13 – 17 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://www.dropbox.com/sh/42emkdzpvw867i0/AAAHA9ljhEBgHkX63xNnWtesa?dl=0

From last week:
What a crappy week.
I had to cut my short on AUDJPY for a small profit.
My risk management parameters made me cut it. Rules are there for protecting you from yourself. My instincts and opinion may be correct about AUDJPY but the market is telling me I am wrong.
Trade with rules and a plan.
My decision to trade less and watch the markets It´s working out for me, I am being able to learn and understand the market swings and news.
Trading in this environment feels more like gambling.


My macro opinions for long term:

  1. We are heading lower, much lower on stocks.
    Despite this huge pump, I don’t believe we saw the bottom. Economic numbers are horrible and earnings season is starting. When those big airlines report, it may bring everything down.
  2. US bond yields are going to zero.
    It´s happening, Powell went on full “brrrrrrrr” the FED printer is working 24/7.
  3. Gold and silver will go a little bit lower before acting as safe heavens.
    Huge rally this week. I maintain my opinion. When this supply chain disruption ends. Gold will correct lower, providing a good buying opportunity . I already have gold on my portfolio, a test to the 1500 level is a buying opportunity for long term
  4. Commodities will behave like gold, specially grains.
    Not doing much as everything is on freeze. Corn is approaching some lows.
    Copper rebounded and oil is in a no mans land.

Next Week:
It´s going to be another crazy week.
I will keep my plan, I will trade small positions or not trading at all. I will use my time to study market movements and improve my systems.
That being said, this is what is catching my attention.
Earnings season is starting:

April 13 earnings week

FED balance sheet is full steaming head, Powell is printing 24×7. This looks like a crypto chart

FED Balance Sheet

CRUDE
OPEC+ decided to cut production, 9.7M bd per day let´s see how futures open. Demand is driving the price. Crude is in a no mans land and I think this wont do much for price while demand remains this low.

WTI Daily

GOLD
Went full on rocket man. FED printing press and supply chain disturbances in the gold physical delivery market are pumping the price higher. When the dust settles, a correction will happen, fast and furious.

Gold Daily

SP500
Last week the TTM triggered a long signal on the daily chart. A retest on the ytd mean reversion of ~2900 is possible. It also broke out the rising wedge, invalidating the pattern.

SP500 Daily

Another Notes
Insiders started selling the pump.

Insiders transactions chart

Sentiment is in a what I call weird mood. Bearish on the economy, bullish on the FED printer.

Market Sentiment

Safe Havens are going up, such is the market. Correlations don’t matter.

Safe Havens


St. Louis FED Financial Stress Index, well that spike sure does means something.

St. Louis FED Financial Stress Index

Events:
Monday

Tuesday
CNY – Foreign direct inevstiment ytd/y / USD denominated trade balance

Wednesday
AUD – Westpac consumer sentiment
USD – Core Retail Sales / Retail Sales / Empire state manufacturing Index / Industrial production / NAHB Housing Market Index
CAD – Rates decision

Thursday
AUD – Employment
EUR – German WPI / CPI / Industrial Production
USD – Unemployment claims / Philly Fed man. Index / Building Permits

Friday
CNY – Industrial Production / Retail Sales / Unemployment Claims
JPY -Tertiary Industry Activity
EUR – CPI / CORE CPI
USD – CB Leading Index



6 – 10 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:
I feel I am repeating myself. Another hell of a week. Markets went up and down with mad swings.
For me It´s being very hard and challenging keeping it up with all this news and activity. So I decided to mainly focus on SP500, FX, Gold and crude. No stocks at all.
The AUDJPY trade is going well, short since 66.508 it´s in profit for ~163 pips. I will keep it open, I think it will go lower.
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.

My macro opinions for long term:

  1. We are heading lower, much lower on stocks.
    It´s still a long way to bottom
  2. US bond yields are going to zero.
    Short term US bonds are already negative and going into more negative territory
  3. Gold and silver will go a little bit lower before acting as safe heavens.
    Gold had a nice rally but I think it will go down before going much higher (I do own gold)
  4. Commodities will behave like gold, specially grains.
    Commodities battle and swing according dollar prices, if the dollar is strong commodities prices go down and vice versa. DXY is looking strong

Next Week:
AUD
I could throw a bunch of ideas of shorts but it would not be any different from your own analysis. I try to do this to share a different perspective on the market.
That being said, my “main” play at the moment is short AUDJPY. Things do look dire for the AUD and versus the Yen seems to be the best way to play it.
Yen looks very strong, it´s a safe haven and due to AUDJPY correlation with the SP500 It validates the price prediction.

AUD Weekly chart
JPY Weekly chart

CRUDE
This is a though one, I really like to trade WTI, It´s one of the main things I usually trade but this is starting to be insane. On last Thursday Trump tweeted that Saudis and Russians were talking and the WTI jumped almost 25% spot.
Common sense says to me that WTI is a no trade asset for the moment.
I do belive WTI will head lower before starting to gain up momentum.
Nonetheless here is my chart.

WTI Weekly chart

This will complicate things for crude prices.

CAD
This is a weird one. It looks ready to fall in oblivion.
It´s high correlation to crude prices makes it one asset to be watching.
Ways to play will be CADJPY/ USDCAD / EURCAD
A close below the yellow box will be a trigger for a short

CAD Weekly chart

GOLD
It is forming a massive cup and handle. Long term I am very bullish on gold, short term I am aware that the downside is more plausible. Maybe a retest of the 1500 lvl or lower.

Gold Weekly chart

SP500
Things are bad, market is bouncing but I feel it´s a dead cat bounce. There are still a lot of dip buyers but people are starting to see the bigger picture. Economic data is deteriorating by the day and this corona virus pandemic is affecting business throughout the world.
I still see SP500 reaching ~2000.

SP500 Weekly Chart

Another Notes
If on mid march, insiders were buying like crazy, last week, insiders were selling a ton.

http://www.openinsider.com/charts

SPY is still seeing a lot of inflows, month-to-month inflows are still positive.

Track Insight SPY Flows

I am taking this time to read and learn new things. I would like to share a few links:
Blogs:
https://advisor.visualcapitalist.com/black-swan-events/
https://e-markets.nordea.com/#!/article/56742/global-once-we-are-out-of-this-mess-the-usd-could-be-hammered

Podcasts:
Macro voices 213 Josh Crumb: Deciphering the Gold market
https://bit.ly/2V02hxM
hmmminars from Grant Williams
https://ttmygh.com/hmmminars/

Events:
Monday
EUR – German factory orders m_m /Sentix Investor confidence
GBP – Construction PMI
OPEC Meetings

Tuesday
AUD – Rates Decision
JPY – CB leading Index
EUR – German Industrial Production m_m
CAD – IVEY PMI
USD – Jolts Jobs Openings

Wednesday
JPY – Core machinery orders m_m / Economic Watchers Sentiment
CHF – Unemployment rate
USD – FOMC

Thursday
JPY – Consumer Confidence / Prelim Machinery orders m_m
GBP – GDP /Industrial production / Manufacturing Production / Index of Services
CAD – Jobs Data
USD – Unemployment claims / Core PPI / PPI /Prelim UoM consumer sentiment

Friday (Bank Holiday)
JPY PPI
CNY – CPI / PPI/ New loans
USD – CPI / Core CPI


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.
https://www.dropbox.com/sh/42emkdzpvw867i0/AAAHA9ljhEBgHkX63xNnWtesa?dl=0

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.
https://www.dropbox.com/s/ihir2nvcgs8rybt/ETFvsNAV.xls?dl=0

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:

Sentiment:
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

SP500
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

CRUDE
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
https://themarketear.com/posts/c9ridVDcjt
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

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

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

Wednesday
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

Thursday
EUR – PPIs
USD – Unemployment claims / Factory orders

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

US most traded ETFs vs NAV

I will try to provide a little bit more data that I use on my day to day.
Starting with a list of the US most traded ETFs vs NAV.
NAV (Net asset value) is a ratio that represents a fund’s per share market value.

This recent market sell off created a unique opportunity in the market, some ETFs are trading below their NAV. Creating opportunities to buy ETF units below their underlying assets.
If you are a value investor this is gold to you.

This list shows the most traded ETFs and their rates.

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

16 -20 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

What I am looking at:
From last week:
I had to cut my longs on gold. The position was making me uncomfortable and I think gold is heading lower. I was wrong on my assessment the market wouldn’t do the same as 2008.
I shorted CADJPY again on Tuesday pump and closed on 74.883 retest.

For this week, I have to be completely honest. I feel disconnected with the market.
I can´t figure out the movements, this is the first “recession” on my trading journey and I am trying to figure out whats what and its not easy.
I don’t trade on instinct and this market conditions are making me uncomfortable, so I am opting out not to trade(real capital) and study market movements and behavior.
This being said, It´s an easy way to practice and learn without loosing capital.

This isn’t taking the week of, I am still working on my trading journey. Sometimes embodying the “You don’t know what you don’t know” is the best thing you can do. Apart from paper trading, I will re-watch this:
https://bloomberg.github.io/foml/#about
Brushing up on my macro indicators and studying on how to correlate them.
https://www.assetmacro.com/

My macro opinions for long term:
We are heading lower, much lower on stocks.
US bond yields are going to zero.
Gold and silver will go a little bit lower before acting as safe heavens.
Commodities will behave like gold, specially grins.
EM, AUD, CAD fx will get destroyed vs USD and YEN.

I will update my opinions on the next trading week prep

Events:
Monday
CNY – Industrial production y_y / Fixed Asset Investiment ytd_y /Retail sales / Unemployment rate
USD – Empire State Man. Index

Tuesday
CHF – Seco Economic forecast
GBP – Avg. Earnings index 3m_y /Unemployment rate
EUR – ZEW German Economic Sentiment/ ZEW Economic Sentiment
USD – Core retail sales / Retail sales /Industrial production / Business Inventories / Jolts Job openings NAHB Housing Index

Wednesday
EUR – Final CPI / Final core CPI
CAD – CPI / Core CPI
USD – Building Permits / FOMC

Thursday
AUD – Jobs data
JPY – Rates
CHF – Rates
USD – Fed Philly Man. Index / Unemployment claims / CB Leading Index

Friday
EUR – German PPI
CAD – Core Retail Sales


Knowledge Up Ticks #3

This week I came across a few articles, a podcast and a video worth sharing

1- Bloomberg article about what happens if US bond yields go to zero
https://www.bloomberg.com/opinion/articles/2020-03-10/federal-reserve-can-t-let-bond-yields-fall-to-zero

2- New article from Guggenheim Partners, very interesting point of view about this “corona virus” market environment and effect
https://www.guggenheimpartners.com/perspectives/global-cio-outlook/the-butterfly-effect

3- A new article from Kevin Muir, as always a very different perspective about the world
https://adventuresincapitalism.com/2020/03/08/hospitality-goes-no-bid/

4- Special Saxo Market Call, market perspectives and future
link

5 – Real Vision Market Fault Lines Exposed by Oil Shock | The Big Conversation | Refinitiv. Some perspectives about what´s next for only
https://www.youtube.com/watch?v=HcLLmzziadA