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Inflation

Will US CPI continue to feed the risk rally?Eyes on today's CPI Risk markets set the tone on Wednesday as traders reacted to hopes that Today’s CPI data will come in lower than expected. This could lead to small interest rate hikes and could even signal peak inflation. We’re anticipating tonight’s data and if it will live up to the hype. How much has been factored in? Could it be a disappointment if it fails to meet what’s being expected? It is simple. We see a solid beat to the downside we think risk markets will continue to rally. We see it come in as expected, or god forbid higher, and we think they will fall. We have done a quick price action review on the USD index and US30. Major risk currencies look to be consolidating at this stage in the lead-up. The USD index is trying to hold out at 103.00. US CPI data is due today at 12:30 am AEDT / 8:30 am ET.
EIGHTCAP:USDX
by Eightcap
DJI/GOLD to drop longterm?It may not be that simple... Now that inflation is in the headlines, I decided to "follow the herd" and post an idea regarding it. To compare the current financial market with the market 100 years ago, one may analyze the pairs DJI/CURRCIR, or DJI/ GOLD . From the chart is trivial to realize that DJI/ GOLD historically moves inside the blue channel. Historically the following occurred in this specific order. A. The ratio increases from the bottom of the channel (without a significant change of course) to the top of the channel. B. RSI maximizes and then breaks it's increasing trendline. C. Near the RSI trendline break , price breaks it's trendline. D. Then a retest of the price trendline occurs. Only then the drop is significant. E. Price reaches the bottom of the channel. F. After a while, the middle of the channel is tested with a significant reaction to the downside. (In 1976 it caused the ratio to stop growing and the price went below the channel) G. The price now increases from the bottom of the channel, and the cycle repeats... Right now we are are in a make-or-break moment. We haven't reached the top of the channel and already the RSI trendline is violated to the downside and RSI indecisively fluctuates a little above the 50 mark. Shortly after the attempt passing the channel axis, a rejection occured. The price trendline is violated to the downside. It seems a second trendline exists now and looks intact. On the chart there are 3 very distinct cycles, which peaked in 1929, 1966 and 1999. The cycle lasts about 35 years. I find it very interesting that it is that consistent. Maybe the 35 year cycle is not that consistent and we are in an abrupt stop. And in the years following having DJI/ GOLD drop significantly. And it makes sense for a drop in stocks and gold exploding. We are talking about food shortages, water shortages and war. This is not a recipe for success for stocks. Most companies need a calm climate to grow. Or maybe in the end, even though we talk about inflation , money losing it's value and the economy being in the brink of collapse, we will grow until 2030 and then we collapse. After all, recessions happen when noone expects them to. We are also above the 1M, 3M Ichimoku clouds. Who knows what will happen? I certainly don't know what will happen. My gut feeling is "way down we go". It may be a controlled demolition of the stock market, but I don't think we have much room to grow for now in absolute terms.
TVC:DJI
by akikostas
6
Japanese yen edges lowerThe Japanese yen continues to have a quiet week. USD/JPY has edged up 0.20% and is trading at 132.50. There is optimism in the air ahead of the US inflation report for December. The forecast is for inflation to fall, which is exactly what investors want to hear. The consensus for headline inflation stands at 6.5%, following the November gain of 7.1%. The core rate is also expected to ease, with a forecast of 5.7% in December, compared to 6.0% in November. We've seen in recent months how inflation reports can move the equity and currency markets and investors should be prepared for the same from tomorrow's inflation report. Soft inflation releases have sent the US dollar lower, as the markets have assumed that the Fed will ease up on the pace of rates and even cuts rates late in the year. The Fed continues to present a hawkish stance, but the markets will likely march to their own tune if inflation comes in as expected or drops even lower. The markets have priced in a peak fed funds rate of 4.93%, lower than the Fed dot plot which projects rates peaking at 5-5.25%. Some Fed members have said rates could go even higher than that, but that hasn't made much impression on the markets. The Bank of Japan meets next week, and investors will be watching carefully. The BoJ meetings are no longer sleepy affairs with little substance, as the markets saw in December when the BoJ stunned the markets by widening the yield curve control band. We're unlikely to get more fireworks at the upcoming meeting, but the BoJ's inflation forecasts will be significant. There have been reports that the BoJ may raise the forecasts for core inflation. This would be bullish for the yen as a higher inflation forecast would be a prerequisite for the BoJ normalizing policy. There is weak resistance at 132.13, followed by 133.30 131.25 and 130.60 are the next support lines
by OANDA
BITCOIN- Ahead of Inflation Data (CPI Tomorrow)Hi everyone, watch the video and let me know your thoughts. I cover the main Technical levels you should know as well as the key fundamental factors and scenarios. Some good news arising today as FTX seems to have recovered 5 Billion dollars . The announcement substantially raises the total FTX has recovered since filing for bankruptcy last year but it's still short of what customers are owed in total. Still, good news. Not so great news from IMF : The International Monetary Fund says that 'The new year is going to be "tougher than the year we leave behind'... scary indeed as some say 2/3rds of the countries will enter into recession this year. More bad news here and there, from Europe, Canada, Australia. Just a little example from Canada: 'The CEOs at Canada's largest banks say tens of thousands of Canadians could default on mortgages due to rising rates. This comes as the vacancy rate at Canadian office buildings are at a record high ' Lastly, we have the FED's cornered between raising or not, for how long and how much? Employment was good last week and inflation report tomorrow will play a huge role. In general: good inflation tomorrow (lower inflation, eased) will probably be better news for markets and BTC/Alts as well. If inflation is high then we run for the hills as the Feds will need to consider new big rate hikes..most likely i think we will avoid this. KEY LEVELS: 18K : A third test is expected as the last 2 times we had rejections. This time we can go higher. One Love, The FXPROFESSOR PS. Remember the cycles: The next Bitcoin halving is scheduled to take place at block 840,000 which is predicted to be on Mar 13, 2024 08:47:30 PM UTC.
BITFINEX:BTCUSDLong
by FX_Professor
7
Inflation Report: 11 Jan 2023Finally there is a sense of relief. The US inflation is just on a some-what downward spiral. It's almost as if we peaked at a whopping 9.1% and now dropping to around 6%. And let's not forget all our friends abroad, like Germany where it's dropped from 10. 4 in October down to 8.6%, UK dropping from 11.1% slightly down to 10.7%, Canada's 8.1 dropped to 6.8%, France's steady 6.2%, and China's decent1.6%. And let's not forget our lekker country, South Africa where inflation has also dropped from 7.8% down to 7.4%. It's just too bad all these numbers are due to supply chain issues, war, and food shortages. But it looks like we have potentially seen the end of The Great Inflation - and now things should start to settle. Your thoughts? Trade well, live free Timon (Trader since 2003)
ECONOMICS:USCCPIEducation
by Timonrosso
Fundamental and Technical Analysis | January week 2, 2023Table of Content: 1. The World Bank 2. Jerome Powell 3. Mass Layoffs 4. Corporate Headline 5. Technical 1. The World Bank The World Bank has recently announced a slash in the forecast for global growth. This year's global growth forecast is reduced by nearly half, to just 1.7%, from its previous projection of 3%. It would be the third-weakest annual expansion in three decades, behind only the deep recessions that resulted from the 2008 global financial crisis and the coronavirus pandemic in 2020. “For most of the world economy, this is going to be a tough year, tougher than the year we leave behind,” Georgieva said. “Why? Because the three big economies — U.S., EU, China — are all slowing down simultaneously.” Furthermore, The World Bank projects that the European Union’s economy won’t grow at all next year after having expanded by 3.3 percent in 2022. It foresees China growing 4.3 percent, nearly a percentage point lower than it had previously forecast and about half the pace that Beijing posted in 2021. 2. Jerome Powell In a recent statement led by Jerome Powell, he expressed his highest level of hawkish sentiment towards the economy. He noted that inflation is the foundation of a healthy economy and can require the central bank to take actions that are not necessary, but popular. Price stability is the bedrock of a healthy economy and provides the public with measurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy.” He wants to resolve the issue he initially created, previously, he was insistent that inflation was going to be transitory and now there is a clear indication that it is not and will require major efforts to bring it down. Why was Powell hawkish? Financial conditions are unintentionally loosening and he does not want to see it because that will increase the probability of a rebound in markets which could mean a rebound in inflation. - Some of the world’s largest asset managers such as BlackRock Inc., Fidelity Investments and Carmignac are warning markets are underestimating both inflation and the ultimate peak of US rates, just like a year ago. (Bloomberg) - “Central banks are unlikely to come to the rescue with rapid rate cuts in recessions they engineered to bring down inflation to policy targets. If anything, policy rates may stay higher for longer than the market is expecting,” a team of analysts including Jean Boivin, the head of the Institute, wrote last week. BlackRock is underweight developed market equities and it prefers investment-grade credit to long-term government bonds. - JP Morgan CEO, Jamie Dimon said Tuesday that the Federal Reserve may need to raise interest rates to 6% to fight inflation, which would be higher than most are expecting this year. 3. Mass Layoffs In order to bring down inflation, the Federal Reserve needs to slow down the economy. It is common sense to see that an economy will not go down until consumers stop spending which results in loss of employment. - One of Wall Street's biggest banks plans to lay off up to 3,200 employees this week, as it faces a challenging economy, a downturn in investment banking, and struggles in retail banking. It is one of the biggest rounds of layoffs at Goldman since the 2008 Global Financial Crisis. Goldman Sachs is having difficulties in the stock market, underperforming. - Bed Bath & Beyond reported a net loss for the quarter ending Nov. 26, 2022, of $393 million. That's a widening of 29.7% from the $276.4 million loss in the comparable quarter of 2021. Furthermore, the Q3 loss is worse than the retailer's projection last week of a $385.8 million loss. These inadequate results will lay off hundreds or thousands of employees in the company. On the other hand, the stock rallied by double digits, emphasizing again that the stock market likes when employees get fired to increase profit margins. - Coinbase announced Tuesday that it was laying off 950 people, about 20% of its staff. The job cuts come only a few months after another major round of layoffs. The crypto brokerage firm let 1,100 people go in June, about 18% of its headcount at the time. Again, the stock still rallied by double digits. It is notable to mention that the brother of the former Coinbase product manager, Nikhil Wahi, was sentenced Tuesday to 10 months for his role in a scheme to trade on confidential information about when the cryptocurrency exchange was going to list new tokens. A comparable phenomenon I start to visualize from these and recent layoffs is the 2021 stock splits. When firms announced stock splits in 2021, their stock would surge. In 2023, when a company announces layoffs, the stock surges higher (until they run out of liquidity). 4. Corporate Headline - The cyclical growth rebound, possibly triggered by the Chinese reopening, is being priced in or could go higher (major resistance at SPX $4,250). Macau sees deserted streets and Casinos after reopening (Reuters). - Taiwan Semiconductor Manufacturing Co. recorded its first quarterly revenue miss in two years, signaling the global decline in electronics demand is starting to catch up with the chip giant (Bloomberg). This issue will take months to recover as it has to adapt to the oversupplied market. - Apple is Broadcom’s largest customer and accounted for about 20% of the chipmaker’s revenue in the last fiscal year, amounting to almost $7 billion to stop buying key components, and instead, produce pieces themselves. - Blackstone Inc. lost a bid to end rent stabilization at Manhattan's largest apartment complex after a judge ruled in favor of tenants at Stuyvesant Town-Peter Cooper Village. - Wells Fargo, once the No. 1 player in mortgages, is stepping back from the housing market. This is a negative signal for the housing market, prices are too high and few can afford these houses. Once homeowners realize the Fed is not going to ease interest rates anytime soon, the housing market is going to slow down dramatically and individuals are going to lose their homes. Renters and Airbnb will slow down real estate further as they will not be able to pay their mortgages and will be forced to get rid of the houses, greatly increasing the supply. 5. Technical Analysis - Momentum indicators: RSI and MACD moving toward positive momentum and volume remains below average (bullish). - If S&P500 breaks the sloping resistance (channel), prices will rise significantly as individuals will assume the market is already priced-in, plus, showing: a break in pattern resistance; higher-low; and bear market sentiment reducing. - This is a similar pattern to the 2000 market crash where SPX broke a major trend and resistance, then followed to fall 34%. I point out the negative indication in most of my recent analyses, this is because the negative indications are far greater than any positive singular indication in this market environment. Overall, I have not changed my outlook and I am keeping my government bonds. I will take the opportunity of a rise in equity markets to short BTC at higher levels.
CME_MINI:ES1!Short
by ssavi
How to use ECONOMIC INDICATORS for informed trading decisionsHello everyone! Here you have some information that I consider useful on how to interpret and use economic indicators and data to make informed trading decisions in the foreign exchange market: GDP (Gross Domestic Product) - GDP is a measure of a country's economic output and is considered to be one of the most important indicators of economic growth. A higher GDP indicates a stronger economy, which can lead to an increase in demand for the country's currency. Unemployment Rates - Unemployment rates measure the percentage of the workforce that is currently without a job. A low unemployment rate indicates a strong economy, which can lead to an increase in demand for the country's currency. Inflation - Inflation measures the rate at which the average price level of a basket of goods and services in an economy is increasing. High inflation can lead to a decrease in demand for the country's currency, while low inflation can lead to an increase in demand. Interest Rates - Interest rates are the cost of borrowing money and are set by central banks. High interest rates can attract foreign investment, leading to an increase in demand for the country's currency. Trade Balance - The trade balance measures the difference between a country's exports and imports. A positive trade balance indicates that a country is exporting more than it is importing, which can lead to an increase in demand for the country's currency. Political Stability - Political stability is an important factor to consider when trading in the foreign exchange market. A stable political environment can lead to an increase in demand for a country's currency, while political instability can lead to a decrease in demand. In summary, GDP, unemployment rates, inflation, interest rates, trade balance and political stability are important economic indicators to keep an eye on when making trading decisions in the foreign exchange market. By considering these indicators, along with other market conditions, traders can make more informed decisions about when to buy or sell a particular currency. Please note that the above information is not a financial advice and only for educational purpose, Economic indicators are important but not the only factor to consider while making trading decisions and It's always important to do your own research and consider your own risk tolerance before making any trades.
Education
by m_maia14
Nonfarm Payrolls Effect on Gold PriceOANDA:XAUUSD Key Economics Highlight in the first week of 2023 - Nonfarm Payrolls and Unemployment Rate for December 2022 were reported on 6th January 2023. - Nonfarm payrolls increased by 223,000 which is higher than what the market was expecting by 200,000. - The unemployment rate fell to 3.5%, which was lower than the consensus of 3.7%. On the night of January 6, 2023, this report had a significant positive impact on various financial assets especially Gold. Gold prices rose from 1,836 USD to 1,850 USD within 10 minutes of the reporting and it made a higher high on the weekly candle at 1,869.9 USD before closing the week at 1,866.1 USD Technically, Gold price almost reach its significant supply zone at around 1876.5 USD. Therefore, it would not be surprising to see the gold price drops to the first support level or trade in the range of 1825 - 1876 for a while. Fundamentally, the current US workforce participation rate still has not reached the Pre-Covid19 level and the contribution of workforce participation in US consists more aging population which could be problematic for future economy growth as there could be more labor demand but less supply since more people are going into being retired. Therefore, it seems like the market has overreacted to this report in short term. But, speculators and investors must still continue to manage their risks based on the inflation rates and potential recession of US economy Let us know what you guys think!~
OANDA:XAUUSD
by ChartTrail
The Misconceptions of a 'FED Pivot'Investors often want the Federal Reserve (also known as “The Fed”) to pivot its monetary policy because it can potentially have a significant impact on financial markets. A pivot refers to a change in the direction of monetary policy, such as shifting from tightening (e.g., raising interest rates) to easing (e.g., lowering interest rates). When The Fed pivots towards easing, it can signal to investors that it is willing to support economic growth and potentially stimulate asset prices. This can lead to increased demand for stocks and other riskier assets, as investors expect that these assets will benefit from the supportive monetary policy. However, it’s important to note that The Fed’s pivot does not always have the intended effect on financial markets. For example; 1. In 2000, the Fed implemented QE in response to the dot-com bubble burst and the subsequent economic downturn. This policy involved the purchase of longer-term Treasury securities in order to lower longer-term interest rates and stimulate economic growth. 2. In 2007, the Fed implemented QE in response to the global financial crisis. This policy involved the purchase of a variety of securities, including mortgage-backed securities and longer-term Treasury securities, in order to lower longer-term interest rates and stimulate economic growth. 3. In 2020, The Fed pivoted towards a more accommodative stance in its monetary policy in response to the economic disruption caused by the COVID-19 pandemic. In conclusion, investors may want The Fed to pivot towards easing in the hope that it will stimulate economic growth and support asset prices. However, it’s important to recognize that The Fed’s actions do not always have the desired effect on financial markets, and there are many other factors that can influence stock prices. BUT. As an investor, there are a few things you can do while waiting for the Federal Reserve to pivot its monetary policy: - Stay informed: Keep track of economic and market developments, as well as statements and actions by The Fed. This can help you understand the current economic environment and how The Fed might be considering changing its monetary policy. - Diversify your portfolio: Consider spreading your investments across a range of asset classes and sectors, as this can help reduce risk and potentially provide more stable returns over time. - Have a long-term investment horizon: The Fed’s pivot may have an immediate impact on financial markets, but it’s important to remember that the long-term prospects of investment are generally more important than short-term movements. By having a long-term investment horizon, you can potentially ride out any short-term market volatility caused by a pivot in The Fed’s monetary policy. - Review your risk tolerance: Make sure that your investment portfolio is aligned with your risk tolerance and financial goals. If you are a risk-averse investor, you may want to allocate a larger portion of your portfolio to safer investments such as cash or bonds. - Seek professional advice: If you are unsure about how to navigate the investment landscape, consider seeking the advice of a financial advisor or professional. They can provide personalized guidance based on your specific investment goals and risk tolerance.
AMEX:SPY
by ariefauliaa
The Misconceptions of a FED Pivot...Investors often want the Federal Reserve (also known as "The Fed") to pivot its monetary policy because it can potentially have a significant impact on financial markets. A pivot refers to a change in the direction of monetary policy, such as shifting from tightening (e.g., raising interest rates) to easing (e.g., lowering interest rates). When The Fed pivots towards easing, it can signal to investors that it is willing to support economic growth and potentially stimulate asset prices. This can lead to increased demand for stocks and other riskier assets, as investors expect that these assets will benefit from the supportive monetary policy. However, it's important to note that The Fed's pivot does not always have the intended effect on financial markets. For example; 1. In 1986 , the Federal Reserve implemented a form of quantitative easing (QE) known as the Treasury-Fed Accord. This policy involved the Fed purchasing large amounts of U.S. Treasury securities in order to lower long-term interest rates and stimulate economic growth. 2. In 1989 , the Fed implemented another round of QE in response to a slowdown in economic growth. This time, the Fed focused on purchasing mortgage-backed securities in order to lower mortgage rates and support the housing market. 3. In 2000 , the Fed implemented QE in response to the dot-com bubble burst and the subsequent economic downturn. This policy involved the purchase of longer-term Treasury securities in order to lower longer-term interest rates and stimulate economic growth. 4. In 2007 , the Fed implemented QE in response to the global financial crisis. This policy involved the purchase of a variety of securities, including mortgage-backed securities and longer-term Treasury securities, in order to lower longer-term interest rates and stimulate economic growth. 5. In 2020 , The Fed pivoted towards a more accommodative stance in its monetary policy in response to the economic disruption caused by the COVID-19 pandemic. In conclusion, investors may want The Fed to pivot towards easing in the hope that it will stimulate economic growth and support asset prices. However, it's important to recognize that The Fed's actions do not always have the desired effect on financial markets, and there are many other factors that can influence stock prices. BUT .. As an investor, there are a few things you can do while waiting for the Federal Reserve (The Fed) to pivot its monetary policy: - Stay informed: Keep track of economic and market developments, as well as statements and actions by The Fed. This can help you understand the current economic environment and how The Fed might be considering changing its monetary policy. - Diversify your portfolio: Consider spreading your investments across a range of asset classes and sectors, as this can help reduce risk and potentially provide more stable returns over time. - Have a long-term investment horizon: The Fed's pivot may have an immediate impact on financial markets, but it's important to remember that the long-term prospects of investment are generally more important than short-term movements. By having a long-term investment horizon, you can potentially ride out any short-term market volatility caused by a pivot in The Fed's monetary policy. - Review your risk tolerance: Make sure that your investment portfolio is aligned with your risk tolerance and financial goals. If you are a risk-averse investor, you may want to allocate a larger portion of your portfolio to safer investments such as cash or bonds. - Seek professional advice: If you are unsure about how to navigate the investment landscape, consider seeking the advice of a financial advisor or professional. They can provide personalized guidance based on your specific investment goals and risk tolerance.
TVC:DJI
by ariefauliaa
Which Forex trading opportunities could 2023 bring?Fundamentals drive the markets... Here is what we could see happen in 2023... 1. Inflation reversal - possible downside for the US Dollar. Rising inflation and inflation fears drove the USD higher in 2022. Now that inflation is coming down and is more under control, we could see USD downside throughout 2023. 2. Global recession trades - this is already priced in, as the recession has been so well broadcast over the last few months. What isn't priced in is if the recession doesn't happen or is much deeper than expected. Look out for opportunities on CHF and USD pairs - CHF and USD strength if the recession is worse than expected. The opposite if no recession crystallises in 2023 and if no recessions are expected in 2024. 3. Russia-Ukraine war escalation/de-escalation trades - hopefully, we see an end to this war. Either way, we could see EUR and USD pairs impacted. USD strength and EUR weakness, if there is escalation. The opposite if the war ends. 4. GBP recovery trades(?) - sterling is undervalued (it is looking cheap). Possible GBP upside throughout 2023, as stability returns to the UK. GBPCHF, GBPJPY and GBPUSD could provide strong upside opportunities, depending on the outcome of points 1 and 2 of this post. Obviously, anything could happen - this is the current outlook as of 5th January 2023, things could look very different in a month! Wishing you all the best for 2023!
by Samuel_Morton_Trader
2
Interest rate up to at least 6.5% in 2023, why?The Fed chairman has given the market a very important clue on 13 Dec 22. At what level will he consider an interest rate cut? He said “I wouldn't see us considering rate cuts until the committee is confident that inflation is moving down to 2% in a sustained way,” meaning only if CPI is heading nearing 2% then it is hopeful to see a rate cut. Market consensus for CPI to range between 5% to 8..9% for this year. If this is true, the Fed is likely to continue to hike the rate moderately at 0.25% in each meeting just to bring inflation down. I am seeing this as the best case scenario. Today’s content: Strategy in an inflationary environment: i. Commodity – Buy them ii. Stock market – Trade them Can inflation be hedged and can we trade into the interest rate uptrend? CME Micro 30 Year Yield Futures Minimum fluctuation 0.001 point = $1 0.01 point = $10 0.1 point = $100 1 point = $1,000 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
TVC:US30YLong
by konhow
14
Interest rate up to at least 6.5% in 2023, why?The Fed chairman has given the market a very important clue on 13 Dec 22. At what level will he consider an interest rate cut? He said “I wouldn't see us considering rate cuts until the committee is confident that inflation is moving down to 2% in a sustained way,” meaning only if CPI is heading nearing 2% then it is hopeful to see a rate cut. Market consensus for CPI to range between 5% to 8% for this year. If this is the case in 2023, the Fed is likely to continue to hike the rate moderately at 0.25% in each meeting just to bring inflation down. I am seeing this as the best case scenario. We can participate in hedging the market and trading the interest rate in this example. CME Micro 30 Year Yield Futures Minimum fluctuation 0.001 point = $1 0.01 point = $10 0.1 point = $100 1 point = $1,000 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com I hope this tutorial will be helpful, in enabling you to read into the market with greater clarity. Stay-tune for the video version shortly, we will do more in-depth study.
TVC:US30YLong
by konhow
1
WTI Lowered demandWe are finally seeing the afterburn effects of Bidens inflations situation start to implode on itself and so pricing has dropped massively due to lowered rates. THE WORST IS YET TO COME! There's a real chance that we may see a dramatic bearish move to below 50 potentially 45 for a brief time as we do not have the foundation or the backing to support the increases occurring. and with the increase of used cars on the market people are going to start buying again just not for a few more months maybe late summer 23. Refineries are allocating capital to do maintenance work so that they can make money around that same time. Either way, you can short this all week and get your money and wait.
TVC:USOILShort
by MANUELRUGGER91
2022 EOY Letter to SubscribersWhat’s up traders! As we close out 2022 I wanted to continue my tradition for the second year with a letter to subscribers. In this letter I want to look back on my 2022 speculations to see what I got wrong, what I got right, and what fell down the middle. I will recap the themes of the year and present my outlook and speculation for 2023 to come. Thank you all for reading and being a subscriber. It has been interesting to watch the decline in activity and engagement on financial social media over the last year as the optimism has waned with the price of all things. This is the cycle of human emotion when it comes to trading and investing. Ironically, this in itself is an indicator. The lowest point of interest is often “the bottom.” If you are still following the markets and looking for opportunities you will be a step ahead of the masses that only chase once jumping in seems "safe." As a personal milestone, 2023 marks the start of my 10th year as a dedicated full time trader. I remember the first trading day of 2013. I had quit my job in IT and the new year would be my first as a professional trader working with a group of Ichimoku traders. Our office was in Buckhead which is widely considered the “Financial Center” of Atlanta. I was filled with excitement as I drove down the darkened Highway 400 before sunrise. I saw the lit towers of Buckhead come into view and I was happy to be on this journey of mastering markets. Through the years since I have seen ups and downs with the market but I can say that the fascination with this line of work has never abated. What I got wrong "The SPY will close 2022 higher than 2021…" That did not age well. This statement was based on the almanac of stock market returns across history. Generally speaking it is best to assume that any given year will be an up year. 2022 ended up not being an up year. What I got kinda right: "…but has a high probability of a -10% to -20% correction. Avoid being YOLO long at all points during the year and keep some dry powder ready." Remember that 2021 was unique in that every month saw a new All-Time High in the S&P 500. This had never happened before and may not happen again for a long time. Up and to the right was certainly not going to be the order of the market for 2022. What I did not foresee was the influence of rising interest rates having such a profound negative effect on risk asset valuations. I hindsight, like everything, it was obvious. During the pandemic, the Fed took actions such as buying corporate bonds to prop up the stock market. I took this to mean that they had expanded their mandate to keep stock valuations high. It seems more likely the Fed took this action to stave off a crash but they were less willing to go all the way in keeping portfolios up forever. This is a good thing to let markets sort themselves out organically. What I got right "I will expect the bearish trend to go on through 2022 and possibly into 2024 with a long term target of $17k Bitcoin" This statement was very controversial but one in which I had the most confidence. I thought it might take a bit longer but I knew in November of 2021 when Bitcoin failed to break higher with momentum that the bull cycle was done. "I am bullish neutral on the price of oil for 2022." Oil ended up being the breakout trend of early 2022. Now as 2022 closes out oil is up a modest +6% on the year so I ended up being correct on both accounts. The year of busted narratives 2022 was truly a year of failed narratives. From “cash is trash” to “cryptocurrency is the future” just about everyone’s surety of the future was demolished by price action. What I found most astounding was the narrative around the US Dollar. It was true that inflation would be a major theme of 2022 but almost everyone assumed this meant the US Dollar would lose value. That was not the case because by mid 2022 the US Dollar, measured by the DXY (US Dollar Index) was one of the best performing asset classes of the year. This was due to the somewhat forgotten fundamental tenet of forex that interest rates and differentials drive relative valuations. I say forgotten because no one has really focused on forex trading in a decade because interest rates across the world have been close to zero which allows for no real trends and because cryptocurrency has satisfied that 24/7 degenerate trading mindset. Even though when I would point out to people that the US Dollar was one of the best performing asset classes they would cite inflation at 8%+ the reality was if one had held cash that cash would presently buy more of All The Things than it did at the beginning of the year. It was ironic that the narrative “cash is trash” was utterly incorrect. The pandemic trades completely unwound with Peloton, Docusign, Zoom, and Netflix. These are quite obvious in hindsight but can serve as lessons on not chasing the big thing once “everyone” acknowledges how it is the big thing. How low can it go? One of the common dangerous tropes of investing is, “it can’t possibly go lower.” The corollary to this dangerous statement is “how much lower can it go?” In 2022 we got the answer to that question from several instruments. I have developed a canned response for when someone asks this question again, “-50% lower”. Back in late 2018, following the former last All Time High, the price of Bitcoin stalled and consolidated for many months. Investors assumed that the low was in after Bitcoin had falled from 19k down to 6k. Then came November 13th and with leveraged long positions at all time highs the bottom fell out and Bitcoin descended to the 3k range. When many assumed “Bitcoin could not go lower” it still had another -50% to go. Throughout 2022 as the dream of cryptocurrency replacing the TradFi system faded as did the prices many bought the dip of cryptocurrencies assuming that they could not go lower. Lower they all did. A pivotal moment in this meme was the earnings announcement of Facebook in February. The stock gapped down -24% overnight making it a record market capitalization devaluation of a blue chip stock. Across social media I saw people saying “it can’t possibly go lower” and people bought the dip. As a consistent contrarian this gave me a rock solid bias that it would, in fact, go much lower. From the opening price of that earnings drop down to where it closed 2022 was -51%. So what is coming in 2023? Inflation I think the rumors of the financial system’s demise are greatly exaggerated. By published economic indicators inflation has peaked. Real estate agents have very little business because interest rate hikes have killed people’s desires to take out mortgages. Prices of goods have noticeably increased but wages have not yet caught up. We will likely get a few more rate increases in 2023 but I reject the extreme cases that the Fed will have to go full Volker to double digits to get it under control. People have been worried about the current inflation cycle for all of 2022. The real problems that shock a market come from unexpected vectors. I tend to not focus too much on what most people are fearing. Most of the time if market participants are worried about something they are busy hedging against it. For regular folks that do not see their paychecks increase inflation is a big problem. Companies that are able to raise their prices with inflation for the goods and services they produce will be fine. Investors with their money in those companies will benefit. Stock Market I expect a market recovery; a return to “normal” albeit slowly as emotions take a while to shift. The rampant “Buy all the things” of 2020 onward into the turn of 2022 will not be fast to recur. If and when we do see a recovery look for people to doubt it and insist this is just a bear market pullback. I would assume, statistically, that 2023’s stock market will close higher than it began. A 23% recovery back to the all-time high is not unrealistic but it is also not statistically guaranteed as the velocity of money coming into stocks is reduced. The price action of the last quarter of 2022 for the S&P 500 has been very interesting to me within my method of analysis. The October 13, 2022 CPI news signaled a spike reversal to go bullish. This spike reversal happened right at the 50% Retracement of the COVID low to All-Time High. This bullish trend from October lasted until the December 13, 2022 CPI news which signaled a spike reversal to go bearish. This spike reversal happened right at the 50% Retracement of the All-Time High to the October low. As we closed 2022 the price of the S&P 500 stubbornly moved to and held the 50% Retracement of the October low to December high. It’s a 50% into a 50% into a 50%. It is a fascinating confirmation to the most prominent method of price action analysis I have developed. I will presume that the December spike reversal signals a retest of the October low. From there we will see if the low is broken and the bear market continues. Should the October low hold I will then be looking for the market to retest the All-Time High through 2023. Cryptocurrency Currently the cryptocurrency market is in a state of cope. I found it amusing that following the collapse of FTX in November the “Rainbow Chart” of Bitcoin had to retire their first version and redraw the model to fit the permabull trajectory. This is the fifth bear market cycle I have witnessed and traded. I was able to call the top of Bitcoin back in November 2021 and projected the down move to at least -75%. Now I think “the bottom” is a matter of time more than price. Investors still hold onto a shred of hope that this bear market will be short lived. I do not think this will be the case. I expect the bear market to persist for another year or two. It is also worth noting that Bitcoin, having been invented in 2009, has never existed through a true recessionary environment nor rising interest rates. At some point in the next year perhaps we will see a bear market rally that will encourage a great deal of FOMO. These happen when something has fallen from bubble territory. There will be a sharp and active rally but it will not come close to recovering the full bear cycle. It is important to trade this wisely with stops and profit targets rather than buy and hold the narrative “here we go again!” Bonds Bonds have been hit hard as nearly two decades of low interest rates are being unwound and long term debt issued at nearly any point is priced lower. However, I see an upside to this trend. As interest rates rise certain low-risk savings options will become viable again. You might just get a non-zero interest rate on a saving account. You might be able to find 30 year municipal bonds from 5-7%. The Fed still has a target rate of 2% for inflation and while many think the Fed may need to raise this target to 4% there may come a time this year or next when the average investor can lock in a truly decent rate on long term, low risk products. Opportunities I am always looking for the next meme. Every market seems to have one. 2021 began with the “most shorted stocks” meme and then just continued the winning of tech and other pandemic trades. 2022 the meme was “being short the hype” and also rejecting the “cash is trash” narrative to remain patient for opportunities to deploy capital. Cryptocurrencies With the anger over everyone’s dreams of crypto richest not coming true many newcomers will seek to save their egos by blaming others for losses rather than their own personal risk tolerance. Expect to see more calls for “justice” and regulation in 2023. I believe this will reinforce the use case for privacy in cryptocurrency. I continue to watch the price action of Monero BITFINEX:XMRUSD , a privacy coin, and its relationship to Bitcoin BITFINEX:XMRBTC . At the close of 2022 the price of XMRBTC was just shy of 0.009. I have noticed and tried to raise awareness of the privacy use case of cryptocurrency becoming more apparent. My favorite quote of the year was, "if you are not buying Monero under $200… you would not have bought Bitcoin under $200." Bank Stocks I like the prospect of higher interest rates for banks and lending organizations. The classic business model of a bank is to borrow money at one rate, loan it out higher, and pocket the difference. That model has not existed for many years but with broadly higher rates it should again. Healthcare Stocks Healthcare seemed to be the only sector that had broad gains in 2022. I think it remains the prospective winner for the next two decades. Baby Boomers as a generation are the wealthiest in history and will want to stick around as long as they can. I expect them to put this massive nest egg they have saved into prolonging their lives and so health care will be one of the primary recipients of this wealth transfer. Inflation Stocks Companies that are able to raise their prices for goods and services that people want to buy will do well if inflation persists. The price of something is just a measurement of the value people are willing to pay. The value itself is what matters. Consumer discretionary would be the sector I would watch as the market begins to rebound. Forex Forex has been ignored by traders for nearly a decade. I think the reason for this is that every central bank has kept rates at or near 0% which has not allowed any real trends to develop in exchange rates. I would expect other countries to follow suit with the United States and raise rates in the near future. This should create real movement in the forex market and thus opportunities. Remember that higher rates should equal a currency increasing in value versus lower rates. 2023 I am committing myself to following rules of proper setups and risk management going into the New Year. 2022 gave me the opportunity to refine my skills and tactics. 2022 also gave me many reminders about why you have to cut losses short, ignore mainstream narratives, and focus on the BEST setups. Keep your mind open and question the mainstream narratives. Focus on doing more of what works and less of what does not. As always, trade wisely!
AMEX:SPY
by norok
4
EUR/USD slides to three-week lowThe US dollar is showing strong gains against the majors on Tuesday, with the exception of the Japanese yen. EUR/USD has tumbled by 1.27% and is trading at 1.0528 in Europe. EUR/USD is sharply lower today, despite a very light economic calendar. The only release of note is German CPI, which will be released later today. Despite the lack of fundamentals, the US dollar is taking advantage of risk aversion in the markets. There are headwinds everywhere you look. The war in Ukraine, the threat of recession in the US and the eurozone and China's slowdown all make for a gloomy outlook as we start the new year. Germany's inflation has been falling, and the downtrend is expected to continue. The consensus for December CPI is 9.0%, compared to 10.0% in November. If the consensus proves accurate, it could put further pressure on the euro, as the ECB may have to reconsider its hawkish stance on rate policy. The International Monetary Fund didn't bring any festive cheer with its pessimistic message on Monday. The IMF warned that 2023 would be tougher than 2022, as the US, EU and China would all see a decline in growth. Adding to the gloom, the IMF said that it expected one-third of the global economy to be in recession this year. In October, the IMF cut its growth outlook from 2.9% to 2.7%, due to the war in Ukraine as well as central banks around the world raising interest rates. After the Christmas and New Year's holidays, the markets are easing back in, as the data calendar gets busier as of Wednesday. We'll get a look at the Fed minutes from the December meeting, which was a hawkish affair that surprised investors and gave the US dollar a boost. On Friday, the US releases the employment report, which always plays an important factor in the Federal Reserve's rate policy. EUR/USD is testing support at 1.0528. Below, there is support at 1.0469 There is resistance at 1.0566 and 1.0636
by OANDA
OIl up, not just because of inflation...Concerns about the global economic growth and covid-related lockdowns in China (which caused oil demand to crumble on their part), caused the price declines that were observed over the past year. It's probable that these vital global conditions are baked into the cake by now. Looking ahead we could see a longer term continued climb in OIL as inflation will render the US dollar effectively worthless as time progresses. Volatility in 2023 could be caused by the (escalating) conflict in east europe, China going through their covid wave cycles and the FED cutting and raising rates to navigate the economy into and through a recession. But the big denominator are the sanctions that are put on the trade for Russian oil, some of which have not even gone into effect yet. The International Energy Agency estimated that Russia’s oil production could drop by 1.4 million barrels per day in 2023 as a result of the sanctions. That means we are still consuming 1.4 million barrels per day, so the full effect of the sanctions have not yet been felt by the economy. It will take time before we can be fully dependend on alterative sources and methods to deal with the lack of this resource. Which means we should expect a horrendous winter or a multiple of winters to come somewhere in the coming years where mainly the poor will both economically and physically suffer even more than they already have from the ever rising oil prices caused by these sanctions all in the name of a so called moral virtue. But hey, there is to many people on this planet anyway... (Said the rich)
TVC:USOILLong
by dab1rd