Eurodollar and the S&P Short
Updated
Let me be clear, when it comes to the fundamental analysis about what is going on in the monetary world there are so many different arguments and points of view that I can't keep it straight. I am somewhat comforted by the slew of articles saying the Fed does't know what it doesn't know, because if those technocrats don't get the complexities of the Eurodollar, GC and EFF, IOER, repos and reverse repos, then I won't feel so bad. I'll just stick to technical analysis pattern recognition and try and make my money off that.
The chart has the key points:
1: Eurodollar futures bottom out.
2: S&P Exhibits topping behavior
3: EuroDollar Futures has a powerful breakout of the EMA Ribbon. Futures and S&P Diverge.
4: S&P Tests the bottom of the EMA ribbon and finally breaks through and bottoms out.
If we repeat the full pattern at least one more time the S&P is going below $2,500, and the move, looking at the progress of the Eurodollar futures through the ribbon means it will happen in 3-9 months. We are on the verge of completing Step 3 again and if that happens then it seems clear stage 4 will complete as well. I am not messing with anything Eurodollar, but I am looking to benefit from the S&P from dipping.
One of the things that is clanging around in my head is the possibility of GE1! going over 100 because actors want to avoid negative interest rates. I think the interest rate on the dollar is going to go negative and if you would lose less money in the futures market than holding it in banks then you buy the futures, or stores of value like gold and silver. This seems to be one of those posts I will be returning to for several years, especially if the GE1! goes over 100.
Please see the linked posts to see how this settles into a bigger worldview. I am trying to build a big picture world view that helps me catch macro moves so I can buy and forget for about a decade, until we come to times like this.
The chart has the key points:
1: Eurodollar futures bottom out.
2: S&P Exhibits topping behavior
3: EuroDollar Futures has a powerful breakout of the EMA Ribbon. Futures and S&P Diverge.
4: S&P Tests the bottom of the EMA ribbon and finally breaks through and bottoms out.
If we repeat the full pattern at least one more time the S&P is going below $2,500, and the move, looking at the progress of the Eurodollar futures through the ribbon means it will happen in 3-9 months. We are on the verge of completing Step 3 again and if that happens then it seems clear stage 4 will complete as well. I am not messing with anything Eurodollar, but I am looking to benefit from the S&P from dipping.
One of the things that is clanging around in my head is the possibility of GE1! going over 100 because actors want to avoid negative interest rates. I think the interest rate on the dollar is going to go negative and if you would lose less money in the futures market than holding it in banks then you buy the futures, or stores of value like gold and silver. This seems to be one of those posts I will be returning to for several years, especially if the GE1! goes over 100.
Please see the linked posts to see how this settles into a bigger worldview. I am trying to build a big picture world view that helps me catch macro moves so I can buy and forget for about a decade, until we come to times like this.
Note
The eurodollar continues to slog through the Moving Average Ribbon. Once we break through the chart suggest pretty strongly that the S&P will decline in a big way. I have mentioned I am taking an investment strategy into my "short" portfolio, and I continue to buy paper and physical precious metals, feed my SPXU position, so forth and so on. I plan on doing a new post to update his post, so it will borrow some from this. If you were following this post please follow the upcoming post.
Note
Eurodollar continues to pump
Really interested to see if it goes over 100 due to negative interest rates and how that will completely bugger the world economy.
Note
Hit Play to see how right I was.
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