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Short Term Short TLTStill think rates will head lower due for a myriad of reasons, but in the short term, it is plausible that rates will go higher for technical reasons. Longer-Term Reasons for lower rates (i.e. lower for longer)- 1) Monetary Policy remains accommodative 2) Growth/Inflation expectations remain subdued 3) Foreign buying interest from places with negative yields on rates (see japan, europe) Near term reasons for the long bond to go up in yield- 1) Hawkish Fed Talk 2) Technicals as seen in the diagram (e.g. long term toppyness, decelerating RSI, declerating CCI, potential MACD bearish cross-over)
NASDAQ:TLTShort
by dsorchestra90
GBPJPY: BOJ MISS; BOE HIT? MORE SELLING ON THE HORIZONBOJ Miss: 1. BOJ deliver one of the biggest misses in history (vs expectations/ pressure) - only increasing ETF purchases and dollar funding by apprx $60bn annual in total vs 10-20bps of Depo and LSP cuts + 5-20trn in QE increase + ETF increase. *See attached post for in-depth detail on the BOJ situation and price action history/ Yen strength/ Safe havens* BOJ Miss Compounded with a BOE Hit: 1. BOE are expected to ease by 25bps and possibly add 50bn to their QE programme on Thursday - a BOJ miss combined with a BOJ hit should cause compounded losses for GBPJPY as there are two drivers - Yen should continue this week to get stronger (as BOJ easing expectations surpass and Yen strength increases) whilst GBP gets weaker as the BOE on Thursday likely takes action, reducing the value of Sterling - with both providing the optimal environment for downside. - Historically, when BOJ has delivered new policy/ missed GBPJPY has sold off aggressively between 2-8days and 700-1200pips. Now whilst I dont expect the same level of aggression in the near-term as the relative value is much lower now (135 vs 175) so moves lower should be smaller - I do expect that 400pips lower on the day is not the end of the selling rally for GBPJPY. - Initially at the start of the week i expect GBPJPY to move lower at least another day (satisfying historical moves), perhaps into the 133.5 level which would be 550pips, lower than the smallest sell-off but fair given the relative value changes - not that i would be surprised to see more. - Later into the week is when I expect the bulk of GBPJPY losses to come (e.g. Thurs/ Fri) - the reason for this is as 1) any Yen downside risk from the MOF releasing upside in the details of their stimulus package would have surpassed e.g. increased stimulus from 28trn-40trn (unlikely) or increased govt spending section - both of which devaluing yen moving gbpjpy potentially higher. Though I think the risks are more skewed to MOF delivering a package that strengthens JPY as it undershoots expectations as several MOF members have mentioned the package being over several years - the more years the less punch the package has (given some expected it (5% of gdp) to be spent in 1yr), equally the less direct govt spending portion of the package will also lessen the depreciative impact on yen (rumoured to be 13trn, if less then Yen could get considerably stronger). As mentioned I see the MOF release to be asymmetrically skewed to expectation downside for these reasons. 2) BOE GBP selling pressure would happen when they cut the rate and adjust their QE programme - this is a highly likely scenario as BOE MPC Minutes in July said "Most members expect to loosen policy in August" and recently the BOE's biggest hawk M. Weale switched stance in light of UK Business PMI/ Optimism prints at 10yr lows saying the BOE needs to act fast/ delaying policy further doesn't make sense. Trading strategy: Sell GBPJPY @mrkt 133.5TP1 130.5TP2 128.5TP3 - risk averse traders could wait for the 50-60% MOF/ general Vol bounce into 136-38 level before shorting - I would reshort here anyway.
Short
by QuantumLogicTrading
11
GBPUSD: STERLING STRENGTH MYTH? ARITCLE 50 ODDS - 50% NOT HAPPENMysterious sterling strength: 1. Sterling has managed to par losses and actually rise in past days despite a number of heavily weighted factors increasing GBP downside pressure e.g. MPC M. Weale switching to the doves, PMI/ Business Optimism 8yr lows, Sterling rates markets consistently pricing >25bps of cuts to the BOE base rate (details below), the median bank forecast of the Bank of England Policy change on the 4th of August is becoming ever more dovish (e.g. calls for >£50bn QE and more than 25bps of cuts by Banks). 2. Struggling to find answers I looked at the Article 50 odds/ Implied probability from the odds aggregator (oddschecker) - to my surprise, but in support of GBP top side I have seen the market shift aggressively in the last week - with odds of a 2016 signing falling to 16.5% from 35%, but more worryingly the odds of a 2018 or later or NOT AT ALL steepening aggressively to 50% from 30% . - 2018 or later or not at all is now the most probable outcome, worrying that this is even possible given the referendum was decided by the people in a democracy - how is this even possible? IMO it should have been mandated to be signed within a given period e.g. 1wk/ 1m. - Even more worrying is that T. May the newly elected PM, Pre-PM was a brexit Bull and vowed that exiting the EU was her top priority and she "saw it as a way to make Britain great again". However, now if you look at the news, she is somewhat of a Brexit bear, recently stating "The Article 50 will NOT be signed in 2016" - completely writing the front end of the curve off. 3. This is likely the potential driver of sterling strength as a delayed non-signing 1) increases the time until we actually leave the EU - given there is ALREADY a clause in the article 50 agreement that states there is a 2yr "cooling off/ negotiation period" where Britain's relationship with the EU will remain exactly the same for 2yrs once the article 50 is signed - so by not signing it until mid 2017 this means technically there will be 3yrs between Brexit vote and leaving which means three years of relatively unchanged economic conditions - thus this in mind why should GBP get weaker now/ in the near-term? 2) and in turn, the above reduces BOE cutting odds - if we're not leaving any time soon the economics should be relatively flat thus no easing needed which means less GBP near-term downside. 4. Also another potential sterling topside driver is the speculation that the BOE is coming underpressure NOT to cut rates by Retail Banks as by doing so it reduces their net interest margins (lower profitability) causing restructuring/ lay-offs in the industry - LLOYDS BANKING GROUP IS AXING 3,000 JOBS AND CLOSING 200 BRANCHES AS IT RACES TO CUT COSTS IN ANTICIPATION OF AN INTEREST RATE CUT - if considered a systemic risk this could seriously reduce the probability of BOE action. Though i think it is more of a isolated issue - Lloyds likely needed to restructure anyway based on already low profitability rather than as a direct function of a potential rate cut. It is almost laughable to think 3000 jobs are being cut because of a small 25bps cut alone. Trading implications: 1. Obviously this is a downer on GBP shorts, however, this is ONLY a suggestion for GBP strength - i could be over estimating the impact but the argument is nonetheless a solid one. 2. Still below 1.36 i stay a seller of rallies - and watch closely for the 4th of August when the BOE is expected to deliver easing which should move GBP$ to 1.25-1.28 where i will TP. - Current implied BOE bank rate cut probabilities are priced as the following: -Three month short sterling (GBP) rate - 66% probability of a 25bps cut, up from 64% on the 26th. -GBP Nominal OIS Spot rate - 84% probability of a 25bps cut on the 26th, up from 76% on the 25th -GBP 1m Fwd Nominal OIS Rate - 29bps 100% priced as of 26th, up from 26bps on the 25th.
by QuantumLogicTrading
5
EOW SUMMARY: RISK THE OVERALL WINNER - US30 & SPX @ 2% NEW HIGHSEnd of Week Summary: 1. On the week we saw risk outperform safe havens for the first time since the brexit vote and the SPX and DJ30 set new all time highs by 2% and 1.2% respectively - somewhat encouraging given this was the longest period post-crisis that equity indexes have had since new highs, with a total time of apprx 1 year. 2. Given the articles attached, this week was also the first week where risk-on/ risk-off positive correlations broke down and went back to some degree of normalcy, with Gold, Yen and bonds ending the week down some 5 - although the TRY Military Coup did cause some risk anxiety late on friday and caused safe havens to par some of their losses by 1% to close down apprx 4%. 3. Drivers of the risk-on rally i must say did come as a surprise, given the relatively subdued economic climate post brexit, with little planned risk-on drivers in sight. However, it was JPY's surprise talk from PM Abe/ BOJ Kuroda easing/ stimulus speculations at the start of the week (speculations around y10-20trn) that gave risk markets some legs - despite the reliability of the claims being denied by much of the JPY Govt though there certainly is no smoke without fire. 4. The other winner of the week was USD , much of which was safe haven demand on Friday (TRY Coup) but $ strength had built through the week on the back of hawkish FOMC speak sentiment (see attached) and risk markets rallying, causing rates to also rally (UST 10y averaging +4-5%) where all have contributed to increased market confidence which has translated into higher projected rate hike probabilities for their Sept/ Nov/ Dec meetings - currently at 12.9%/14.4%/38%, which is pretty much a 100% increase in expectations on the week. - Once risk got going, given the severe depression, it was unsurprising that it did manage to run away higher - as safe havens needed a correction higher, if only in the short term. Next week Projections: 1. Given last week, and most of friday, the obvious expectation would be to expect risk to continue on the offer and making new highs - however, late on friday afternoon we saw risk-on/risk-off balance tip in favour of safe havens as the TRY Coup uncertainty increased risk-off demand. - Friday traditionally is a weak day for risk anyway as 1) end of week sellers/ weekend flat risk books cause a natural selling of risk, and a natural buying of safe havens as portfolios look to hedge weekend event risk over the two days that the markets are closed (especially as the session ended i the middle of the TRY coup). - That in mind, i was surprised to see risk even trading better than safe havens on mid afternoon Friday at all (until TRY) - with Yen falling to 106.3 and goldd down 0.9%, i was confident that we would enter Monday with a risk-on tone.
TVC:DXYShort
by QuantumLogicTrading
2
BREXIT YUAN DEVALU: USDCNH - SNEAKY FX FIXING? SELL SPX & FTSEAt the start of 2016 the PBOC began aggressively devaluing the off-shore Yuan against the USD, imo in an attempt to start the year with a competitive export:import advantage - with the aim of making 2016 a headline "come back" year for China amid the growing GDP growth and Credit bubble worries. As a result Equities across the board sold-off (-8.5% in a few days) as non-chinese Exporters globally feared that their biggest market/ growth market was coming under pressure, as the relative value of their USD exports soared, as Chinese import demand would fall significantly and as a function of the depreciation relative to the USD. Whilst the initial highly correlated move hit equities by -8.5% (7 days), however when fully priced, the CNH devaluation fears took the SPX down 13% to 1808 lows in just 12 trading days. The PBOC Deval intervention took CNH to lows of 6.7550 and low-closes of 6.6900. Brexit - Under the radar and sneaky PBOC FX Intervention? 1. Fast forward 6 months - the Days going into Brexit USDCNH traded at almost exactly the same fix as the pre-deval January level at 6.58 (blue line), then on the most volatile brexit days, the 24th and 29th, PBOC fixed the Yuan 1000pips lower to 6.6850, just above the extreme January lows at 6.6900 - Since then CNH has continued drifting lower, and now has eclipsed the shock January low closes of 6.6900, currently at 6.6960, which is now a new 6 year low. - This begs the question, did the PBOC plan this as a way to get their goal of competitive depreciation achieved WITHOUT the negative press/ market impacts that were seen in January? The answer is unknown but by looking at the Yuan prices on brexit day and the day after, it certainly looks like it - 1000pip devaluation in 2 days, thats bigger than any deval in CNH's previous history (even from January). How to trade it? 1. Imo this trade is a no brainer, given the PBOC seem happy to keep fixing CNH higher and have shown no signs of stabilising/ appreciating - with the last 6 daily candles in the green, my bets are that the PBOC in the near-term think they have gotten away with the deval, in the midst of all of the brexit effects e.g. Central Bank information flows are high, the brexit news itself and general market volatility are all acting as distractions - thus the SPX hasnt priced any of this deval YET despite it being more extreme than what caused the 8-13% equities sell off in January? - I have to admit, it has taken even me until now to realise this sly depreciation, nonetheless this trade (short Equities) is a one up on the market currently as most still havent noticed and continue to focus on central bank action.
Short
by QuantumLogicTrading
SHORT GBPUSD & FTSE RALLIES: GOV M.C SPEECH & BOE FSR HIGHLIGHTS1. *Id say a 6/10 dovish reaction by markets, GBP falling across the board & FTSE gaining. Carney seems contempt with a lower GBP and is happy to continue talking the currency lower in an attempt to use the exchange rate mechanism as a leading instrument to buoy UK economic stability (GDP, CPI, Unemp) against the potential Brexit backdrop; thus I continue my view of shorting GBP on pullbacks (my near term <1.30 is imminent, with August end 1.25xx in sight) and FTSE on rallies near 6600. 2. I continue to be surprised by the lack of coverage/ rhetoric from media in general and the BOE/ Govs regarding the UK Political situation regarding Brexit e.g. failure to sign the Article 50, PM Cameron Resignation in Oct, 70% chance Brexit happens in 2017 vs 2016. Govenor Mark Carney Speech Highlights: - BOE Carney: Have A Clear Plan, Putting It In Place, And It's Working - BOE Carney: Will Take Whatever Action Needed to Support Stability - BOE Carney: GBP Fall Was "Necessary" To Support Needed Economic Adjustments - BOE Carney: Continues to See "A Material Slowing" in Economy Despite GBP Fall - BOE Carney: Evidence Since Brexit Vote Consistent With Expectation of Slowdown - BOE Carney: Want to Ensure No Question About Availability of Credit - BOE Carney: UK Banks Have More Capital Than They Need - BOE Carney: UK Banks Can Be "Part of the Solution, Not Part of the Problem" - BOE Carney: "Extremely Important" That Policy Decisions Well Targeted - BOE Carney: Negative Rates Have Potentially Counterproductive Consequences - BOE Carney: Commercial Property Not A Big Issue for UK Banks - BOE Carney: General Sense of Heightened Risk Aversion in Global Markets - BOE Carney: Have Wide Range of Tools If Monetary Policy Easing Required Financial Stability Report highlights: - BOE Lowers Countercyclical Capital Buffer for UK Exposures to Zero from 0.5% - BOE: Expects to Maintain CCB at Zero Until "At Least" June 2017 - BOE Move is First Easing of Policy Following Brexit Vote - BOE: Decision Will Raise Banks' Lending Capacity by GBP150 Billion - BOE: Decision Will Lower Regulatory Capital Buffers by GBP5.7 Billion - BOE "Strongly Expects" Banks Will Continue to Support Real Economy - BOE "Strongly Expects" Banks Will Continue to Support Real Economy - BOE: Ready to Take "Any Further Actions" Needed to Support Financial Stability - BOE: Stability of Funding Costs Should Reduce Pressure to Tighten Lending - BOE Sees Risk of Decline in Capital Inflows Following Brexit Vote - BOE: Persistent Fall in Inflows Would Put "Further Downward Pressure" on GBP - BOE: Prolonged Period of Brexit Uncertainty Could Weaken Eurozone, Global Economies
Short
by QuantumLogicTrading
USDJPY - Long term Long IdeaThis is a Monthly chart of USDJPY, this one has caught our eye the most as it has broken out of a major long term downtrend back in 2014 and since hasn't looked back until now, this lines up perfectly as a potential value zone where big money may look to step in. Technical Reasons: 1. Break and retest of a monthly trend line as support. 2. Key area support of 102.000 3. Fibonacci retracement 0.5 4. Bullish trend from 2012. 5. RSI is in Oversold territory. Some potential positive Fundamentals for this trade are: 1. YEN - BOJ may want to cut their rates or introduce more stimulus as a strong YEN (Due to potential safe haven status) is totally against what the Bank wants. 2. DOLLAR - FED 'May' hike their interest rate but its unknown as to how likely this is.
Long
by ZenTrader108
PRICE ACTION ANALYSIS - GBPUSD: SCOTTISH UK VS UK EU REFERENDUMThis article compares the price and technical analysis of GBPUSD in the 10-weeks leading into the two events in order to gain an execution-able advantage going into the UK EU Referendum taking place on the 23rd June 2016. Price Action and Trends Scottish UK REF - 10 weeks = 14.July.14 to 18.Sep.14 - The first 8 of the 10 weeks GU traded extremely bid, selling off 1000pips from 1.7000 to 1.6000 . GU failed to make any significant recoveries during this period - signifying an extremely strong down-trend. - at the end of the down trend and coming into the REF, GU recovered 40% from 1.6000 on the 9th Sep, to 1.64000 on the 18th Sep (event vol highs at 1.6580). The sell off the proceeded to continue after the event, selling off back to 1.5900 by week 12/13. - Price action remained significantly below the 50 & 20 VWMA throughout the 10-week period and after the event - confirming the strong down-trend. UK EU REF - 10 weeks = 18.April.16 to 23.June.15 - Since the bottom formed on 29th Feb at 1.3850, GU has been trading in an up trend, forming marginally higher highs and higher lows. However, the uptrend has turned into sideways action in the last 3-4 weeks as GU has failed to make new highs of any significance and is failing to make higher lows - and the high-low range is tightening. in the last 10 weeks GU has risen 330 pips from 1.4270 to 1.4500 close-close and has had a range of 600 pips - 1.4170 to 1.4770. In the last 5 Weeks however GU traded flat closed to close at 1.4500, with a range of 400pips 1.4340 to 1.4730 illustrating the tightening range, sideways movement and end to the trend - the market is sleeping and is waiting for a stimulus to break in a direction. - At the start of the 10 week period, Price bullishly crossed the 50 & 20 VWMA and has stayed above since, confirming an up trend. The 20 period, however, has been trading choppy, illustrating the low trend/ direction and the significant pull-backs. Comparisons 1. The Scot REF priced GU over 1000 pips lower in the 10 week period, in a decisive downward move - however, this UK EU event has failed to do anything similar and has actually done the opposite by rising in the last 10 weeks, currently trading up 300 pips. - Why? imo there is only 2 reasons why there has been such a big difference in the price action. 1. The reason GU isnt pricing downward is because GU already priced/ factored in Brexit uncertainty into the downside we saw between december 18th.15 to March 2nd.16, which took us from 1.5300 to 1.3800 which is a whopping 1500+pips lower - this was likely FOMC hike driven but given the extent of the move, it is highly likely that brexit was included in the price lower - hence why we are not seeing a move now - the UK REF is already in the price. 2. The less likely reason is that GU isnt pricing the move because 1). the market has been scared stiff by the uncertainty, and people simple arent willing to take risk either way thus explaining why price is trading flat/sideways. or 2) GU is planning on making a significant run to the downside in the next two weeks where it could shed 1000 pips if it falls back to 1.3800; or even 700 pips if it moves to 1.4000 which isnt that far off of the 1000pip Scot Ref move. The technical indicators are just mirror a function of price thus I will not read into the technicals much - obviously the Scot Ref indicators spent much of the time depressed since the price was falling rapidly, whilst the UK EU Ref has been mixed - since the price is trading sideways. *Look out for my upcoming article where i will discus what the above differences mean and what they imply price action will do in the next two weeks going into the UK EU Ref and FOMC.
by QuantumLogicTrading
PRICE ACTION ANALYSIS - GBPUSD: SCOTTISH UK V UK EU REFERENDUM 2This article compares the price and technical analysis of GBPUSD in the 10-weeks leading into the two events in order to gain an execution-able advantage going into the UK EU Referendum taking place on the 23rd June 2016. Ranges Scottish UK REF - 10 weeks = 14.July.14 to 18.Sep.14 - GU started the period at 1.7000 and closed the period at 1.64000, with highs at 1.7150 and lows at 1.6000 with a range of 1150pips. - In the last 5 weeks (Aug.18th-Sep 18th) GU opened at 1.6730, closed at 1.6400 with highs at 1.6730 and lows at 1.6000 and a range of 730 pips - Close to open of 330pips - In the last 5 weeks (Aug.1st-Sep5th 5wk comparison) GU opened at 1.6877, closed at 1.6300 with highs at 1.6877 and lows at 1.6277 and a range of 600pips. - from week 10-13 GU shed the the Recovery/ No vote volatility gains, and traded from 1.6400 to 1.5900 with a range of 500 pips. UK EU REF - 10 weeks = 18.April.16 to 23.June.15 - GU started the period at 1.4270 and closed at 1.4500 - range of 600 pips - 1.4170 to 1.4770. -In the last 5 Weeks (5wk comparison) however GU traded flat open to close at 1.4500-10, but with a range of 400pips 1.4340 to 1.4730. Comparisons In general, the Scot Ref traded/closed much closer to its ranges than the UK EU Ref has to date e.g. in the "comparative" last 5wks, Scot Ref opened at 1.6877 (which was its high also) and closed at 1.6300 (only 30 pips from its range low at 1.6270) so GU ate 570/600pips of its range - illustrating that the Scot Ref had much more directional bias since it traded and held its extreme levels. Where as the UK EU Ref comparative 5wk period, opened at 1.4500 and closed at 1.4510, but with a range of 1.4340 to 1.4730, so GU only managed to eat/commit to 10/400pips that it ranged - illustrating that the UK EU Ref has lot direction commitment and 0 trend, it is a sideways ranging market. Technicals Scottish UK REF - 10 weeks = 14.July.14 to 18.Sep.14 - RSI, STOCH and RVI sold off in the first weeks of the 10wk period, then remained severly under pressure for the remainder of the 8wk sell off - all of which failing to break 40 and posting lows of 13 with several <20s. The event driven recovery between the 9th sep to 18th sep however helped the technicals recover to 50 levels. - Historical vol, traded in an uptrend during the first 8wk selloff from 2 to 11, before falling slightly during the recovery and spiking again to 10-12 around the REF date due to event volatility. UK EU REF - 10 weeks = 18.April.16 to 23.June.15 - RSI and RVI have been bullish, trading in the upper 60% all of the time, with several "overbrought" conditions arising at 70. - Historical vol has traded relatively flat, ranging between 6-12 with it ticking up in recent times to trade above 10 on most days now. - Stoch oscillated throughout the period, with a bias to the downside, showing two oversold conditions of <20, illustrating the bullish trend as it was the little pullbacks that caused these conditions. * See the first article in this series (linked to this article) *Look out for my upcoming article where i will discus what the above differences mean and what they imply price action will do in the next two weeks going into the UK EU Ref and FOMC .
by QuantumLogicTrading
5
GBPUSD OPEN - 100 PIPS LOWER; UNDERPRICED RISK = SELL PULL BACKSA disappointing open from cable with a bears perspective. Gapping down 100 pips to 1.435 almost immediately puts my sell limit orders (at 146.5) in "unlikely" territory of being hit this week. On friday following the $ EMP report cable managed to rally to 1.458 - i was hopeful it would tick a few more pips upward before the slew of selling started as we move further into FOMC and Brexit event Uncertainty territory. Reason being, i was looking for better/ safer levels to short at - cable at 1.465 is an almost CERTAIN trade (the ones i like) as the next daily support level isnt until 1.443 which means there was over 200 pips of 0 risk equity upside to be collected. Since we are already trading well below last weeks lows at 1.436, we will likely soon test the daily support level at 1.433 then 1.430. TRADING STRATEGY: SELL/ FADE ANY PULL BACKS IN A PYRAMID e.g. 1@1.450, 2@1.456 & 3@1.464! TPSL is discretionary.. i personally have my stops just above 1.48 (on my current shorts at 1.45as I will be holding until the 23/24th of june (to include the FOMC and BREXIT REF volatility) which at somepoint IMO will yield at least TP1.5x the amount of SL = 250/300pips. FOMC hike = 1.38 or 700pips; FOMC Hawkish = 1.41 or 400 pips; BREXIT uncertainty = 1.40-1 or 400-500pips; BREXIT YES = < 1.345. Thus the risks from 1.45 are certainly skewed to the downside for cable (upside for shorts) in my opinion. Above is my strategy for this week, given it is the last realistic week we will be able to add "risk-cheap" shorts to our portfolios (given FOMC is on the 16th and brexit ref on the 23rd). BUT given we have already started the week lower, I think the market has finally begun to price in the cheap risk hence the 100 pips lower - you will see in my previous articles i said to short cable anything below 1.45 - which is now 150pips of upside and looking good for more!
Short
by QuantumLogicTrading
USDJPY short Opportunity Maybe?As the rally in US stocks continue I taught it would be a good idea to look at the USDJPY since it has been getting beat on in the last few months due to the strengthening of the Japanese Yen. BOJ has introduced negative rates to cause devaluation but that is not working. Going back to Technical Analysis, we can see some support levels that USDJPY is approaching. I am going to sit back and see how this trade progresses forward. It could hit resistance at 105.508 in which if it closes below we could see a a re-tracement or a major draw down for the pair. Or we could see a retest of structure (resistance) and might open on opportunity to get short. Notice that we could be reaching a minor level of overbought so we could see some selling pressure from other traders. Tell me what you think down in the comments. Look forward to hear your taughts on the pair. FX:USDJPY
Short
by Thinkfund
Utilities (XLU) are toppish, correction expected.The XLU has recentlly reached it's high of early 2015 near $50 which seems to offer strong resistance. A double top seems to be in process. Elliott waves count of 5 waves is completed, a correction seems to have started towards the $46.70/$45.35 area, The wave III should just have started, a fast drop is expected. RSI (5) and MACD are showing beairhs divergence and the XLU-0.20% is trading far away from its 200 days SMA (at $44.30). The bond market is also showing a similar exhaustion pattern.
AMEX:XLUShort
by waverity
VVIX cheap, long volatility ahead of FEDVVIX represents the volatility of the VIX indicator, more precisely its the 30 day expectation of the VIX index which is the expectation of implied volatility in the SPX in 30 days time. Read more on this on CBOE's website. VVIX is mean reverting in nature, as it is as index and non-tradable it represents this mean reversion without market expectation building this into its price directly, some expectation will be implied from VIX futures market - and that whole "tail wags the dog" argument. I believe the VVIX is unusually low as can be eyeballed by the chart I have created. Despite the SPX coming off its all time highs and global discussions on NIRP, economic slowdown, migrant crisis, Oil crisis etc... For me this implicitly represents an under pricing of volatility risk protection, I can backup this confidence with looking at market Junk bond demands and Puts & Calls Open interest on the S&P500, relatively low put volume especially around the current market price. I am expecting a pickup in volatility as we approach the FED March 16th rate decision and this presents an opportunity to purchase exposure to volatility then profit from its explosive nature if the future looks a little less clear cut.
VLong
by MarcusWilliamson
USDCHF magnet at 1.0Market have found strong lowest point at near 0.7 prize zone and reversed. We can see how many times since 2008 price level of 1.0 shown strength as support and resistance as well acting like the magnet. Since 2011 market unfolded into slightly rising wedge with 2015-01 higher highs and higher lows. In 2015-11 market have closed monthly candle above 1.0 and next candle dip down to close just below 1.0. Is it a manipulation or the break through and retest we will see soon. In case that US economy is growing and show good performance results with intention to rise interest rates at the same time CHF have negative interest rates and deflation in economy we can consider that fundamentals support moves higher. For more detailed and more frequent ideas, reviews and analysis you can contact me here, on Facebook or website. Best wishes for new incoming trading year! ;)
by venckusarunas