even SPY flows were negative.
A big chunk of the S&P constituents are also turning bearish, the bull-bear lines are at ~47% to the bear side
Technically the chart looks week too, a retest of ~3100 seems very likely.
Finally, the market volume spiked in the last two weeks when selling was taking place. Which gives Its strength to the bearish bias.
Dollar The dollar index just broke out last week with some strength. Maybe investors are running to the dollar ahead of this week’s uncertainty.
A lot of action on the FX markets too, AUD and CAD showing some weakness ahead of cash rate decisions.
Tanker rates are taking a dive.
Sentiment is a bag of mix feelings.
Safe havens are also mixed. CHF is consolidating and Gold is reacting to dollar strength.
From last week: Crazy week, SP500 making huge intraday swings, uncertainty reigns in the markets, and huge earnings blow out.
I am still for the major side on the sidelines, there’s too much I don´t “understand” so I prefer to be conservative. I know I am missing on huge returns, but I prefer to sleep without the worry of a market meltdown. And there are other ways to keep investing. I recently added Masterworks.io painting shares to my portfolio, If there’s interest in it, I will make a post about it.
I am still long $AG , $LVO.MI and Gold CFD.
Next Week: More earnings ahead, last week was pretty good earnings wise. Intel was a huge upset and Southwest Airlines a huge surprise. I don´t really know what to think about Tesla, I sort of believe everything is a big scheme, but who knows…
The week ahead:
I will be watching Flastly, It will be interesting to see what happens after last week’s disappointment on US and Bitedance (China /TikTok rivalry). Microsoft is almost a certain beat with a rally, same as Apple and Amazon. Curious about how Jetblue is doing, I wasn´t expecting the $LUV earnings. Facebook will be a huge upset, in my opinion, the ad´s revenue ll be very bad, The last ones are the big pharma, Pfizer, Moderna, and Gilead
WTI WTI keeps inside the trading channel/trend lines. I already explained my narrative, there´s no demand for the excess supply. I think oil is heading lower, probably retest of – $30.
Gold The yellow metal It´s trapped on the current level. My reading is that every move is dependant on how the dollar is moving, and the uncertainty of the US elections is making gold numb.
Fun fact $GVC, gold volatility, is approaching Its lows of $20. Technically, gold broke out a bull pennant and should be up, the failure to push through $1900 cloud be a warning.
I am still watching the $1800 level to add to my position with size (yellow area).
SP500 This big boy, the choppiness is unreal… Last week’s swings were between a 79 points range, with intraday drops of 30-40 points. That´s huge money on the table.
Technically looks like we are revisiting the 3500 level, again before a drop.
To be fair, the market is holding nicely, the 250DMA is above 62%. One thing to have in consideration, the impact of the US elections on the dollar and therefore on the stocks. Stocks are a huge yield provider for many investors in the US and If USD is no longer appellative, they will look somewhere else for that yield.
Themes We are at that time that the “manias” will start moving again. My special candidates are $AVO, Mission Produce, an avocado producing company.
$TLRY, Tilray a cannabis producing company, just broke out and could eye $11.
The last mania is guns, after US elections, doesn’t matter which side wins, there will be a huge blowout. Guns will be back again with full force. I am eying $RGR Rugger and $SWBI Smith and Wesson.
Other Notes FX is going insane, CAD and AUD look very vulnerable.
From last week: More choppiness, I took the week to connect again to the markets and keep my ear to the ground.
Earnings have been good, especially banks. Bringing back the ideas from last week, banks are a laggard and probably is the sector to be in for the next days. Airlines earnings also started with an up kick from $UAL, from last week hint, It is also a sector to be in. Some stocks are at their lows. I can´t foresee the future for airlines, but I can foretell they aren+t going bankrupt anytime soon.
Still long the same positions $LVO.MI, $AG, and Gold (CFD).
Next Week: More earnings, special attention to $T, $NFLX, $TSLA, $LUV, $KO, $INTC, $AXP, and $VZ.
Some stocks here may be a good buy, for example, $T is a great dividend stock and is trading at near March lows. Earnings will tell how this year went for $T and what to expect for 2020 last quarter.
It will be a difficult week to trade, between dollar strength and S&P choppiness, there’s a lot of indecision in the market. One important thing to have in mind, and these can change all the bullish narrative is that Jerome Powell speaks tomorrow (Monday).
WTI Last week WTI broke out from a downtrend. Despite all the bullish news, cuts, storms, inventory withdrawals, and overall bullish sentiment, the price didn’t manage to break the $41 resistance.
I still think, as explained last week. All movements are connected to crude demand. Planes are in the ground, cruise ships are stationed on ports, people are working from home, etc. The demand isn’t there.
Technically, WTI is creating a nice trading channel. My idea, wait and watch if it breaks the newfound trend line and rejects the top of the channel. The idea is to trade it down to the bottom of the channel.
Gold The technical setup on gold is as bullish as it can be. It´s a clear breakout from a bullish pennant. That being said, the breakout didn’t convince me. It was very low key and rejected the nearest resistance. Gold’s latest movements are very closely correlated to the dollar which is gaining momentum and strength.
I am very bullish on gold and silver long term, although I would like a retest on the yellow box.
SP500 The last two trading days were insane, the reversals on the end were epic. Last Friday SP500 closed rejecting $3500, to be fair $3500 was my last week target for it, and from then I would expect a clear rejection.
If somehow we break the pattern, we could easily see $3200 (200 DMA). I sort of dropped my bearish bias because no one will let the marker drop, a lot. And some volatility is expected because of the up and coming US elections.
Be careful trading the SP500 the daily ranges are insane.
Dollar I think that here lies the key to the market. US markets keep being the most liquid and better yield market available globally and guess what, in order to invest in them, you need dollars.
DXY just broke out from the downtrend channel and If this continues to ride we can expect an equities and precious metals pullback.
Also, watch the correlation between the US10Y yield Vs Dollar. Higher yields and lower dollar = good for equities, and vice versa.
From last week: Back from vacations. Took some time to read up on the market and politics, things remain the same. Uncertainty reigns.
This breather from the markets and all things market related worked like a breeze of fresh air. I returned with an open mind and my bias is reset.
Next Week: Here we go again, a new earnings season is about to kick off. This is going to be interesting because we already had a round of massive stimulus across the world. How companies behaved during these last 4 months will reveal a lot of what can happen until the end of the year.
What I will be watching like a Hawk:
Airlines: Despite all major airlines already have received bailout packages, I think It wasn’t enough. A new round of fresh cash injections will be needed, and coming winter the pandemic travel will get chaotic. Every sneeze or cough will be a covid alert trigger. On the bright side, when the companies report the stocks will probably tank and would be bough on the dip. Airlines like Delta, Lufthansa, Air France, American Airlines, etc won’t go anywhere. They will be bailed out, merged, or restructured. So It´s clearly a buy on the dip moment.
Banks: Especially EU banks, they have been hammered for months, we are taking -50% moves on the stock price. They will provide buy the dip moments across the chart. I am watching Natixis, Banco Santander, Intesa Sanpaolo, and BNP Paribas.
Energy: Major oil has been hammered. Despite WTI rise, oil companies have been the market dog. They are lagging a lot. I am watching major oil like XOM, CSX, RDS, the safest way to play this is through XLE or if you are a European based investor like I am, SXLE.
WTI Despite the bearish bias on world consumption, the prices of crude futures keep on rising. Inventories keep on drawing down but the world consumption isn´t increasing and with planes, cruises, and a lot of people working from home, the demand didn’t catch up to the supply.
One thing to have in consideration, futures spreads are trading positive, what that means, long term futures are trading at a premium related to the current contract, which indicates market interest.
Gold Gold just broke out, again. The massive macro narrative plus the dollar weakness is pushing gold to the moon.
The bull in me really wants a pullback to the $1800 region to buy more. I will be watching closely the dollar movements next week.
SP500 The gift that keeps on giving. Forget bearish bias and fundamentals, this is an all-new market. New rules, ways of trading, and reason.
SP500 broke again and as I suspected and shared a few posts ago, It will revisit the 3500 level.
I am not trading It actively as It is very difficult for me to trade movements I don’t feel comfortable with, despite having the right ideas.
Last few weeks, CME raised the limit of the future up & down, and brokers such us IBRK raised the margins requirements. Market players are preparing for a lot of volatility for the weeks ahead of US elections so we should too.
Dollar I couldn’t be more wrong about the dollar. It has been beaten and kicked left and right. That being said, I think It´s time for a bounce. Check the CoT´s for USD, EUR, and GBP:
Both EUR and GBP are crowded long trades and USD started to get some traction on the long side. If the dollar manages to strike back with a vengeance, you can expect a major commodities pullback and maybe stocks will follow too.
Important note, both EUR and GBP are on top of their mega channels: