Which Way Next?The market is stuck sideways this week. Perhaps the breakout will be determined by external events rather than the FED under Powell who is certainly no Volker...
Rates
THE 40 YEAR BEAR MARKET IN 10 YEAR TREASURY NOTE INTEREST RATEThe attached chart shows 40 years of declining 10 year rates. As we all know, that rate is the basis for mortgage rates and just about everything else. During that half cycle the housing market boomed, the stock market boomed and generally speaking, corporations and individuals prospered.
But that trend has ended.
Thursday I would have said that rates would either remain low for an indefinite period while inflation soared or rates would be raised to quell inflation. But Friday Central Banks around the world announced tightening.
The party is over!
It is time to batten down the hatches, lock in long term profits on stocks, rentals and any other investments that correlate inversely with interest rates.
Obviously the major players saw this coming and started bailing at the first of2022.
Now us little fish must do what we can to avoid losing the wealth we have.
As an aside, it was announced last year that Bill Gates was diversifying into farm land. Obviously that anticipates food shortages and inflation.............
I will post more on this once the picture becomes clearer.
midnitepoet
SP500 selling pressure might not be completed however missing leg higher is probable for the american indices in which we can see a completion of wave 4 soon.
the selling pressure was because of the rate hike pricing from the FED.
wave can be simple or complex however we will wait for more confirmation to see the pattern that will show on this wave before any buying opportunity.
DJI WEEKLY - FIB RETRACEMENT - CORRECTION MODE - MEGAPHONEFollowing along with the MEGAPHONE theme from a previous chart taking the first touch of the MEGAPHONE TOP, as the top. Being a weekly chart, we need to see the weekly close below the RIBBON for CONFIRMATION that we are indeed heading into a period of CORRECTION. Given that the FEDERAL RESERVE will meet next week and have already stated that they will not move in to bolster the stock market I hazard a guess that the DOW will continue its current downward trend. As we all know the FED is slow to respond as that is the nature of the data cycle, they are at least 3-6 months behind real-world. We also need to keep in mind that the FED is an INFLATION fighting mode which means they will be announcing a rate rise of 25 basis points at the very least for a MARCH START, which the market has already priced in. My gut feeling is that they need to raise rates by 50 basis points to douse inflation, which the market has not priced in.
We have a CHINESE NEW YEAR coming up and harsh WARNINGS FROM the WEF and DAVOS.
Take care and stay safe.
NOT FINANCIAL ADVICE
Mortgage Rates Back In An Uptrend Trend On 30 Year-Fixed Historically in America the interest rate for a 30 year fixed has been in a multi-decade down trend. As of January 2021 the rate for a 30 year fixed dropped to a historical low of around 2.65% and has since reversed in trend. This year we can potentially see rates continue to rise up to 3.75% as we're in secondary uptrend on the line chart. Currently we're at around 3.45% up 30% from 2.65% we seen last year.
$QQQ bounces for now$QQQ bounced today as shown on the weekly chart
$QQQ has still not experienced a 13/34-week EMA bearish crossover
10 year rates briefly moved above 3 year highs but have since stalled
CPI numbers were hot today and market participants are pricing in a March rate hike
10Y YIELD CRATERING SOON? EXTREME FEAR EXPECTED IN 1Q OF 2022Hello traders & investors!
As we look into the beginning of 2022 and use 10Y as our guide - expect enormous amount of fear coming to the markets/news channels/politician speeches..
I am expecting 40-50% correction on this 10 Year treasury. Cash will flow into bonds and DXY should strengthen at the same time too :)
That being said, I expect this to unfold in first half of 2022. Multi-year and decade long views does not change - rates will climb much faster & higher.
We have nice place to enter the markets in the times of extreme fear.
Levels to watch: 1.52% & 0.90%
Take care! This is not a financial advice.
10 Year Rates: Daily and Weekly Perspective: Important JunctureA reminder that falling bond yields are synonymous with higher bond prices while rising bond yields are synonymous with lower bond prices. In other words, a yield downtrend is the same thing as a bull market in bonds.
Last week we published macro overviews of rates and equities that should be referred to for context.
1) A weekly close above the 1.77% would represent the first time since the February 2020 - 0.33% low print that rates will have managed to set higher highs. This would represent a significant change in the markets behavior.
2) The market is currently testing the confluence of resistance generated by the pivot high (1.77%), the top of the channel from the August 2021 low, and the roughly 50% retracement of the 3.25% to 0.33% decline. The confluence should provide signficant resistance.
3) Combined with the oversold condition of the RSI oscillator (remember that rising yields = lower prices, so a high oscillator reading is oversold) it is reasonable to monitor the daily and hourly charts for tradable reversal behaviors. We will cover some of these behaviors and patterns in future posts.
4) At the very least the resistance confluence should create a period of consolidation.
5) The caveat is that longs would not be in harmony with either the weekly and monthly charts, which appear to be setting up for an extended period of rising rates.
6) With both weekly and monthly charts appearing to be in the midst of a signficant change of trend, a break out wouldn't be particularly surprising.
7) At important junctures like this, I typically adapt an, "If this happens, then I do this" trading approach. After all, the market can only do one of a very few behaviors.
a. It can breakout and run. In which case finding a trade with solid risk reward becomes impossible. Move to a different market and find a trade.
b. It can breakout, move higher and then make a clear consolidation pattern (for instance a flag or a pennant). You can buy breakout with risk stops below the pattern.
c. It can upthrust the range (make a false breakout) and fail. This is by far my favorite trading pattern. We will cover it extensively in future posts.
What fundamental could produce a produce a reversal? Equity weakness that produces a flight to safety is the most likely candidate. But note that SPX saw a strong reversal yesterday and this mornings dip attracted buyers. But, again, refer to part two of the macro overview for context.
Good Trading:
Stewart Taylor, CMT
Chartered Market Technician
Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
Government Bond Yield Surge - US2Y, US5Y, US10YThe crypto & stonk killer. Rates have been exceptionally low because of crisis. Look back to 2009. They went up in 2016 for a little bit while donnie complained. (he wanted that easy money because he tweeted about stonks his entire time in office). They drifted lower thereafter and then BAM! Another crisis the government had to print through. Where did all the PPP money go??? Kodak? DWAC? Nobody knows. Frauds abundant and the Fed will now run-off their near $9T balance sheet and start lifting rates. Plebs keep buying $SPY & Tesla calls or Simpcoins. #clueless
Should be an epic show.
*valuations matter
Rates will bust the Fed's 2% Long Term average goal with ease. Crypto kids will go broke and they should blame their doge daddy for pumping them for personal gain.
The "trillion" dollar companies will implode. Shibby Bitty too. All of it.
GL
Buckle up!Dear reader
How nice to see you again.
I have been busy with public and private clients since 2020, and although I continue to take a keen interest in markets and etc, I no longer have much time other than the (very) occasional consultancy for detailed writings. I am looking for a solution as even the weekends cannot tempt me back into regular updates!
There are a couple of trades though that I hear interesting things about - whether they will be suitable for your portfolios, I do not know, but they may be worth considering:
Stay Long USDJPY looking for 150, and Short Gold for 1510.
Full disclosure I am in full positions in both, Long USDJPY we have covered in great detail already, as with Gold . My in-depth knowledge of the commodity sector is decreasing now as I am further away from it, but from what I hear, these two are capable both medium and long term.
I hope this information might be useful to you. I would be grateful for anonymity as a source. Wish you all the best for Q1.
Thanks again!
21/12/14 - Gold offering a good long entryHey Trader,
please see my current idea on Gold where my count suggest an entry at around 1778 leading to a target of 1813.
Tomorrow evening we will have high volatility in the markets due to FED's rate decision. For those who decide to enter ahead to the FED meeting I suggest to play this trade with small size and tight stops, just in case this idea gets folded by fundamental impact.
This is no financial advice,
RT
EURNZD - another shortBased on the daily chart, the N100 stock index has grown today and the oil seems to be stabilizing preparing for growth.
Both of the two assets are anti-correlating to the EURNZD pair which I explained several times in both educational articles and pair-delegated ideas.
Furthermore, NZD did increase its interest rates. This would normally lead to NZD growth, hence EURNZD's drop.
However, the drop has not started yet and although it never has to, it just doesn't have to work like that single time, I do believe that the recent rally was driven by a lot of fear in the commodity markets as the following chart explains.
The commodity index CRB has just started dropping. Baltic Dry Index has been for some time, which is an average for shipping costs calculated every day.
I will be opening another short in this market at some point. I am waiting for price action now.
Bond to Bitcoin CorrelationHere is a brief correlation between bitcoin and bond price action. Hope you find this useful! I haven't been posting much due to what's going on in the economy. Switching up my approach. We all know when bonds rise, yields fall. When bonds fall, yields rise. Think about this when reading this chart. Good luck to the HODL!
Feel free to follow or simply keep up. I'm working on getting better always so bare with me. We all know what kind of journey this is!
Would love your support!
Long🟢Symmetric Triangle, Descending Wedge on BTCUSDT (Bullish)AI computes BTCUSDT is solid for a rally.
Price is in a falling wedge.
Falling wedge is a bullish pattern.
Wedge breakout will pump the price.
Heuristic pattern combination describes:
The wedge is in a Symmetric Triangle.
Wedge breakout triggers Triangle breakout.
Target would be ATH.
EURNZD: As rates increase, the currency growsNew Zealand national bank increased rates from 0.25 to 0.50 points. It doesn't take a genius to imagine how that impacts the price of the EURNZD pair. With higher interest rates, it is more beneficial for the banks to hold NZD. Plus this pair was in a downtrend before that.
The most recent lows are broken ( dashed green ). A somewhat recent low meets a 2019 swing low of around 1.63 - this could be a temporary stop for the price ( green, transparent green ).
A descending channel could be drawn here stretching from this June 2021 till Now. If I project its biggest breakout under the channel's angle, I will get the same support around 1.63
If the market believes that European Central Bank may increase the rates as well, the price should make another short-term bottom there. If it does, one of the broken supports will be tested, perhaps it will even reach the middle of the channel.
Is it likely though? Indebted Italy and Greece would be in trouble if the rates on their debts increased further.
I don't know about future fundamentals, but I think some long entries will be found in the area - especially on lower timeframes and I plan to join!
Stocks To Watch This WeekThe Market's longer term uptrend still intact. Interest rates are driving the market.. These names have shown good relative strength and accumulation volume and most are in the growth sector. This may give good risk/reward entries on some of the best names. Some of these charts still need to confirm their price action. This video is my watchlist. Most of these names are at or near all time highs or multi year highs. There are 21 total stocks on this list Many of these have IPO'd in the last few years and still have a growth story ahead of them. Know your time frame and risk tolerance. Know your earnings dates! I go through these quickly so grab a pencil and paper and jot down the names that look interesting to you and then make the trade your own. Good Luck!
Rates Breakout - Be Cautious on the ramifications24/Sep/2021 08:22 AM AUTHOR: Brandon Gum
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10 yr yield is breaking out.
This is after they were down 5% on Monday of this week on Evergrande default contagion fears.
Fed met this week. They indicated tampering(?)
Sentiment trader suggested that lots of money managers are not positioned for a move higher in rates and to be careful of your positioning and know what you own.
IWM should outperform (as they do with rising rates - though I dont understand the text book theory behind this.
Regional banks should do well in rising rate environment.
Growth names that leverage cheap capital will be hit.
No comments on other sectors. Im not there in my development yet.
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Possible pullback if tapering is announced at next fed meetingRising wedge with pullback estimates. Tapering is very possible at this meeting and I believe we will finally see a pullback once it is announced.
USD INFLATION!FUNDAMENTALS-
the ONLY "Major" news we have this week is the USD inflation data on Wednesday 8/11 @ 8:30AM est ...
Now we've seen what NFP has done already. Dollar soared because bloomberg revised down the expectations due to a poor ADP, (check 2 post ago), but NFP wasnt bad.
Now i can see US inflation CPI data to continue it's trend of coming in WAYYY over expectations!
TECHNICALS - 12Hr W on NZD & there's also more room to grow on the DXY. I can see NZD testing the bottom of the range for ANOTHER test then.
FUNDAMENTAL SIDENOTE - NZD RAISES RATES NEXT WEEK FROM .10% TO .25% .. SO U MIGHT WANNA REALLY GET RRADY TO BUY IT AFTER THE SELL OFF
STOP .693 - I FORGOT TO EDIT THAT PART IN ! :(
NZDCHF reversal - Time for some up movementBy my opinion , downtrend just ended . RBNZ just released news that telling us we are in front of higher interest rates. Covid is there question of history and technicals playing with us. CHF is overbought as well . Lets try to buy this dip. TP 65´s , SL for me 63,200 , RR ratio very good. Stay green mates
STOP STOP HUNTING!!!THIS IS THE DEFINITION OF A STOP HUNT!
we've all seen how the dollar has exploded over the past couple of days but NZD is not giving up without a fight you can see that every time the kiwi goes below .695 on the weekly candle it rushes back up before the week is over.
now fundamentally speaking, WE KNOW the RBNZ (New Zealand Central Bank) will be raising rates next month from the current .25%. & WE KNOW THE SMART THING TO DO IS TO PUT OUR MONEY INA STRONG CURRENCY WITH HIGH INTEREST RATES, ESPECIALLY AGAINST LOW ONES JPY( -.10%) CHF(-.75%), & USD (.25),which happens to be all the "SAFE HAVEN" currencies
i cannot be the only one looking ahead and seeing the true potential of the KIWI.
nzdusd must go to .7315 (400+ PIPS)
nzdchf must go to .662 (250+ PIPS)
nzdjpy MUST GO TO 83.9 (800+ PIPS)
