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ridethepig | CHF Market Commentary 2020.06.05Clearly all the action has been in EURCHF after the enormous bids that came through into euro yesterday. Large macro players are liking what they hear from ECB and the Commission which is setting the stage for the EURCHF short-covering. The key divergence can be seen in USDCHF breaking down, this isn't a CHF driven move but rather from the USD weakness. I am interested to chase this lower as risk sentiment begins to turn down again and CHF begins to find that safe-haven demand. Currently the outlook for CHF is firmly neutral, this can change as early as today's NFP. How it behaves below the 0.950x handle will be thoroughly examined, the totally rigid cast around the risk rally is still part of a "KNEE JERK REACTION" phase from the initial crash. This means that markets will begin to start trading the facts around a recession and slow recovery. If any any doubts of the recession consider the following diagrams: For a) see 2's 5's curve screaming recession For b) , consider the unemployment levels In this simplest of all positions, every other time this happened it ended badly for the economy. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. CHF appears in the FX desks to be starting to finally bow down to the boss, that is risk. The blockader that is employment, is not flexible here and able to go on long journeys in all directions. The elasticity; should be kept in mind and used to analyse risk flows as such.
Short
by ridethepig
2
S&P500 BUY - Beethoven's 5th SymphonyThis is a continuation of the US500 trade idea posted a while ago. I applied Elliott wave theory and fibonacci extensions in market geometry to predict key zones in price fluctuations. As I found Elliott studies so poetic and inspiring, I decided to do a twist with the name :) We are going for the bullish 5th wave. Look for signs of support around 3131 and enter long. There's also big chance to eventually test new highs due to FOMC report yesterday. Turn on your printing machines.
ULong
by theSoothsayer
ridethepig | EUR Long-Term Macro Map📍 EURUSD Principal rule: Consolidation or 'compacting' for a more politically correct term of debt across Europe is the ONLY way to save the currency. Covid challenged this, and France & Germany combo stepped up to the mark. A complex concept, which regardless of the amount is a step in the right direction and was enough to begin to chip away at some of the longer term macro tail risks. A very good time to update the before and after charts in EURUSD: Here the static weakness of the USD via artificial Fed devaluation is a heavy one that will play out over the following Months and Quarters. Now consider the position in 'DXY' below taken from last year. Greenback sellers have been encouraged and smart hands haven taken advantage of Europe being hijacked via the virus for long-term macro positioning. I am certain that in a few years, nobody will consider surrendering their euros for dollars. The disappearance of dollar dominance will open the way for a new and brilliant development of Europe and - the east.
Long
by ridethepig
3
ridethepig | NZD Long-Term Macro Map 📍 NZDUSD Long Term Macro Map An ingenious saving move from buyers, which is extraordinarily difficult to defend. The slingshot, you should also note is an advance momentum play. These come around only once or twice in a cycle, in cramped positions you cannot afford to give opponents free tickets and allow them to make an easy ride. The shakeout was flawless, now buyers are in a much better position from the lows as anticipated: On the NZD macro side, it's the same story everywhere with consumer confidence in the red and credit card spending low. RBNZ bazooka doubled their purchasing program to 60bn NZD last month, while rates are starting to find a floor and look cooked here till 2021. Arden is a breath of fresh air, the handling of the crisis was superb - as New Zealand begin unwind the social distancing we can see the Kiwi find strong demand as her leadership has not gone unnoticed! Updates comes to the AUDNZD chart tomorrow, those who wish to make their fortunes in the crosses will have to wait till later in the week. The limits of 10 charts a day on @tradingview are proving restrictive in getting the entire board updated. In any case, the supple, flexible and sometimes sincere NZD targets for 2020 remain at 0.675x and 0.755x for 2021 respectively.
Long
by ridethepig
2
ridethepig | Flatten the CurveA paradigm shift followed the "It's time" chart more rigidly than even I expected. Apologetically we can give the official ✅ for those following the example of dogmatism from @ridethepig and can see clearly how far we have come: "It's Time" 📌 It can be said that the opening knee-jerk reaction from "The Great Lockdown" is over and we can begin to enjoy a return back to the old 'normality' (whatever that means). The unemployment rate has likely peaked here in this cycle, it is curious how this happens so often, the cycle nature of time and human behaviour allows us the ability to prove all kinds of flows and forecasts; but with certain classical variations, as in the present case. So, given the huge development in claims, it is reasonable to challenge the highs of what is undeniably a historic crash. What can one learn from the flows, to fully understand this question we will need to begin digging a lot deeper. Thanks as usual for keeping your support coming with likes, comments, charts, questions and etc!
FRED:CCSAShort
by ridethepig
ridethepig | DXY Long-Term Macro MapThe attentive readers have been asking can USD still devalue in this race to the bottom! The simple answer is that this is a good ploy in in such a restricted monetary environment although this move would be considered a bad one nowadays from a strictly fundamental perspective: the weakness of the dollar is necessary in order for equities to continue the advance. US were faced with a 'choose your side' between a weaker stock market or a softer currency; and opted for the weaker green. 📍 On the positioning side... The fate of the game now depends on the retrace leg in macro charts. If the dollar is driven off the cliff, then as G10 & EM FX are already committed to the short-circuit the flows will be very simple to track. This is a nice illustration of the Quarterly theme "aggressive dollar devaluation". The move in question is transparent and therefore a good illustration of the theme and how to officially mark an outpost on the 'B' wave. So the correct play is to complete the ABC sequence before adopting a wait-and-see approach. In order to get in as quickly as possible and at any price, we must begin to dig into the inner swings on lower time frames. Today we 'know' that the satisfactory requirements have been met at 102.5x, the plan from last year: The longer term chart shows clearly the move(s) we are tracking and expecting. " => The move towards 102 is still corrective and within the bigger picture this is a large B wave of an ABC since the cycle highs in Jan 2017. " ✅ " => In theory we can expect another 5 wave decent to match the logic of the previous 5 wave move, ideally this will kick start the flow from 102-103 range highs. " ✅ The manoeuvre from sellers becomes crystal clear, a devaluation cycle, they wish to seize the 75 and 50 targets in the multi-year correction before raising the stakes later in the decade once supply shortages enter into the picture. But the move cannot be said to have positive value on volatility, since expansions and contractions in vol have a case to play : 📍 On the technical side... Here I had been expecting the sell-off (at last!) from the 102.5x highs and had prepared a nice problem for my opponent, namely the EURUSD explosive move to the topside and now threatening the ultimate break of 1.15xx. It is relatively easy for someone who knows about the CB intervention on such a line and how it must be put under pressure. The 87.4x in Dollar is a minimum target for our 'C' leg that we are tracking, anything beyond this would imply that the impulsive leg towards 75 and 50 is underway. In what follows from the comments, I will give me feelings and views to the next moves, so we can follow what is happening. Thanks for keeping the support coming with likes, comments, charts and etc!
TVC:DXYShort
by ridethepig
2
ridethepig | JPY Long-Term Macro Map The elements of Macro strategy 📍 On the JPY side... It is well known the vulnerability of Japanese corporates in this environment, they are particularly exposed because of the demographics and sector exposures. Restaurants, bars, entertainment etc all are looking very feeble, and with credibility seems to be fading on the monetary and fiscal side too since the latest rounds of stimulus there is room for a massive leg lower in JPY. For those following the conversations on Japanese fiscal bazooka, the sizes are insane... Abe just put through another 6% of GDP and raised the overdraft to +/- 15% of GDP. A comatose recovery is underway, even if the fiscal execution is flawless this will take years to recovery. 📍 On the USD side... Hedging will become a lot lot cheaper with Fed zero rates meaning that the demand for USD will increase as it remains a more attractive hedging instrument than JPY. So we have the following picture: the king stuck in retreat via Covid forcing the front end of the yield curve to stay anchored to rates, while the belly and long end are starting to dislocate and tick higher. This is screaming of longer lasting pain to come . Local politics will provide some ebb and flow although Trump looks a done deal. The only caveat is if Hillary throws her hat in the ring, low odds as per today but of course this will be one to keep an eye on and Biden dependent. 📍 For the technical flows... We are tracking an ABC sequence with the 'C' leg in play after this weekly close. The 151 remains the main target in the sequence with a time horizon of Q4 21 / Q1 22. The monthly chart is a little out of scope for retail trading, instead it will serve as a compass to help our Weekly, Daily and H4 maps. A round of Macro Maps will be uploaded over the weekend. As usual jump in with charts, views, questions or etc and thanks for keeping the support rolling with likes, comments and etc!
Long
by ridethepig
10
ridethepig | EUR Market Commentary 2020.06.03EURUSD exploding to the topside as USD comes under further pressure from domestic issues. While I am bullish on the euro more broadly, these latest moves are starting to look stretched above 1.12xx given all the cards that are on the table. Well done all bulls riding what has been so fat a very fast move; we are coming to the end of this initial ‘expectation leg’ around debt mutualisation of the block. Official confirmation coming later today will mark an end of this chapter and unlock a quick pullback for the next ‘fact’ leg which should be bought. On the technical side, tracking closely the 1.104x support as the next loading zone for bulls looking to ride the swings towards 1.15 and 1.20. 🔑 Remember markets trade expectations first and then facts later.
Short
by ridethepig
3
ridethepig | DXY Market Commentary 2020.06.05A quick update to the DXY chart which is essentially intended to cast some light over G10 FX as we prepare for NFP. In order to understand the dangers of pursuing a weaker dollar too energetically, we shall in what follows begin to point out the inner wave flows in which short-term moves become indicated. The process of short-term swing trading is automatic for macro players, having a clear understanding of the direction and which side occupies control ensures us of control over individual strategically important swings and the apparently desirable opportunities where retail begin to go overboard will become clear places for us to do profit taking and trap them in the opposite directions. Lets review a sketch of the Middle and Long game with Dollar: Clearly sellers wish to occupy the flow, in order to deliver an impulsive wave to the +/- 75 targets; but if they try moving too far too soon they will exhaust and allow buyers to prevent the attack. So, sellers will play the macro swing in incremental waves ... 1 ... 2... 3... 4... 5... The correct sequence is to play both the impulse and retrace exchange, and, in the current case, we are reaching the main impulse target so its time to leave late sellers no room to protect with NFP because they have to cover. For the Technical NFP flows: Steel Support 93.8x <=> Strong Support 95.8x <=> Soft Support 96.7x (we are currently here) <=> S/R FLIP <=> Soft Resistance 97.83x <=> Strong Resistance 98.8x <=> Steel Resistance 99.9x When major forces on both sides come under attack, it comes down to a sort of exchange / expansion in vol which we shall call: "Sellers trying to sell their lives for the highest price possible". Anyone with the slightest TA knowledge can tell sellers are gunning for the lows, they want to condemn bulls to death, it appears understandable given the domestic US issues on social and political unrest to want to sell your life for as much as possible. Imagine for a moment you are soldier, down to your last clip and you are surrounded... You would need to take as many enemies out as possible so you will pick your moments. Smart sellers will defend in the most important areas! Coverage resuming as usual here after @ridethepig returns back to London...Thanks as usual for keeping support coming with the likes, comments, charts, questions and etc!
TVC:DXYLong
by ridethepig
3
ridethepig | A closer look at US EquitiesA timely update to the US Equities chart after a month of consolidation/chop. The energy building up here is immense, before you tackle what follows, you should quickly check that you are well versed in the notions concerning the retrace leg, the ABC sequence and passed crashes. If not you should refresh your ideas on these, because both of the following legs are necessary for full understanding for the next swing. The question we are tracking is as follows: After the 61.8% pullback from the sell-off, assuming equities do not advance beyond 3177, sellers have the possibility of opening a final leg lower opening the capitulation in the global economy. By playing the 5th wave lower, sellers release tension in the congested areas as naive short-term specs continue buying for no apparent reason. So why do these levels matter? Well, the 2892 is the measured target in the ABC sequence from the March 23rd lows, could buyers break back up as re-openings unfold? Not really possible as another test of the lows would be much healthier from a bulls perspective. It gives more time to load and re-position, even if in some modified form. The next cycle down in the economy looks set to last into 2021, in other words all those expecting a V shaped bounce and running from the lows as quickly as you can are dividing the flows into two halves. For the sake of convenience we shall call this a "dead-cat-bounce". Remember we are tracking the two important fundamental charts on the macro side: "It's Time" "Alpha Protocol: Seeking Immediate Extraction" Further pockets of shutdowns and social distancing measures will weigh heavy on consumer confidence, it looks unavoidable for the Northern Hemisphere Winter (December 2020) while in the background cooking there is a powerful urge to move away from Oil that seems to be unfolding. After the inconsiderable disadvantage US producers were put under via Russia, China and S.A, the battlefield has emerged: But moreover, thanks to protectionism China and US are moving towards escalation. Foreign policy will provide the narrative for this final leg lower, Trump will attempt to establish lines of communications later in the Quarter with Xi although the damage has already been done. Follow the flows... capture the final leg lower in global equities, while the rest panic and begin to think its doom and gloom forever we can obtain the lows with cheap bids to exert pressure on soft buyers and later sellers (we can update the charts as we get down there later in June). As usual thanks for keeping the support coming with likes, comments, charts, questions and etc!
OANDA:SPX500USDShort
by ridethepig
16
ridethepig | Thoughts and Themes in TurkeySwings and position building We have witnessed a tremendous amount of profit taking after clearing the 7.23 targets in USDTRY and are arriving back into major support territory. The pick-up in local activity was notable as banks were forced to defend the TRY. Many clients I speak to are happy to continue buying USDTRY , the picture looks gloomy for Turkey and real money continues to sit on the bid. On the monetary side, the CBRT cutting by 50bps was widely expected although wont make much difference at this stage. EM FX will remain under pressure if we see a broad risk-off environment this week. Keeping a close ear to the wires for any updates on swap lines, those looking for positioning in USDTRY should always think about loading in a safe place. Such a shelter will render us a superb shelter when the storm hits shore... A massive 30% macro swing after an obvious mistake from Erdogan. Turkey will remain sluggish until they expose the issues underneath, the correct idea would be to put pressure on CBRT which is what markets are doing and show no signs of stopping in the Short-term. Here 7.80 would be the measured target in the shelter then profit taking can begin again. As with any swing, it is important we assess the downside to see if we find something which is to our advantage. The dollar devaluation is the only technique that the Fed can construct, the only defence left in the toolkit is -ve rates and like a scout putting up his tent we must prepare. Depending on how quickly markets begin to price negative rates in USD, we may fail to complete the mission towards 7.80.
Long
by ridethepig
3
ridethepig | NZD Market Commentary 2020.05.26It is evident that a general round of profit taking for buyers is called for, it will act as a catalyst to kickstart a fresh leg into USD and provide a helping hand from markets to put -ve rates back on the table for Fed. One more time it is all eyes on Equities, if those betting on a quick V-shaped recovery lose their tempo we can see blood on the streets. The squeeze higher in NZDUSD is healthy into month end from a strictly positioning perspective. The USD Long boat was heavily loaded to one side and needed a shake-up. The sweep lower in AUD and NZD will demonstrate the exploitation of Keynsian economics. By pushing the USD bid the obvious collateral damage in EM FX and High Beta FX can easily lead to pressure on the inelasticity between Whitehouse / Fed combo. Watch-out for wild swings ahead, we can cover the flows live below.
Short
by ridethepig
4
ridethepig | AUD Market Commentary 2020.05.26On the commodity currency front, looking for risk markets to reject the move quickly this week and trigger the flows towards USD. I recommended standing aside last week, and here I have been actively adding full sized AUDUSD shorts in the 0.660x handle. The healthy cleanse of USD longs in the antipodeans will make things a lot easier to trade with the next leg lower in S&P (see chart of the day below). It will immediately be clear once equities turn and the 'V' crowd are flanked that everything was not as it seemed. Sellers have to make an attacking move at the highs and defend the possible occupancy from buyers in the jurisdiction. A sustained break in AUDUSD through the 0.665x highs will remove any cover provided from the RBA panic cut. On the other side, remember we are tracking the 2's 5's curve which is signalling loudly that we are not out of the woods! This is a brutal squeeze for USD longs, a lot of pressure applied but we are reaching boiling point. Such a wilderness will not transform into a full bloomed garden despite how politicians sell it...
Short
by ridethepig
2
ridethepig | Dovish SARB On Deck!We are reaching the lows in the range right on time for SARB today. Markets are expecting a 50bps move, a little bird tells me that we are set for more... Remember the domestic story in South Africa is only going one way; sadly it's the same outcome as Turkey. On the technical side, tracking closely the 18.00 support to build longs outguessing a dovish SARB. Look to target the 18.5x and 19.0x highs and lighten up below 17.7x. Good luck.
Long
by ridethepig
1
ridethepig | TRY Market Commentary 2020.04.29All eyes on risk markets and the recent rebound reaching its final stages of exhaustion. USDTRY not giving any gains back, continuing to attack the 7.00 important psychological resistance. Buyers calmly finishing their preparations for an appropriate welcome of the next risk headline, while local banks try everything they can to defend. Happy to sit long USDTRY, if we do not see concrete measures around the Fed swap line then expect macro players to stick the knife into Turkey once more. There is little to see to the downside, I will actively look to add longs on any dips should we see them towards 6.90xx otherwise to the topside we have very very soft resistance at 7.00. A break above will open 7.235x and 7.80x main targets. The move played is a demonstration of a winning macro one, the main line comes down to the pursuit of safety; capital is forced to flee a dictatorship, but the flight itself can be beset with difficulties as more and varied restrictions are conjured. Tread extremely carefully for those invested in Turkey. Thanks as usual for keeping the support coming with likes, comments, charts, and etc!
Long
by ridethepig
ridethepig | RBNZ To Cut!All eyes on RBNZ tonight, Equities globally are running out of steam and high beta FX looks set to suffer badly... the Governor has been very vocal around negative rates and protection via debt monetisation if necessary. Markets have quite the habit of unpinning Central Bank promises of late by choosing to apply maximum pressure. RBNZ will have to satisfy the following logic with a 15bps cut to seem credible. On the technical side, a simple breakdown in pure price can be played from the 0.610x handle. I am comfortable going into the meeting short, 0.618x is strong resistance and will keep stops protected, while to the downside 0.600x will serve a suitable initial target. The risk to the thesis comes from the RBNZ being unable to set the dovish stage correctly at this point in the game, the process of unpinning can be seen from quite a different angle. Good luck.
Short
by ridethepig
3
Lower rates = worse bank profitability.Hey. I'd like to talk about the effect of lower interest rates on something called 'net interest margin'... In other words, how banks make money. The chart attached shows US commercial banks' net interest margin (blue) versus the target Fed Funds range (white). Net interest margin (NIM) is a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example, deposits), relative to the amount of their (interest-earning) assets. What can we see from the chart? As the Fed Funds target range decreases, bank net interest margin does as well. Currently, there is talk of going negative, and just last week, Fed Funds futures priced in negative rates for the first time ever for the Dec 2020 meeting and the Jan 2021 meeting. This is important. See, if people are of the opinion that lower interest rates will lead to less bank profitability, then they are likely to short financial stocks. And if people are shorting financial stocks, it can lead to a decline in lending and liquidity in the economy - which leads to dampened demand. Over the last few years, a type of bond known as an AT1 (Co-convertible) has been used to try to sure up bank common equity tier 1 (CET1). This gives regulators a gauge of strength of the financial institution in question. It works like this... The investor buys the bond, and if the share price of the bank falls to a certain level, the bond is converted into equity to prop up the CET1 of the bank. The problem is that these investors (mainly hedgefunds and sophisticated investors), are alpha seeking... In other words, they will hedge the delta of the decline in their bond by shorting the bank stock. This creates a bit of a doom loop on two fronts, firstly by removing the validity of the AT1 instrument, but secondly, the decline in net interest margin leading to the shorting of bank stock and the incapability to adequately lend. Markets and economies function on liquidity, and without it, we are in serious trouble - which explains the lengths to which governments and central banks have gone to liquify *everything*... And why equities just keep going up... See lower rates and more QE lead to equity risk premium compression - that is, the premium paid to take the risk of investing into higher risk assets versus simply staying invested in riskless assets (such as government bonds) - and ends up with investors piling money into equity markets. If the perceived risk of investing into equities is a tiny bit greater than staying invested in risk-free assets, then you will get into equities. This is exactly what has happened over the last 10 years - and it's why the market threw a fit when the Fed tried to raise back in '18. Passive long strategies have become the norm - buying ETFs such as $SPY and simply holding - and this also affects bank profitability; less trading = less commissions paid to the dealer. This is one reason why so many banks have moved into high frequency market making activities - Volcker prevented them from prop trading, but allows for market making (which in the high frequency trading area is largely still prop trading, although trying to prove that is tough). Jerome Powell is expected to push back against negative rates tomorrow, and the rhetoric leading into this from Fed members has been that they do not like negative rates. It remains to be seen, but real yields across the curve from 1y-30y are currently priced negative... So what's the difference, really? (tongue in cheek).
F
by FinkPro
9
SPY 400 by Labor Day (S&P 4000 this summer)We have not reached the top yet. The S&P will rise due to unprecedented liquidity and serious retail FOMO will kick in for a parabolic rise to SPY 400 (S&P 4000) by labor day 2020. This is the end of a 30+ year secular bull market. Once the fed signals slowing of quantitative easing due to rising S&P and economy showing signs of recovery, the bust will reach its second stage and kick S&P down to 800. Deflation will take control, leading to more QE and trigger inflation long term. Gold $10k by end of decade. Bitcoin will tag along the melt-up and will reach ATH this summer, then crash with the S&P but find a strong support level above $20k and reach $1MM by end of decade.
AMEX:SPYLong
by HashtagTrading
3
ridethepig | NZD Market Commentary 2020.04.28Across the commodity block, NZD is looking the weakest and most vulnerable with negative rates entering into the picture. This looks unavoidable now and makes NZD the more preferred short across G10 crosses. The resistance is weakly protected as we enter into FED fact territory, the market was a little too long USD and I understand the need for a healthy cleanse, however, the move looks overdone here as I am not expecting any further cuts tomorrow. Equities will hate the bad news, and high beta FX will be first out of the door... last orders at the bar!? On the technical side, strong resistance is located here at the 0.605x - 0.607x region and is the one to track for those wanting to position for FED and a further leg lower in risk markets. The goal for sellers is in protecting these highs and defending any real seizure of the advance, an initial target at the mid point to pay for risk at 0.600x and an extension towards 0.592x is in play for a simple range clear with the CB event. A break below the 0.592x lows will call into question the macro slingshot target at 0.49xx.... INSANE!!! From a macro perspective as soon as your CB unlocks negative rates or foreign asset purchases its game over! You have taken on a well hidden exchange sacrifice. Smart money will exploit it, a slingshot is in play later in the year but will require another sweep of the lows via Covid panic flows into USD ... For those waiting to buy the bird from a long-term perspective, not recommended till the end game in this current leg should we pay any attention towards the development arise. Good luck all those positioning across G10 FX for FED flows, thanks as usual for keeping the support coming with likes, comment and etc!
Short
by ridethepig
23