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Bitcoin, 1 pump chump bound for correction not sustained pump. BTCUSD 3D Chart - Currently maintaining its validity inside of the bear flag, Bitcoin may be out of steam regardless of the "risk on" morning Crypto had after the CPI release. Looking over the past 50+ days we can see Bitcoin has had a pretty consistent 2 up, 2 down timed count with the exception of 1 data point. Now this is a small sample size but we are in a Bear Market even if the micro trend has been upwards/Bullish. With that said, its not as likely that Bitcoin will just continue to climb and climb and the odds will favor Bearish moves. Currently, in the 2nd candle of the upswing with a lower high we could see 2 consecutive down candles. Upside levels to watch - pivot high at 24.6k or closing above 25.5k for a shot at 28k+ Downside levels to watch - pivot low at 22.4k and the 2017 cycle high of 19.5k.... Keeping in mind anything below roughly 22k becomes outside of the Bear Flag depending on what time frame you are looking at. Anything lower than 25.5k I remain Bearish on Bitcoin.
INDEX:BTCUSD
by jlouvierobv
4
$EUR - Be prepared...!$EUR - Be prepared...! $EUR - What a mess! We've shifted gears this morning. Fundamental reasons as I stated in my previous posts and various others there is no good data coming out of EUR. Now as you look across the board its DXY move and you have precious metals, crypto, Indices and majors under pressure. This could continue! However, further insight will be happening at Jackson Hole. Which is another event to see what Powell has to say - Dovish or Hawkish. Europe shot themselves in the foot when it comes to further sanctions, as Europe overall heads into an energy crises. Germany & French electricity prices keep climbing, hit fresh records. German year-ahead power is on a nine-day rising streak. Contract rose 1.4% to record 545 euros per MW/h. Europe year-ahead coal futures climbed 2.1% to a record $311.50 a ton, and the river Rhine having issues due to low levels and lastly German producer prices on record (+5.3% MoM). It really doesn't look very pretty at all! Have a great weekend, TJ
by Trade_Journal
Market Impacts of the US Mid-term ElectionsCME: S&P 500 CME_MINI:ES1! ; NYMEX: WTI NYMEX:CL1! and Henry Hub NYMEX:NG1! ; COMEX: Copper COMEX:HG1! and Aluminum COMEX:ALI1! The 2020 U.S. presidential election put Democrats in control of the White House and both branches of the Congress. In the upcoming mid-term elections, if Democrats retain their majority, Joe Biden will become the most powerful U.S. president in the 21st century. Donald Trump, his predecessor, enjoyed a Republican-led Congress in the first two years. However, after Democrats took back the House in 2018, Mr. Trump found himself fighting with Speaker Nancy Pelosi daily, all the way to a presidential impeachment in 2020. President Obama faced a divided Congress in six of eight years. The only lasting impact of his presidency may be Obamacare, besides his own legacy as the first African American president in U.S. history. United We Act, Divided We Fight Looking back on the 90 years since Franklin D. Roosevelt first became president: • We had Party Government for 44 years. The term refers to where the president, the house and the senate are controlled by the same political party. • For 14 years, we had a Divided Government , where only one branch of the Congress aligned with the president. • The remaining 32 years were Opposing Government , where the president and the Congress came from opposing parties. A divided or an opposing government tends to spend too much time on political infight. It’s difficult to reach a consensus to do big things. Major bills usually got approved in a unified government, and their impact extends far beyond the four-year presidency. For proof, we only need to look at how government spends money. In 2022, Medicare is the biggest expense item in the $6 trillion federal budget. Medicare Act was introduced in 1965 under President Johnson and a Democrat-led Congress. More than half a century later, it now costs $1.44 trillion or 24% of government spending. Social Security is the second largest expense item. The program was enacted in 1935 by a Democrat-led Congress as part of President Roosevelt’s New Deal. Social Security costs $1.13 trillion in 2022, or 19% of federal budget. Biden Administration’s Achievements What did the Biden Administration accomplish? One may point out the embarrassing retreat from Afghanistan in 2021 and the runaway inflation in 2022. However, Mr. Biden has been very effective in pushing legislative agenda. In just 1-1/2 years, four major bills with a $4 trillion total budget have been signed into law. A month after Biden took office, Congress passed a $1.9 trillion American Rescue Act on March 11, 2021. Most Americans received a $1,400 check from the Treasury Department. Millions of small businesses got approved for much needed loans. Government bailout prevented the economy from going into recession in the depths of a pandemic, even though it might have paved the groundwork for hyperinflation we are experiencing now. On November 15, 2021, Congress passed a $1.2 trillion Infrastructure Investment and Jobs Act. Among the biggest items, $110 billion are allocated to upgrade the country’s roads and bridges, $66 billion to renovate passenger and freight railways, and $65 billion to revamp the electric grid. U.S. unemployment rate stays very low this year, thanks in part to the new jobs created from government funded programs. On August 9th, Biden signed into law the U.S. Chip and Science Act, which has a $280 billion price tag for ten years. Just a week later, He approved the $737 billion Inflation Reduction Act. Most economists agree that bill has little chance of reducing inflation. The real purpose is to fund climate programs. To be budget-neutral, high-income earners will see a tax hike. Investment carry interest will be taxed. And there is a 15% minimum corporate tax. Mid-term Outcomes and their Implications to Financial Market The 2022 mid-term elections consist of 36 senate races, 435 house races, and 36 gubernatorial elections. There are thousands more at state and local government levels. Depending on their political leanings, different polling agencies have very different mid-term predictions. Here, I would like to explore the impact of the mid-term elections on financial markets based on the three states of governing: • A one-party government • A divided government • A lame duck government One-Party Government The Democrats currently control the Presidency, the House of Representatives, and the Senate. A united government could do big things and spend big money. If Biden’s party win in the midterm, the Administration would continue its path to "Build Back Better ". The Winners: • The stock market: My chart shows correlation of market turning and passage of big bills. Government investment creates jobs and supports business expansion. If you expect Democrats to win, you could express this view by a bullish equity index trade. Suggested strategy: Long CME E-Mini S&P 500 Futures. • Base Metals: Massive infrastructure programs call for more use of industrial materials. This is Bullish for NYMEX Copper and Aluminum. • Climate programs will provide more subsidies to clean energy, electric car, and new investment to support an ambitious carbon reduction goal. The Losers: • Fossil energy: Traditional oil and gas industry would face more government restrictions. This is bad for stocks in the energy sector, but Bullish for NYMEX WTI crude oil and Henry Hub natural gas. Less domestic drilling means less energy supply. • High net-worth investors: Higher tax rate on people earning $400,000 or more. New taxes on investment carry interest. This will be bad for hedge funds, private equity, and venture capital funds. • The 15% minimum corporate tax will affect multinational corporations and high-tech companies which frequently use offshore tax haven. • While government spending may help pop up the S&P, the Tech-heavy NASDAQ 100 may be a loser with the higher corporate tax rates. I am concerned about the long-term ramifications of the new taxes on innovations. Government investment could not replace the role of venture capital. The former tends to be risk-adverse and the latter has more risk appetite to fund early-stage companies. They may find ten losers before running into a blockbuster. If you cut off the incentive by taxing the winner, venture capitalists will no longer fund the Apple or Google of tomorrow. Divided Government If Republican retakes either the House or the Senate, but not both, the Administration would face challenges mainly in government spending and taxes. New legislation may be stalled at a Republican-led House or Senate. I don’t see any clear winners or losers in this scenario. The Administration would turn its focus on implementing the bills already passed, such as the CHIP Act and the Inflation Reduction Act. Fewer new legislations are on the horizon. Lame Duck Government If Democrats lose control of both the House and the Senate, we may well expect a lame duck government in the next two years. A Republican-led Congress would launch attack on “Build Back Better” and roll back progressive policies enacted by the Democrats. The Winners: • Oil and gas. Domestic drilling will resume in full speed. • The rich. New taxes will be rolled back. The Losers: • Climate programs. Funding will be stripped out or watered down. • New energy and electric car. Subsidies will be reduced and restricted. Voters have short memory. What happened in 2020 and 2021 will be ancient history. What will happen in the next two months – the economy, jobs, inflation, gas price – will dominate voters’ mode when they come out to vote on November 8th. So, it’s fair to say it is still too early to predict which state of government would prevail in the next two years. Financial market is extremely volatile this year. Getting an information edge increases your odds of success. I suggest my readers subscribe to CME market data. Tradingview users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME_MINI:ES1!Long
by JimHuangChicago
36
$ES - What to do now?$ES - What to do now? This weekend, I present you many ideas in various assets and here's one chart of $ES is last and its important chart I am keeping an eye on for LT positioning. We've had great bullish momentum due to 'we are at neutral rates', CPI steady - For now and all data is excelling perfectly this week we do have FOMC minutes and as have US Retail sales. The key areas I am keeping in mind when it comes to fundamentals is the factoring in credit cards, has been escalating further and real estate is in trouble due to obviously high rates. There are many other bearish fundamental factors but then we have the bullish momentum side technically - ES is bullish and the fundamentals less rate hikes of hights 75 is less anticipated and further slow down leading DXY to pull back and ES, RYT, NQ & even looking at QQQ to excel further and this could be the bottom of 3700 areas for ES. Technically - we are a trendline resistance which comes at the levels of: 4300-4200 areas. A key pull back towards areas of support of: 4180, 4000 & 3900. Are the areas I am keeping an eye on. TJ
CME_MINI:ES1!
by Trade_Journal
EURUSD To Potentially Fall After US Core CPI SpikeThe result of today's US Core Cpi data both monthly and yearly: (Core CPI (MoM) (Jul) Act: 0.3% Cons: 0.5% Prev.: 0.7%- Core CPI (YoY) (Jul) Act: 5.9% Cons: 6.1% Prev.: 5.9%) showed a strong sentiment of bearishness in regards to the US dollar. Monthly data showed decreasing inflation from the previous month's data and also was less than expected. Yearly data showed inflation flattening out and also was less than expectations. Across the whole foreign exchange market and main pairs the dollar fell short. There are some good opportunities today for a day trade for pairs such as EURUSD, GBPUSD, AUDUSD, NZUUSD shorts, and USDJPY, USDCHF, USDCAD long positions. There should be a market correction after the big US dollar sell off. I will be looking for a 4 hour short on EURUSD and long for USDJPY soon, along with the other currency pairs mentioned. In regards to the stock market, the S&P500 and NDX100 saw big gains and should continue to see bullishness with inflation decreasing. This is beneficial for the stock market. Meta saw shares rise today increasingly. $EUR/USD$ $S&P 500$ $Nasdaq 100$ Ilyas Khan Top1 Markets
Short
by Seafair-Capital-Management
GBPUSD D1 - Bearish play following DXY bullsGBPUSD D1 Complimentary to the above DXY analysis, if the dollar starts to pick up, this is no doubt a scenario we could see. Failing this, a breach above 1.23 and subsequent retest could see us with long entries to target 1.25. Pivot points indicated on both DXY and GBPUSD. We are still 'technically' in a downtrend though, as we are still holding price below the latest 'lower high'. Similarly, we are still 'technically' holding onto D1 support on DXY.
Short
by Trade_Simple_FX
🔥 ALL Inflation Expectations Beat: Expect Summer Crypto Pump!Recently we've seen a lot of news and headlines surrounding today's CPI. The market expected that we'd go from 9.1% to 8.7% headline inflation. Furthermore, the market expected that the core inflation would rise from 5.9% to 6.1%. As seen on the charts, both expectations have been beaten. Both headline inflation and core inflation beat expectations by 0.2%, which naturally came as a bullish shock to the markets. In my view, this is just what we need to get BTC out of the bear flag pattern in which we've been trading sine June. I'm expecting overall bullishness until at least September. I'm especially looking at the yellow break out area. A close above here means that we will most likely break out of the bull flag and resume our way up. Note that yesterday's post is still valid. We didn't get a bearish close below the blue trend line, so the bulls have the incentive.
Long
by FieryTrading
85
Global Market Reacts Positively Amid Reduced U.S Inflation RateGlobal Market Reacts Positively Amid Reduced U.S Inflation Rate Compared to June, the annual rate of inflation reduced marginally to 8.5%. Bitcoin is trading at $24,003 with a 4% increase in the last 24 hours. After a long period of stagnation, U.S inflation has fallen for the first time since April. Compared to June, the annual rate of inflation reduced marginally to 8.5%, according to the most recent statistics release. The July CPI was projected to be 8.7%. Well, it’s possible that a decline in inflation may be a beneficial thing since it would help dilute the Fed’s aggressive position and lead to lower interest rates. The main indexes, which had ended Tuesday’s session in the negative, responded favorably to this new information. The Dow Jones Industrial Average’s futures soared by 400 points, or 1.2%, on Monday morning. S&P 500 futures rose by 1.7%, while Nasdaq 100 futures rose by 2.4% in tandem. Market Gains Momentum In reality, the crypto market, which had been in the red for the previous several hours, has now turned green. Recently, though, the link between Bitcoin and the larger market has declined. This suggests that the markets have not always moved in lockstep with one another. The tables may turn in the future, and we may see a collective infusion of liquidity, just as we have seen shock spread from one sector to another thus far. However, this may not happen right away since the crypto market has been ready for a drop for some time. Since Ethereum and other cryptocurrencies are gaining ground, Bitcoin is following suit. Bitcoin is trading at $24,003 with a 4% increase in the last 24 hours as per CMC. In addition, exchange inflows have been increasing during the previous several days. Merely 10.8k BTC were sent to exchanges on August 7th, according to statistics from CryptoQuant. The 36.7k BTC figure on Tuesday, on the other hand, reveals a shift in mood.
Education
by TheNewsCrypto
11
BTC range bound still?Range bound since June, perhaps this setup was to lead into CPI data? Currently at the 23k pivot line - short term upside 23,755, downside 22,518. The big upside could push to finally break that 24K resistance while downside can be several scenarios. 1. Bullish harmonic butterfly potential, the min and max extension shown, the minimum lining up with the lower demand and the lowest roughly at 19.6 lining up with a demand from 7/14 *read about bull/bear harmonics* 2. 21.9K demand test - bounce/consolidate/or breakdown.
INDEX:BTCUSD
by kenloi
ETH to 2000?It could based on a measured move from a month long right angled broadening pattern but... It's been stalled in this range 1630-1815. In a different market this would have probably moved up on a big impulse move but that's not the case. Mostly ranging sideways here, currently I think it's pulled back on a bearish harmonic, with the measured target lower than here 1580/1560 and finally 1410. There's a supply now turned demand zone that's holding up this higher low at 1678 and 1684 acting as a pivot to the upside and downside. Near term it needs to hold this higher low, retest supply 1786, break through and base in order to even potentially see that 2000 level. A bit to work through otherwise we should be seeing lower highs and lower lows into testing support below. We won't know what happens at those areas until we see it.
BINANCE:ETHUSD
by kenloi
2
US30 BUYSummary: this weeks time frame is delineated with the two pink lines(8-12). First thing to notice is last weeks NFP was the news driver to allow price to run out liquidity(32500.0 level) a whole number. Prior to the start of this week they engineer a OB at (32710.6 level). All of the individual days of the week are delineated with purple lines. After Mondays impulse( create the trading range for the week) they create liquidity in the form of the equal lows at (32764.0 level). The most important part of this liquidity creation comes from how close it was created in reference to the OB(32710.6 level). Tuesdays trading shows a running of the newly created liquidity(lows of 32764.0), while simultaneously trading into the OB(32710.6 level) created of Friday NFP. Finally Wednesday trading sees prices returning to the hot zone in-between those two levels before the take off was cause by CPI data that shows easing of inflation which would ease pressure of raising cost of big companies. Entry would have been off of the OB and Profit objective smashed at the equal highs. Stats were 100 pip stop loss with 750 pip take profit, having an overall risk to reward of 7:1.
OANDA:US30USDLong
by palmer519
CPI price action trap zone Following yesterday's exciting price action movements, there always follows a difficult period when the market needs to establish tradable levels. the EUR has fallen into consolidation on multiple pairs but EURAUD is the first to start trapping traders long and short. I'm sitting on my hands unfortunately until this plays out. As a technical trader my skills are only useful when there is consistency in price points, which are difficult to find after oversized moves like we've just seen. There is a void below 1.45100 and obviously the area parallel to the large move so I'll let the battle happen before taking a position.
by RuckSack
🤖 #BTCLIVE - 11.08 - #IDEA 🤖🤖 #BTCLIVE - 11.08 - #IDEA 🤖 Snapshot: Short-Term 50:50- Bullish:Bearish Long-Term 70:30 - Bullish:Bearish Technical Analysis: The bullish scenario is to break $24.75k with strong volume to remove the above sell orders confidently and hold for the daily close - it will strongly confirm a push up to $27k since there is very little resistance on the way along with a bullish CME gap target and top of the macro range. The Beraish scenario here is losing $24.2k again will push it down likely further to $23.5k where there should be some support there is a chance it can form an inverse head and shoulders pattern here and bounce quite nicely but short therm there could be blood to take out a lot of leveraged longs. Bullish Factors: + Little overhead resistance + Broken Key Resistance with strong support + MFI is positive + Above all key EMA's + Above 20 & 50 DEMA + $250 billion inflows crypto market cap in last 30 days + ETH Merge causing bullish sentiment + Positive CPI Data + Transfer Volume turned positive + Funding Rates turned positive + Taker Buy Sell Ratio turned positive + Liquidations turned positive Bearish Factors: - SEC is still on a rampage - RSI Pullback Signal - Bearish RSI & Wave Divergence - At Local Resistance - Wave Reversal - RSI and Wave Overbought - Volume slowing down - Large Sell Orders - Trendline Resistance - Exchange Reserve turned negative - aSOPR turned negative Key News: + ETH Merge causing bullish sentiment market wide - U.S Treasury has blacklisted 'crypto mixer' Tornado Cash. + CPI Announcement - 8.5% - sub 8.7% was deemed bullish - SEC Subpoenaed Coinbase + $250 billion inflows crypto market cap in last 30 days Metrics: Exchange - Exchange Reserve - As the exchange reserve continues to rise, it indicates higher selling pressure. - Exchange Netflow Total - Net deposits on exchanges are high compared to the 7-day average. Higher deposits can be interpreted as higher selling pressure. Miners / Miners' Position Index ( MPI ) - Miners' are selling holdings in a moderate range compared to its one-year average. / Puell Multiple -Miner's revenue is in a moderate range, compared to its one-year average. On-Chain - aSOPR - More investors are selling at a profit. In the middle of a bull market, it can indicate a market top. + Binary CDD - Long term holders' movement in the last 7days were lower than the average. They have a motive to hold their coins + Net Unrealized Profit and Loss (NUPL) -Investors are in a Fear phase where they are currently with unrealized profits that are slightly more than losses. + Transfer Volume - The total number of coins transferred has increased by 5.00% compared to yesterday. + Active Addresses - The total number of active wallets used to send and receive coins has increased by 40.00% compared to yesterday. + Transactions - The total number of transactions has increased by 55.00% compared to yesterday. Sentiment + Coinbase Premium - US investors' buying pressure is relatively strong in Coinbase. - Korea Premium -Korean retail investors' buying pressure is relatively strong. - Fund Premium - Investors in funds and trusts including Grayscale have relatively weak buying sentiment. Derivatives + Funding Rate - Long position traders are dominant and are willing to pay to short traders. + Taker Buy Sell Ratio - Buying sentiment is dominent in the derivatives market. More buy orders are filled by takers. / Open Interest - As OI increases, it indicates more liquidity, volatility , and attention are coming into the derivative market. The increasing trend in OI could support the current ongoing price trend. + Liquidation - 101609383.99 of short positions were liquidated in the last 24 hours.
by Kryptochristian
1
A Tale of Two Americas CME:LE1! The U.S. Bureau of Labor Statistics (BLS) released July non-farm payrolls on August 5th and July Consumer Price Index (CPI) on August 10th. Both reports beat market expectations. About 528,000 new jobs were created in July, well above June level. Annualized Inflation was lowered to 8.5% from the record 9.1% in June. While strong jobs data and taming inflation show the resilience of US economy, worrying signs are emerging. There are strikingly different faces of America: 1) People with jobs and those without; 2) Financially sound public companies and struggling small businesses; 3) Commodity prices that are under control, and those still flying high. July Non-farm Payrolls According to the Census Bureau, US population was 332 million in January 2022. Civilian Labor Force data reported by the BLS was 164 million in July, 49% of total population. It appears that the non-farm report shows us only half of the country. America: People with Jobs Total number of non-farm employees was 158 million in July. Of the half-million new jobs created, Leisure & Hospitality contributed to 96,000 (18%), while retail, wholesale, transportation, and warehousing together accounted for 42,000 (8%). Service-sector jobs tend to be low-pay, part-time and/or without benefits. Health care and Government created 70,000 (13%) and 57,000 (11%) new jobs, respectively. Since 2020, the Federal government has spent trillions to fight the pandemic and rescue the economy. These jobs were funded by budget, not by growing demand of a free market. Although American consumers continue to support the economy, low-income earners are struggling with rising costs of housing, food, transportation, and household necessity. America: People without Jobs Officially, the U.S. had 5.7 million unemployed persons in July. It is very misleading. According to the July report, “The number of persons not in the labor force who currently want a job was 5.9 million in July. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.” If we take both into consideration, the total number of unemployed people would be 11.6 million, with real unemployment rate at 6.8%. Additionally, more than half of the population is not included in the labor force, who count children, housewives, retirees, military members, adult students, and US citizens living abroad among them. People without jobs still have living expenses. They may be supported by working family members, government programs, or charities. They are the most vulnerable when the economy turns south. Retirees with fixed income are also being hit hard. With rising price, they sometimes must make the hard choice between food, medicine, and filling up the gas tank. Now, let’s turn our focus to American businesses. American Business: Public Companies From the pandemic triggered selloff in March 2020, the S&P 500 rebounded and doubled its value to 4800 last December. In 2022, the index was down 24% in the first six months. It has since recovered half the losses, down just 11% year-to-date as of August 10th. Based on data compiled by Liberated Stock Trader, these 500 publicly traded companies employed 28 million people worldwide. Walmart (WMT) is the biggest employer with a 2.3 million workforce. Amazon (AMZN) came in 2nd, with 1.3 million employees. On average, S&P component companies have 56,000 employees. With the ability to produce and distribute their products around the world, Big Businesses could withstand the impact of higher cost or adverse policy better than most companies. According to WSJ data, as of August 5th, the trailing 12-month Price/Earnings Ratio (P/E) is 22.6 for S&P 500. Forward P/E is 18.2. Market expects S&P component companies to have lower earnings, but the impact of pending recession is not very significant. American Business: Private Companies Let’s start off by saying that I do not have comprehensive research on private businesses. Since most readers could only invest in the secondary market, we could use the Small-Cap Russell 2000 index as a proxy to mainstream American businesses. Russell has a YTD return of -12%, about 1% below the S&P. In the past five years, Russell underperformed S&P by 28%. Small-Cap stock performance is especially weak at time of market turmoil. A big difference is in the P/E ratio. Russell has a trailing P/E of 68.9, but the forward P/E sharply drops to 22.6. In good times, Small-Cap stock price have been inflated a lot more than the Blue-Chip. I expect their price to deflate faster in the pending recession. July CPI Data July CPI is unchanged from June month over month (M/M), and up 8.5% year over year (Y/Y). Core CPI, which excludes food and energy, is up 0.3% M/M and +5.9% Y/Y. Diving in the data by commodity category shows a different picture. Food: Up 1.1% M/M in July from 1.0% in June. Annualized food inflation is now 10.9%. Energy: Down 4.6% M/M, of which, gasoline, -4.6%; diesel, -4.7%; natural gas, -3.6%. Annualized energy inflation remains uncomfortably high at +33%. Gasoline price is 45% higher Y/Y after 50 days of consecutive price cuts. Commodities (excluding food and energy): Up 0.2% M/M and 7.0% Y/Y. CPI data M/M and Y/Y for selected products is: New cars, +0.6% and +10.4%; Used cars, -0.4% and +6.6%; Clothing, -0.1% and 5.1%; Pharmaceuticals, +0.6% and +3.7%. Services (excluding energy): Up 0.4% M/M and 5.5% Y/Y. CPI data M/M and Y/Y for selected service categories is: Housing, +0.5% and +5.7%; Transportation, -0.5% and +9.2%; Medical, +0.4% and +5.1%. Overall, inflation is lower in July only because the sharp decline in energy prices offset the price gains in food, housing, new cars and medicine . Investors' thrill in the stock market may be gone when they go the supermarkets after work. There are signs that consumers are downgrading their food purchases in the face of runaway inflation. Firstly, people tend to give up dining out in favor of cooking at home to save money. In July, food at home inflation was +1.3% M/M and +13% Y/Y. Price inflation for food consumed away from home increased at a slower pace, up 0.7% M/M and 7.6% Y/Y. There is a 5.5% spread, which impacts food spending at these two segments. Secondly, meat purchases show an apparent shift toward less expensive options. In July, beef price inflated 3.4% Y/Y, while pork was up 7.6% and chicken up 17.6%. Within each meat category, lower cost products also show higher inflation, indicating more demand. For example, ground beef was up 9.7% Y/Y, while steak price was down 1.5%! Bearish Trade Ideas With the headwind facing American economy, I think that a recession is inevitable. Based on the above analysis, I recommend shorting the Russell 2000. A 60+ P/E is too rich a valuation. The index could crash harder than S&P during an economic downturn. We could consider shorting the CME Micro E-Mini Russell 2000 December contract (M2KZ2) . Each contract is $5 x Index. At current quote of 1,974, each contract has a notional value of $9,870. CME requires initial margin of $550. Another idea is on beef prices. American consumer generally eats more beef while dining out. With the shift to cooking at home and buying cheaper meat, I expect beef prices to fall faster than pork price during a recession. We could short the CME Live Cattle December contract (LEZ2) . Each contract is 40,000 pounds of cattle. At current quote of 150.575, each contract has a notional value of $60,230. CME requires initial margin of $1,600. The futures market is extremely volatile this year. Getting an information edge increases your odd of success. I suggest my readers to subscribe to CME market data. TradingView users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME:LE1!Short
by JimHuangChicago
5