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Are we building a ladder with the steps we just used?Today was quite an interesting, and most likely historical day following the shenanigans of $GME. For me, it was a day to sit back, contemplate, & construct questions into the future of the economy in Canada. Please bear with me as this is my first idea, and I am admittedly a new trader (One year so far). Comparing 3 types of bond yields: 10Y, 2Y, and 3MO has been quite the staple for determining the direction of our economy. Our interest rates, the general market outlook, and also what the government is doing financially. Like an electrical circuit, we can see that each time these 3 graphs begin to touch, the economy short circuits and is sent spiraling downwards. I'd like to start where a lot of people start, and a lot of people groan as well when they hear this: the stock market crash of 2008. First, it would be ignorant to completely declare this fiasco as identical. However, there are many parts that are (and continue) to be similar. Some people say the stock market is just an irrational machine. Any sort of programmer would laugh at the idea of true randomness. I believe it is a system of gears that are controlled by millions of different entities and that it's our job to be able to understand which gear(s) are controlling each sector to formulate a decent idea, or fair percentage to make our predictions. The first and most obvious similarity between these crashes is the level CORRA (Canadian Overnight Repo Rate Average). The Bank of Canada has taken control of the CORRA and it " will be further adopted across a wide range of financial products and could potentially become the dominant Canadian interest rate benchmark, particularly in derivatives markets". There's an obvious pattern of the market reacting violently to the CORRA rate and as of right now, they are at the same level as the 2008 stock market crash. The very first sign of a stock market short circuit can be noticed with the 10 and 2 year bond yield rate. From almost December 2005 these rates were starting to close in together, leading to complete cross-under of the 3 month yield and shortly after - the great 2008 stock market crash. For our recent crash we had it play out almost exactly the same: tightening between 10Y & 2Y, and then a cross-under of the 3 month. Shortly after, the crash occurred. Now, what's different? Well only that the 3 month yield appropriately spaced itself from the 2Y from the 2008 market crash. I'm sure we all know but the main cause of the 2008 crash was from too many people defaulting on loans that they shouldn't have been given in the first place. However, when this crash occurred our different yields are took their respective position to comfortably restart. In our new crash the 3 month and 2 year yields are still confused while the 10 year is entering a parabolic increase. The last time something occurred similar to this (noted by the squares) we entered a bear market that took a hit to the real estate industry first. So, what's the problem? I believe we all got a little too worried about the result of this pandemic, but were saved by the technology industry. Most people in high-end jobs were able to continue working without much difference, and people in low-end jobs pretty much had to continue working - but were labelled as heroes. Additionally, there has been a lot of new faces (including mine) in the stock market world, stimulate bonuses were (and still are, I believe) given to everyone and their 14 year old kids (seriously). A lot of people have taken up online hobbies, stores, and especially jobs that they can do remotely. We are humans, we learn to adapt in every situation, and that's why we're the kings of this world. Despite the lovely recovery, there's echoes and signs that are increasing in strength. In boxing, a fighter can be the best and be unmatched - only to have it all taken away from one loss and never recover again I find the market to be a swinging pendulum. It goes up, it goes down. There's an invisible line of gravity that we accept and it swings depending on the uncertainty and volume. When we defeat our fears we need to stay humble before we start to believe we're invincible. The biggest industry of Canada (that controls 13% of the GDP) is.... real estate. I'm sure every Canadian here that's looking to buy a house in wincing in pain, and everyone that already has a house has the biggest grin. I was reading that Toronto went up around 15% in real estate in January. What the heck is going on?? . My friend recently purchased a nice condo in Quebec which costed $430,000. Does my friend make the kind of money to justify a house that expensive? Heck no. Can we just flip back to the 2008 market crash? We remember what caused it right? Ridiculous loans that were given out, and that were defaulted because they were ridiculous. Now, I'm not saying that this crash was similar, but I am trying to imply that we are on the verge of hitting that crash again. CERB has effectively given everyone who can fill out a form a bit over $10,000. Some people didn't even EARN $10,000 in a year but they still got it. It's still continuing under some new name so the amount is still increasing. Secondly, any new home buyers are eligible for a government loan that pretty much equates to 5 - 10% of the down deposit. So let's get this straight: Everyone and their child has received ATLEAST $10,000 (And won't have to give it back until they file this year's tax returns), first-time house buyers can get 5-10% loaned for the down deposit, and banks are giving mortgages with crazy low interest rates. Anyone else see an issue? A regular, decent house in my area would've been maybe $150,000 or $200,000 a year or two ago. Now, it's about $300,000 and steadily increasing. A minimum deposit is about 5% - the government is willing to do that and you already have $10k in the bank. A lot of people have lost, changed, or reduced their jobs to adapt to the new world. Our pay stubs from 2-3 years back IS NOT A HEALTHY INDICATOR . Our government is pushing the younger generation into buying houses that they honestly cannot afford. Almost everyone has been given all the tools to effectively place a down deposit on a house they probably cannot afford, and mortgage rates are so freaking low it seems like a no-brainer. Houses are increasing way too fast in this economy as a result of government stimulation, and like any market with huge volatility: it will start to swing downwards at some point. The question is: will we be able to control it? Once taxes come in, the mortgages go back up, the stimulation ends, and the prices start to find their middle ground, will everyone be secure enough to handle it? Final thoughts Our economy is in a stage of mania with our insane house prices and market recovery. It's like being at the doctor but they give you methamphetamine instead of morphine. - Will the come down be manageable or will it drive the economy into a huge fit? - Are we teetering towards another financial crisis brought by ridiculous loans? - Will we just continue this high until something else happens? - What can we do to increase the odds for a clean and healthy recovery? Thank you for reading. Near the middle point I let my mind wander. Please give me reasons that my logic is invalid as I am always trying to learn.
TVC:CA10Y
by woodyjohnson
USDCAD 4th leg up and 5th leg downPlaying with some ideas, not a trade to copy - testing key levels as part of a bigger picture. Hence up to then drop down. Disclaimer This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years’ experience in stocks, ETF’s, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Long
by Mayfair_Ventures
Bitfarms LtdThis little-known Canadian Gem, Bitfarm Ltd in my opinion will continue to gain momentum in the next coming months and years. BitFarms Ltd is a massive Canadian financial technology company that currently runs bitcoin mining machines that solve complex mathematical equations at an industrial level. What separates Bitfarms Ltd from its competitors is there ability to scale. They have software that allows them to monitor all their mining devices from one central computer. I believe Bitfarms Ltd will become a household name in the next 10 to 15 years for this reason im incredible bullish on Bitfarms Ltd
BLong
by k416bitcoin
USD/CAD - Consolidation OpportunitiesGreetings Traders! Here's some thoughts of USD/CAD: Since USD/CAD December High at 1.29570 , price has been falling all the way to 1.27000 . From the December High, price has created consistent Lower Highs and is expected to keep falling to the next Support Zone where new Trading Opportunities can be executed. Here's the two possibilities I'm thinking of that could happen at that Support Zone : 1. Price Rejects the Support Zone and Reverses to go Bullish back up. This could mean that it goes back up but won't go all the way to the Resistence Zone, considering that there's a Trendline that Price so far has respected. I would probably get out of the Trade at that Trendline if price doesn't Break. But if it does Break, then I would most likely have my next take profit at the Resistence Zone above. 2. Price Breaks through Support Zone but will Re-Test that area. If the Re-Test turns out to be Bullish and breaks through the area again, then I would go back to my first strategy again and looking for new entries to buy. However, if Price doesn't break the area at Re-Test, then that would be my entry for a sell. Quick tip: Always wait at a Key Area to see what price will be doing. It may Reverse or it may go through , but don't assume something. Look at what actually happens and Trade after that. Looking at the DXY chart ( U.S Dollar Currency Index ), the U.S Dollar has consistently fallen after Biden's Installation. Considering the Federal Open Market Committee ( FOMC ) interest rate decision, means that it may keep the exchange rate under pressure, as the Central Bank looks to be in no rush to scale back its emergency measures. Hopefully this gave you a better understanding of the current USD/CAD situation. Good luck with your trading & I wish you a continued good day!
by TraderEliahs
2
VERY headed to a new all time high? This stock has been CSE:VERY good to me. The Very Good Food Company makes Vegan Meats better than Beyond and all the other meat wannabes CSE:VERY I first 'bought in' to this company when I tried my first vegan faux breakfast sandwich at their first and only eat-in location in Victoria, Canada. I put my money where my mouth was when I bought into them soon after their IPO at $1.09. Since then, their market cap has exploded to 640m and so has demand for their products. They are rapidly scaling up production to meet an even more rapidly growing demand, with an 82% production capacity improvement since OCTOBER 2020. They recently acquired a small nut-based vegan cheese company to expand their product offerings. Bullish press releases and strong technicals continue to push this stock up. I wouldn't be surprised if an uplisting to the NASDAQ is in their future. A close over 9.50 above their previous all-time highs will be breaking out of a final resistance point could be a good entry with a lot of upside. I am hanging on to what is left of my original position and don't intend on exiting anytime soon, this is a long term hold for me. DISCLAIMER: This is not to be interpreted as trading advice.
VLong
by matrixmisfit
4
Cad heading into a risky zone The cad bullish momentum is going to be tested within the zone because it heading towards a major resistance zone. This zone has rejected several trends, causing bearish momentum in the past Now would be the best time to test for the bearish emergence being that the cad is another safety currency. As the market's fears over the viruses ease more the cad might not look as favorable anymore and there could be huge profit-taking and shifting of currency demand.
TVC:CXY
by SoryKaba
GROW.V Breakout New 52 Week HighsIncreasing volume and price action past few weeks. Ascending triangle breakout confirmed today with rise above weekly ichimoku cloud. Low float micro cap stock. Disruptive agriculture tech increasing plant growth, new signed contracts and sales behind the run up. Previously ran to 0.70 in April 2019 with a lot less company traction and progress. Price target 0.30-0.35 from ascending triangle break, stop loss 0.20 at previous resistance. I am long GROW, recently doubled my shares at 0.15.
TSXV:GROWLong
by Unlikely-Bite
Bank of Canada to Cut Interest Rates Next Week?My readers and followers are up to date on the ongoing currency war. Central banks are attempting to weaken their currencies in order to boost inflation and exports. The export part is self explanatory and well known, but the inflation aspect involves the classical economics definition of inflation. Inflation is the weakening of a currency where it takes more of the weaker currency to buy something which gives the appearance of prices rising. It really is the currency that is weakening. Now the Bank of Canada is set to make its next move in the global currency war. Just a quick recap: central banks have three ways to weaken their currencies: 1.Rhetoric. This is the most common way central bankers weaken or strengthen a currency. Also why the press conferences are closely monitored by traders. Chairmen (and women) use diction and rhetoric as a way of telling market participants what they are planning on doing in the future. The market reacts and prices this in. The currency moves in the way the central bank wanted. 2. Interest Rate Cuts. This is the next step up using interest rate differentials to either strengthen or weaken the currency. 3. Quantitative Easing. The final and most extreme way to weaken the currency using supply and demand principles. Most central banks have exhausted 2 and 3. The European Central Bank is the one I have been following for awhile. The ECB is trying to weaken the Euro as the European Union is a heavy export union. The problem has been the US Dollar, the true winner of the currency war so far. Since the US Dollar is the reserve currency, if the US Dollar is dropping, the other currency is strengthening. This includes the Euro, the Pound, the Loonie, the Aussie Dollar, the Kiwi Dollar, the Yen etc. The ECB increased their emergency asset program up to 1.8 Trillion Euro's in December. The Euro popped. Now all the ECB has left is to cut rates deeper into the negative. Expect this to happen. "Money markets see an increased chance of the Bank of Canada cutting interest rates closer to zero, as tightening economic restrictions to contain a second wave of COVID-19 cases offset optimism that activity will rebound later this year. Interest rates were thought to have hit rock bottom in Canada after they were slashed 150 basis points last March to a record low of 0.25 per cent, a level the Bank of Canada considered the effective lower bound. But in November, Governor Tiff Macklem said a lower floor could allow Canada’s central bank to ease further if the economy weakens." After these statements, the expectations for Canada to cut rates next week has increased. But don't worry, it is not negative rates. Yet. The Bank of Canada is expected to do a microcut, or an interest rate cut less than 25 basis points. The Bank of Canada's rate currently is 0.25%, and expectations are rates to decrease to 0.10%. Microcuts have occurred already. "Other central banks have moved in small increments. In November, the Reserve Bank of Australia cut its policy rate by 15 basis points to 0.1 per cent, while the Bank of England did the same last March." The Bank of England is now expecting to enter negative rates sometime before June of this year. The Reserve Bank of Australia will be next, and I am sure the Bank of Canada and then eventually the Federal Reserve will follow. All to attempt to weaken the currency, and why I have been saying the trade is out of fiat. Hard assets/commodities and cryptocurrencies are the way to play this going forward. Let's take a look at the USDCAD. The Loonie has been appreciating against the US Dollar as the Dollar (DXY) keeps sliding. You have seen in my previous posts, that I believe the DXY is at a MAJOR support zone and a relief rally is highly probable. Funnily enough, the USDCAD is also at a major support zone, and is looking like the Dollar will strengthen against the Loonie. On my chart, I have drawn a trendline which is a popular way to determine when a trend shift occurs. If price closes above the trendline, the Loonie will depreciate against the US Dollar. However, I am hoping we develop a right shoulder to create a head and shoulders pattern with the neckline being the zone above in blue at the 1.30 zone. This would imply price pops up, and then retraces before breaking and closing above. The interest rate cut could be the catalyst for the reversal pattern. This was expected. This is the currency war.
Long
by Uncharted-FX
1
The CAD/JPY surrenders to the stability of the resistance The CADJPY pair attempted to form some correctional bullish trades recently, while the stability of 81.05 resistance blocks the bullish attempts and reinforces the chances of renewing the negative attempts. Note that it is important to gather the additional negative momentum to manage to crawl below 80.50 level and open the way to record the main negative targets by reaching 80.05 and 79.60 levels. With Risk Management you will Never loss. thank you
Short
by Ridethemacro