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European Gas March 2023: Bullish and Bearish FactorsThe idea has two parts: fundamental and technical analysis . The latter is based on the weekly chart. On the fundamental side , several essential and minor factors affect and could affect March 2023 price change. Let's divide them into three groups. Bullish : Russian shutdown of gas supply to Europe Russia has cut its European flows for the last months so that a total shutdown would be possible. Russian gas remains crucial for the European economy despite the American armada of LNG ships. Freeport LNG plant Restart Shift The company plans to restore the plant in January 2023. A possible postponement would support TTF prices in the winter season. Limitations of US Gas Exports Last winter, some US Senate members suggested limiting or prohibiting US LNG export. They estimated that the change would increase US gas supply for the internal US market, especially for New England, which is dependent on the import of gas from the gas-production states getting gas via pipelines and LNG. They said the prohibition would reduce high gas prices for customers and industry. In July, LNG winter 2023 prices for New England touched a record high of $40/MMBtu, while Henry Hub traded at about $8.6/MMBtu. I suppose that senators would return to the idea, especially since the US elections are in November. Although the risk is low, its realization could dramatically affect the TTF price assessment. Analysts and think tanks have considered possible Russian gas cuts but haven't accessed a potential US gas supply reduction. French Nuclear Plants Outages Since the end of 2021, the French nuclear industry has been weak with planned and unplanned maintenance. As a result, nuclear output has lost more than 40% YoY of its output. While serious issues are unlikely to arise, new minor obstacles could buoy TTF prices. Dry Summer The continuation of the European 2022 dry summer led to abbreviated hydropower production. On the back of hydropower reduction, natural gas-power generation increases its output and gas consumption, driving subdued gas injection into storage facilities. Subdued gas injection in summer means less gas for winter, creating a possible gas deficit. Bearish: Slowing European Economy and Demand Destruction High inflation induced by the monetary policy of 2020-2021 provokes a decline in real incomes and makes some industrial production unprofitable or near break-even. These debilitate aggregate demand, particularly industrial output of fertilizers, ceramics, and other chemicals. Industries that are heavily reliant on gas are cutting their gas consumption today. Lasting historically high gas prices would promote a decrease in gas utilization. The demand destruction could happen among all consumers: power, industrial and individual. A new recession is near. ECB monetary policy with a growing rate also adds problems to the economy. The rate is still tiny, but debt bubbles are sensitive to interest rate change. The bust of bubbles would drop economic growth and curtail gas demand pushing TTF prices down. Slowing world economy The world economy suffers from high prices losing economic growth momentum. A move into a recession would trigger a decline in gas consumption lowering LNG gas prices and letting LNG producers increase LNG sendout to Europe. Voluntary Demand Reductions of 15% and Gas Rationing Energy ministers of Europe adopted plans to voluntarily cut gas demand by 15% from August until March 31, 2022. In case of emergency, like near zero Russian flows, the voluntary reduction changes to mandatory. i.e., gas rationing. The actions could divert rising prices. Covid Lockdowns in Europe Europe has prepared different measures to withstand possible gas issues in winter. Besides voluntary reduction or rationing Europe could return to the lockdowns of 2020, when gas consumption dramatically went down because industrial production of goods collapsed. Since June 2022, the media has published news about a new variant of Covid. Countries could impose Covid-related limitations this fall. Unstable gas consumption and gas shortage would drive for a Covid or climate lockdown. A good measure to cut gas demand and destroy the economy. Covid Lockdowns in China Despite possible lockdowns of 2022-2023 in Europe, lockdowns in China happened in the last months and could be imposed again. An effect of prohibitions has hit the Chinese economy and cut gas consumption resulting in freeing up the supply for other consumers, i.e., Europe. New Chinese lockdowns would mean more gas for Europe. Joker : The joker that could be a bullish or bearish driver is the weather. They can't predict winter weather today. Lasting temperatures above season norms in winter could be a lifesaver for Europe, dropping gas consumption and its prices. Cold spells and lingering temperatures under the winter season average would lift prices significantly. Near-average temperatures would put the significance of the factor on hold. While in summer, it is vice versa. Temperatures above the norms slow gas storage injection and slightly increase a lack of gas risk in the winter season. On the technical side , there are no resistance levels cause the contract is traded near its record high. Only psychological levels like €200/MWh , €300/MWh , and higher. On the bulls' side, there are many support levels. For those practicing buy a bounce trading , essential levels are €125/MWh , €100/MWh , and €86/MWh . The last one developed in the December 2021-April 2022 period. I estimate that Gazprom made a significant contribution to its existence. Gazprom's export price to Europe, which was pegged to a fusion of lagged prices of fossil fuels, including TTF, was near to €86/MWh . So when the market price rose significantly above the level, market participants cut their demand because Gazprom sold cheaper. When the price tried to break through €86/MWh and went down, Gazprom trimmed its flows to Europe. All in all, this helped the company to control its revenues on the same level. Since then, it has not been the case because Gazprom has changed its approach. Finally, I am afraid to forecast the price on the expiration date. I suppose the price would remain volatile, and we could see spikes above €200/MWh in the winter season. Thank you for your reading, and have profitable trading! Comment your thoughts!
T
by Nikita_Kalinin
Fundamental and Technical Analysis | FebuaryTable of Content: 1. Eurozone Inflation Data 2. US Economics Growth 3. NVDA 4. Commodities 5. Technical Analysis 1. Eurozone Inflation Data The Eurozone's inflation for the month of January has exceeded the previously estimated figures, as reported by MarketWatch on February 23. It has been emphasized by policymakers that the economy is undergoing a disinflation process, and a soft landing has been achieved. However, the recent surge in inflation within the European Union implies a substantial escalation in interest rates. 2. US Economic Growth The US economy experienced a less robust economic expansion than previously estimated in the fourth quarter, as evidenced by a downward revision in consumer spending. This adjustment has resulted in weaker economic growth (Bloomberg). The total amount of outstanding credit card debt in the United States has reached $986 billion, with an average interest rate of 20%. This marks the highest level of credit card debt since the 1980s and translates into an interest payment of $200 billion per year. These figures do not include other forms of debt such as mortgages, student loans, and car loans, which are likely to exacerbate the situation. At the same time, the US government is paying over $200 billion in interest payments The Personal Consumption Expenditures Price Index has risen from 5.3% to 5.4%, however, this data alone is insufficient to support the notion of disinflation. The Gross Domestic Product (GDP) has been revised downwards from 2.9% to 2.7% (a decrease of 0.2%) from the preceding quarter. According to Bloomberg, the US economy experienced a weaker expansion than originally projected. Revised fourth-quarter inflation figures have been adjusted upward. Additionally, JP Morgan's Jamie Dimon stated that "The Federal Reserve has lost a little bit of control of inflation". He has been warning about the economy for a while and I believe that he knows something is cracking as we speak. 3. NVDA The stock price of $NVDA experienced double-digit growth. The stock price has risen by 100% since the beginning of the year. Revenues and profits have both decreased by 21% and 52% respectively on a year-over-year basis, and every segment of the business has exhibited a decline over the same period. The CEO placed significant emphasis on the importance of Artificial Intelligence, yet he sold stocks worth over $100 million prior to the market's significant downturn and may presently be engaged in additional sales. 4. Commodities The statement suggests an anticipated appreciation in the value of the US dollar, which is reflected in the downward movements of gold, silver, platinum, copper, and various grains such as corn, rice, and soybean. Conversely, energy commodities are experiencing an upward trend, with natural gas exhibiting a significant increase. 5. Technical Analysis The 21-day weighted ratio of equity-only put-to-call options is suggestive of a preponderance of puts in the market and indicates a significant degree of buying pressure. This metric has demonstrated a high degree of efficacy in identifying market highs and lows by suggesting a move in the opposite direction to the put/call ratio. Notably, during the present bear market, the ratio has achieved a 100% success rate. Furthermore, the current volume of call options is the highest on record, and retail investors are contributing $1.1 billion daily to the market. -Momentum indicators: RSI and MACD moving downwards and volume remain below average (bearish) As previously stated, " I will take the opportunity of a rise in equity markets to short BTC at higher levels". I have now filled all my short position on BTC in a confident manner. Below is my BTC outlook Conclusion: The recent market rally, spurred by technical indicators, high-quantity puts, and government emphasis on disinflation, has led to a surge in retail investment. As a result, prices for some assets have skyrocketed, and the quantity of long positions in the market has reached alarming levels. This suggests an overabundance of buying and a lack of liquidity that could cause the market to dip and potentially result in retail closures, as inflation has proven to be more persistent than anticipated by governments. I remain committed to my long-term investment plan, I am acknowledging the growing fissures in some economies that could lead to a catastrophic downturn. It is essential to remain vigilant and prepare for potential market turbulence in the future. As previously mentioned, my portfolio consists of short-term bonds, USD, SPX shorts, BTC Shorts, small quantity gold, and just acquired Natural gas contracts. For personal records but feel free to discuss or argue.
CME_MINI:ES1!Short
by ssavi
Value, Growth or neither?Looking at equity markets as a conflict between Value stocks and Growth stocks has become a reflex for many market commentators. ‘Growth is beating Value’ (or the other way around) is always a good headline. Value stocks are defined as basically cheap stocks and it is, therefore, possible in any index, to point to the Value side of that index. Growth stocks are defined as stocks with above-average growth prospects. So again, it is possible to look at an index and point to the growthiest stocks. The main index providers have done exactly that by splitting their main indices in two down the middle, a Growth and a Value version, as early as the 1980s. Using Value and Growth to explain the last ten years While simplistic and playing into human’s love of false dichotomies, it is true that this narrative explained the last ten years of equity performance pretty well. From the overwhelming domination of Growth stocks, in a negative interest rate environment where investment was cheap, to the start of a Value revival last year, on the back of the most aggressive tightening cycle in decades. What about the other factors? Didn’t Quality perform better over that period? However, most things in our world can’t be reduced to a simple choice. Academics have demonstrated over the last five decades that multiple other factors can be used to slice and dice the markets to create outperforming portfolios. In the 90s, Fama and French introduced their 3-factors model using Value but also Size and Momentum to explain market returns. More recently, they added Profitability (often called Quality) and Investment in a new 5-factors model. Looking at the performance of the seven leading factors over the last ten years, we note that while Growth beat the market by 1.6% per annum and Value underperformed by 1.9% per annum, the strongest factor was, in fact, Quality with an outperformance of 2.3% per annum1. Is Quality Value or Growth, then? Using Quality as a third lens, we observe that companies in the Value index are, on average, less profitable than those in the benchmark, and that those in the Growth index are, on average, more so. 23% of the S&P 500 Value exhibit less than 10% in return on equity (ROE) versus less than 5% for the S&P 500 Growth. And 25% of the S&P 500 Growth has more than 50% in ROE versus less than 5% for the Value index. However, what is fascinating is that in the Value index, there are still some very profitable companies and in the Growth index, there are still some unprofitable companies. In other words, the Value/Growth dichotomy is very different from the High Quality/Low Quality one. The market could therefore be split not into two indices (Value and Growth) but into four: High-Quality Value High-Quality Growth Low-Quality Value Low-Quality Growth Historically, High-Quality Value has outperformed High-Quality Growth Using academic data, it is possible to splice US equity markets since the 60s into groups by fundamental data. In Figure 3, we focus every year on the 20% of the universe with the highest operating profitability (that is, High Quality in Figure 3). That group is then split into five further quintiles depending on their valuations (using price to book (P/B) as a metric) from the cheapest to the most expensive. We observe that picking profitable companies with high P/B would have outperformed the market since the 60s but would have underperformed profitable companies in general. On the contrary, picking cheaper High-Quality companies would have outperformed both the market and the overall High-Quality grouping. In other words, Quality Value has outperformed Quality Growth over the last 60 years in US equity markets. Looking at other geographies, such as Europe, we find similar results. At WisdomTree, we believe that a well-constructed Quality strategy can be the cornerstone of an equity portfolio.High-Quality companies exhibit an ‘all-weather’ behaviour that offers a balance between building wealth over the long term whilst protecting the portfolio during economic downturns. However, in 2022, secondary tilts were incredibly important. Value stocks benefitted from central banks’ hawkishness, leaning on their low implied duration to deliver outstanding performance in a particularly hard year for equities. Among Quality-focused strategies, the one with Value tilt delivered outperformance on average, and the one with Growth tilt tended to underperform. Looking forward to 2023, recession risk continues to hang over the market like the sword of Damocles. While inflation has shown signs of easing, we expect central banks to remain hawkish around the globe as inflation is still very meaningfully above targets. The recent coordinated communication plan by Federal Reserve Federal Open Market Committee members is a further example of this continued hawkishness. With markets facing many of the same issues in 2023 that they faced in the second half of 2022, it looks like resilient investments that tilt to Quality and Value that have done particularly well in 2022 could continue to benefit. Sources 1 Source: WisdomTree, Bloomberg. From 31 January 2013 to 31 January 2023. Growth is proxied by the MSCI World Growth net TR Index. Value is proxied by the MSCI World Value net TR Index. Quality is proxied by MSCI World Quality net TR Index. The remaining 4 factors (Min Vol, High Dividend Small Cap and Momentum) are also proxied by indices in the MSCI families.
NASDAQ:NQFFUSQ
by aneekaguptaWTE
NN: Biggest daily H&S ever and €250 million new share buyback.After posting a more than 14% drop in 2022 operating profit (1.74bn), missing market estimates of 1.84 bn, and even though its operating capital generation (OCG) jumped 8% to 1.71 billion euros last year mainly thanks to higher interest rates and a strong business performance of the Netherlands Life and Insurance Europe segments; the company is shaping the biggest H&S pattern I have ever witnessed in a stock. Besides, NN also announced a new share buyback programme of 250 million euros. Will they implode due to share buybacks that will materialise into negative returns in the near future? At this pace, all those companies doing share buybacks will be the most damnified of the market due to an increased own capital at the wrong time. And it is a pity because this company has really attractive fundamentals, but after the operating profit miss in 2022 and the imminent recession all media is talking about, it is currently very risky to invest in it. But I will keep it in the radar as 35.6€ is the first support while 45€ is the first resistance.
EURONEXT:NNShort
by alexinve
25 year monthly study of ESAnnotations included on the chart: This chart is essentially demonstrating just how far the market is capable of pulling back. The chart includes key levels and the years of notable highs / lows as well as + / - rejection boxes showing where price pivots as well as how perfectly, years later, price is capable of traveling far distances to perfectly tap back into an old rejection block. Most notably the 2020 pullback that perfectly filled the small rejection block created when price was finally able to make a break above in 2016.
CME_MINI:ES1!Short
by puapwr
Alt Coins in need of liquidity Let's skip the whole macro and interests rates stories. The last crypto pump was pure market manipulation in order to floor the "whales" entry price. It was a pretty big short squeeze caused by released of sell positions as seen on the derivative open interest. Without explaining all the concept of liquidity, the market is in need of more cash. The whole short squeeze leg left hanging a whole lot of orders, in what is called : gap. Based on the common sell off pattern. I already took a short positions and I am waiting for a upside retracement to take another entry. The imbalance or gaps can act as a S/R and these zones will acts as my T.P Remember this : Market moves from liquidity to liquidity. PSA. Knowing how crypto moves in harmony between coins, I simply choose the charts that feelt more comfortable.
by Ant2ny
1
S&P 500 Are we about to drop it like it's hot?Tracking our wave count for the S&P 500 we could be about to drop hard this week, with CPI reports due out on Tuesday and the Fed due to deliver another hawkish statement on Wednesday we could be entering into the wave 3 of C which will be a very sharp move and will demolish a lot of wealth in a very short space of time. We will move away from the narrative of inflation peaking and into a new narrative of inflation not dissapating as quickly as hoped. In turn the Fed will have to keep interest rates higher for longer than anticipated (which they have signalled in the past few meetings). This is likely to scare investors out of stocks and into cash, namely the dollar. The 'bullish' move up that topped on the 1st of December was just a counter trend rally (completing wave 2 of C) and was designed as such to convice traders/investors that the bottom is in and we are heading to new highs, drawing in the bulls only to swing rapidly to lows not seen since the covid crash. We feel a conservative target for this wave 3 of C would be circa 3200, a very nice 750 points of profit from current prices.
CME_MINI:ES1!Short
by RAA_Trading
A Recession vs a Bearish Correction The bitter memory from 2008 still persists in our minds, or at least in the minds of those who witnessed first hand what a Great Recession is. In 2008 many variables were set and many gears were in motion. Long story short, even though the media has attempted to call a recession, or to spread the fear of the bear among the people, which technically yes, it is a bear market by definition, it is not a recession, just yet. We’re in a hiking rate environment, and still the major indexes have managed to find support on the long term moving averages. Comparing the levels and the moving average crosses today and in 2008, the main difference we find is the levels did cross down and the trend was officially bear. Afterwards a capitulation took place and the macroeconomic variables changed to provide the environment for a rebound and a reversal which gave birth to this secular bull market. We’re not at the capitulation level, the volume has been steady and we’re on the bullish side of the trend. What did we just witness? A bear leg, basically a painful correction. The indexes are turning to the upside, the market took profits and the VIX scratched above the 20 level. We’ll probably see more selling because we’re in the take profit part of the short term cycle. We’ll see how deep the market is willing to dive, but the positive momentum divergence and the back to the green of the indicators show the intent to go for a bullish leg. The target area is at the 4500-4600 level.
SP:SPXLong
by Madrid
2
SPY Uncertainty High as Trends CollidePrimary Chart: S&P 500 (SPX) as represented by SPDR S&P 500 ETF (SPY) 1. SPX and Recession A recession is exceedingly likely in the near future. It could officially begin next month or in 4 months. But does that mean bears should be rewarded by a straight-line decline to new lows? Sadly not. Unfortunately for market participants, the S&P 500 S&P 500 ( SP:SPX / AMEX:SPY ) has confounded bulls and bears alike in recent months. Since June 2022 lows, SPX has traded substantially within the 3800-4000 range (380-400 SPY). After last year's lows on October 13, 2022, SPX rallied hard into mid-December 2022, only to be rejected at its down TL from its all-time highs. Down trendlines are one way of gauging a trend, especially the more times that price touches the trendline and reverses, showing it is a valid and effective dynamic boundary for market prices. When price was rejected from the mid-December 2022 highs (on December 13, the date of that month's FOMC presser), it fell rapidly into the 3800 SPX / 380 SPY range. Then it spent over two weeks within that range doing price discovery before breaking out and retesting the downward trendline (from all-time highs) this week. Many bulls called for 4100 SPX / 410 SPY saying the lows are in. Bears furiously covered shorts. Then bears were rewarded late this week as bad macro data started to be respected by the markets. But will bears continue to be rewarded? Just because a recession looms does not mean prices must go straight to new lows. Yes, they might, and they could very well do so, especially with the Fed not backing off much at all. But price could also find a reason to squeeze shorts one last time before heading to new lows. Be prepared for anything. 2. VIX Signals VIX told us earlier this week that the S&P 500 ( SP:SPX / AMEX:SPY ) was in a precarious spot. A multi-year trendline on VIX lies just below where it closed Friday, January 13, 2023. This trendline provides major support at approximately 16.80 to 17.00 on VIX, and VIX closed at 18.34, its lowest level in a year (specifically, the lowest level since January 2022 when SPX had just finished making its all-time highs). However, VIX remains within a downtrend, subject to a trendline that has contained VIX levels since they made their most recent peak at mid-October 2022 lows. Until this downtrend is broken, clarity on the next trend leg in SPX will be difficult to find. In the VIX chart below, notice the yellow downward trendline containing VIX peaks more or less. And the pink line is the long-term upward TL that has provided long-term support. Some say TA cannot be applied to VIX. Strong opinions exist on both sides of this issue. Some of the best technical analysts serving institutions apply TA to VIX, and others do not. Supplementary Chart A.1 To those who are skeptical, SquishTrade would ask whether you would bet against the long-term upward TL each time VIX levels have reached it. In other words, would you sell vol when VIX fell to its very long-term uptrend line? Each time it has done so, it has moved back higher off that line. See Supplementary Chart A.2. Supplementary Chart A.2 3. SPX Triangle A triangle is a consolidation pattern. The Primary Chart above shows the current triangle that has formed. It is essentially a collision between a 3-month uptrend and a 13-month downtrend (lasting over a year since January 2022 highs). So long as price remains in this triangle, uncertainty about the intermediate term direction will likely remain high. Many triangles have arisen this year, and each one has led to new lows. This one may as well, as the yield curves and macro data support this outcome. But price could whipsaw out the top of the triangle for a month or two before heading to lows. All possibilities remain on the table. Expert Elliotticians have continued to change their wave counts as the year has progressed. This does not mean they are bad at their craft—it simply may point to the challenging nature of the price action. In the intermediate term, direction remains murky given the collision between these two uptrends. Ultimately new lows should be formed. But will a powerful rally rip higher to trap bears first? Will price action whipsaw around after a triangle breakout before figuring out a recession is coming and the Fed won't come to the rescue as quickly and spectacularly as in the past? These are the questions that many are trying to answer. This post contains no short-term directional bias—it's too close to call. So despite the powerful rally off October 2022 lows, and despite the powerful rally off late December 2022 lows, and the rapid decline this week, price remains stuck in a very large triangle on the daily chart. See Primary Chart. Notice how the edges of this triangle align in early February (right around the FOMC meeting) at key Fibonacci levels. See Supplementary Chart B.1 The smaller blue circles point to key pivot levels at 3800 SPX / 380 SPY and 4000 / 400 SPY. The larger blue circle shows the apex of the triangle and the (compressing) range it covers from 388 to 396 / 3890-3970 SPX, where price may remain for a bit longer. Supplementary Chart B.1 Here is an additional chart showing the Fibonacci levels a little more clearly. The key .618 retracement of the August-October 2022 decline lies at 399.79 SPY / 4000 SPX. Above that, a .786 retracement lies at 402.85 SPY. These now are both outside the downward trendline. If the downward trendline is adjusted for the whipsaws in mid-December 2022 (yellow downtrend line chart below), these key Fibonacci levels could be tagged within the "adjusted" down trendline. To the downside, notice how multiple Fibonacci levels come in right at 380 / 3800 SPX. This seems to be a line in the sand, also from a support perspective. When 3800 is decisively broken, watch out below for a new low. Supplementary Chart B.2 Note the 200-day SMA which has been widely discussed in financial media over the past week as it was tested yet again. This 200-day SMA is the magenta EMA in Supplementary Chart B.2. 4. Anchored VWAPs The anchored VWAPs—anchored to key swing highs and lows since June 2022—align quite well with the lower boundary of the consolidation triangle discussed, especially as more time passes and that lower boundary (an uptrend line from October 2022 lows) rises. See Supplementary Chart C.1. The VWAPs show a support range of 3870 to 3900 SPX / 836-388 SPY. If these are broken decisively, watch out for the upward trendline as it may break too. If these are held, as they have been so far this week, uncertainty remains high. Supplementary Chart C.1 VWAPs also show confluence with two key Fibonacci retracements, the .50 retracement and the .618 retracement of the recent rally from December 22, 2022 to January 17, 2023. Supplementary Chart C.2
AMEX:SPY
by SquishTrade
8
$ZN_F: Bonds have bottomedI think we have a low risk trade here, buying bonds until March 17th or so. Weekly trend is up, until said date, and could after that form a new consolidation and new continuation pattern over time if my view here is correct. Definitely a good idea to have some exposure to bonds, I personally opted for buying OTM calls to ride this signal, but you could use futures or ETFs as well (or just buy the actual bonds). Best of luck! Cheers, Ivan Labrie.
CBOT:ZN1!Long
by IvanLabrie
1
Bitcoin long term outlookFirst outlook on previous analysis turned out to be wrong, but the overall idea is very much valid: BTC is now hanging around supply area/886 retracement level and losing momentum, RSI showing heavy divergence. I wouldnt't expect prices to go balistic in 2023 with recession coming and goverments doing all kinds of crazy stuff. This could very well be the top of the "bull trap", "fake out" or however you wanna call it. In case we break 25k, 30k would be pretty much guaranteed, but i still excpect a sub 10k Btc within the year. Remember the market will always gear towards the maximum amount of loss for the max amount of people, I would argue that a sub 10k BTC would be almost a sure thing if we get to 30k as the top of the fake out, just cause it would be such a loss for most people. Always working level by level and taking action based on what the market tells me and not my feelisngs. I would only enetertain the possibility of the bottom having been 15k if we break above 30k, until then this is the plan.
KRAKEN:BTCUSD
by Filipe_forner
Can Dow Jones Rise Above Falling Trend Line?It's FOMC day! The markets have already priced in the 25bps rate hike so Powell's speech will be the most important thing today. A dovish Fed can help Dow Jones break the falling trend line and finally see acceptance above the resistance level of 34000. While I'm expecting a dovish speech from Powell today, the inflation fears are slowly fading away and recession fears are taking over, so in this environment, it's best to trade with minimized risk on stocks.
TVC:DJI
by egegonulcan
Copper is Screaming! Are you listening?Why is Copper so important to track and what can we learn from studying its price action. Copper simply put is the most used base metal in the world and really powers every aspect of world. Doctor Copper is telling us something. Copper has had an impeccable rally of the lows, this has been confirmed with the major rally in copper mining stocks. In this chart we have overlayed the inflation rate in orange with the price action in copper. The inflation rate has a delayed reaction based off of the price action in Copper. What we can observe recently is the price of copper topping 112 days before the inflation rate. Copper had a significant decline which was followed by a decline in peak inflation. Over the last 148 days, Copper has rallied 38%. Could this mean that we are about to see a delayed spike in the inflation reading?
CAPITALCOM:COPPER
by Trading-Capital
2023-2024 Forecast - from Dow Jones 2000-2002 dot com RoadmapThis is a chart of the Dow Jones 2000-2002 dot com bubble market overlaid on the Australian share price index, but really, this Dow Jones market could be laid upon a number of U.S. indices and you would still find a high level of correlation. The forecast dates are unlikely to align. The overlaid will need to be pushed and pulled forwards a backwards by a number of months to achieve 1, 2 or possibly 3 'best-fit' potential outcomes. The major low is generally more likely to aligning with a secondary low (a low just before or after the major low), or possibly one of the highs between the lows.
OANDA:AU200AUDShort
by U2Rinfinite
Making Hay in the Land of the Rising SunLong Japan; Short US. Market conditions exist for Nikkei-225 index (“Nikkei”) to remain resilient over the next quarter relative to S&P 500 (“S&P”). BoJ's unflinching commitment to negative rates benefits Japanese firms with a weak Yen. Meanwhile, worsening economic conditions in the US with feeble growth outlook and likely recession could send S&P lower. This case study illustrates a spread trade between Nikkei and S&P to extract positive yield with compelling upside and limited downside. Entry at 7.011 with target at 7.402 and stop-loss at 6.787. TAILWINDS SUPPORTING NIKKEI In a year of crumbling global markets, Nikkei has shown remarkable resilience. YTD Nikkei is down 6% relative to 18% decline in the S&P. Three reasons why: 1. Consistent low interest rates in Japan: Loose monetary policies inflate asset prices. Thanks to a benign monetary stance from the Bank of Japan (BoJ), Nikkei has been and continues to benefit. The BoJ has set its short-term rates at -0.1% and long-term rates at 0%. 2. Weak and weakening Yen: YTD 2022, the Yen is down 20% relative to USD. This helps boost profits for Japanese firms. While most central banks have gone hawkish, the BoJ is resolute in keeping its monetary policy loose. A weak yen makes Japanese assets cheaper. Rising demand for real estate, and a policy framework that incentivises foreign investment boost capital inflow into Japan (e.g.: TSMC new plant in Japan). 3. Pent-up tourism demand boosting travel industry and local spending: Easing pandemic restrictions and opening of borders unlocking pent-up tourism demand is turning the outlook of tourism industry bright. NIKKEI TECHNICALS Since October, Nikkei has rallied 11% to its peak on November 25th and 6.5% to its current levels post correction. The index sits gently above its 200-day moving average which perhaps serves as a support. The stochastic indicator is at 7.4 suggesting that Nikkei may be oversold and positioning for an upward correction. HEADWINDS FACING S&P 500 While Nikkei sets to soar, S&P appears feeble. US outlook is bleak with structural shifts pointing to slowing demand and job losses. Hawkish Fed with its stance on raising rates to fend off still hot inflation is likely to tip US economy into recession. a. Growing Recession Fears Recession looks likely after FOMC rate hike last week. As Chair Powell remarked, while a soft landing was still possible (skirting a recession), the runway for that was becoming shorter. Fed's stance remains firm and rightfully so. In the last eight (8) rate hike cycles, not once has the Fed eased until inflation print came lower to Fed funds rate. Expecting more rate hikes in 2023 creates downward pressure on the broader economy and the S&P. US growth outlook for the next year is a mere 0.5%. About 1.6m more could go jobless. In a sign of growing weakness, last Friday, Goldman announced 8,000 staff retrenchment comprising 8% of its workforce. b. Shrinking Consumer Spending Uncertain outlook makes consumers wary. Wary consumers spend less. Forecast by Walmart point to structural weaknesses. Weak retail sales are starting to show with no relief signs in sight. c. While King Dollar has lost some shine, it remains strong The US Dollar is enjoying a solid performance in decades. Flight to safety amid a world faced with poly-crisis and compounded by a hawkish fed committed to controlling inflation, the dollar remains king. A strong dollar is not necessarily good news. Rapid dollar ascent has made US goods & services less attractive hurting offshore earnings for the US firms. TECHNICALS FAVOR NIKKEI OVER S&P Notwithstanding the above, S&P is up since October rising nearly 20% to its peak on December 13th and 11% to current levels. However, unlike the Nikkei, the S&P is trading below its 200-day moving average which seemingly is impeding as resistance. S&P fell below its ascending channel suggesting that the rally might have lost steam. INSIGHTS FROM COMMITMENT OF TRADERS REPORT As seen in the CME Commitment of Traders Report, Hedge Fund positions vindicates our outlook for Nikkei and S&P. Over the last 12 weeks, hedge funds have increased their net short positions by 34% in the CME's E-mini Futures and Micro E-mini futures . In sharp contrast, during the same period, these participants have increased their net long positions by 18% in CME Nikkei USD and Yen Futures combined. TRADE CONSTRUCTION Spread trades using futures require equal notional exposures across both legs. With S&P at $3,852, one lot of CME's Micro E-Mini contract provides $19,260 in notional exposure while each CME's Nikkei USD futures contract gives $136,160 exposure. At current levels, equalising notional value requires 7 lots of Micro E-Mini S&P futures for each lot of CME Nikkei Dollar Index Futures . One (1) lot of long Nikkei 225 futures is required to offset against Seven (7) lots of short Micro E-Mini S&P500 futures . Entry: 7.013 Target: 7.402, Potential Profit: $7,783 Stop Loss: 6.776, Potential Loss: $4,177 Reward/Risk Ratio: 1.86 When Nikkei outperforms S&P500, the spread trade delivers positive returns. Outperformance could manifest in one of three ways: (a) Nikkei rises while S&P falls, or (b) Both Nikkei and S&P rise but Nikkei rises more than S&P, or (c) Both Nikkei and S&P fall but Nikkei falls lesser than S&P. If the reverse of these three scenarios occurs, then the spread trade loses money. MARKET DATA CME Real-time Market Data help identify trading set-ups and express market views better. 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 DISCLAIMER Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. This material has been published for general education and circulation only. It does not offer or solicit to buy or sell and does not address specific investment or risk management objectives, financial situation, or particular needs of any person. Advice should be sought from a financial advisor regarding the suitability of any investment or risk management product before investing or adopting any investment or hedging strategies. Past performance is not indicative of the future performance. 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CME:NKD1!Long
by mintdotfinance