gordonscottcmt

gordonscottcmt

It makes sense that interest rates in the U.S. would be correlated with a carry trade like the dollar/yen. But I wonder how many forex traders think to use this information to inform their USD?JPY trades. The positive correlation between bond futures (say the ZB contract), or even TLT and FXE while U.S. markets are open, is remarkable persistent in any time...

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The candles below represent a 60/40 mix of TLT and SPY, bonds and stocks. SPY (orange) and TLT (blue) by comparison show than neither asset class is helping to overcome the bad performance of the other. By comparison, moving money to cash (UUP) looks like it would have been a great short-term move against inflation.

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With the inflationary environment persisting in the U.S. the correlation between the US stock market and various currency pairs may be uncoupling. However, the EURAUD seems to be maintaining a mildly positive correlation to the S&P 500. If the bear market in U.S. stocks continues, this pair may gravitate towards a bullish trend. Currency traders will want to keep...

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RINF is an exchange-traded fund that tries to price inflation expectations. TIP is an ETF that tries to hedge against inflation. While both of these have flattened (or are falling), the CPI keeps rising. Could it be that even stocks won't be able to outrun inflation in 2022?

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If this line, the two-ten yield spread, reaches zero, then the markets will be forecasting a recession. This is yet another way of looking at the inverted yield curve.

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When a 50-50 Apple and Microsoft portfolio show relative weakness to the QQQ, it could be a significant short-term top. Did we just hit that?

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Gold and Silver drop as the Dollar rises. This has happened as investors have begun to shift expectations in the wake of the latest FOMC meeting. It's also happening at a time when producers, in all sectors, seem to be ramping up supply to meet consumer demand. Are gold and silver going through seasonal demand or is this yet another point of evidence that...

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Lumber prices are likely responding to increased supply. We can tell because not only is Lowe's (LOW) moving lower, but also Whirlpool (WHR) is moving lower in the same dynamic. Both of these stocks are components of State Street's Homebuilder ETF (XHB) and all of them are related to the price movement in Lumber futures (LBS). Since Whirlpool's appliances aren't...

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Investors seem certain that inflation is here and more is coming. But should they be? Consider this chart comparing different forms of Lumber pricing including LBS futures, Timber ETFs, and stocks (HD and LL) that are retail outlets for lumber. Lumber's dramatic rise is being followed up by a dramatic fall. LL may be a leading indication for lumber prices and if...

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In this weekly chart of stock sectors, it seems clear that investors aren't panicking and heading to Utilities. However commodity and inflation-sensitive sectors made a big pullback this week. This would seem to indicate that investors think the supply issues are going to be resolved soon, and that growth will happen with or without higher prices coming along....

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Paving the way for new highs on Nasdaq.

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Short sellers cleaning up on GameStop. Likely more opportunity for that ahead.

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Inflation taking a pause?

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If I could short SCHW right now, I would. Short-term trade only, but likely to go lower for the next one to two weeks as TNX fails to return to new highs. Modest profits available. But the bigger move is the bounce upward that follows.

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The 10-year is dropping. That wouldn't naturally combat inflation, so shouldn't it fuel the fire instead? More inflation means cheaper dollars. Cheaper dollars means more expensive stocks, so in general, if TNX is going down, shouldn't SPX be heading higher soon?

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While iShares' Russell 2000 index ETF (IWM) broke new highs and found support on the retest, the large cap benchmarks failed to make new highs, showing resistance instead. Something's gotta give. Since the 10-year broke support (inflation IS temporary) my guess is the large caps will soon follow the small caps higher.

gordonscottcmt Updated 

How will ETFs and Portfolio managers respond to CRWD after earnings. It seems they have been stepping away lately. Volume from the ETFs that hold the largest weightings of CRWD seem to be declining. Will be interesting to see if this predicts a drop after the earnings announcement.

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What would drive this stock higher? A favorable earnings report. Investors don't seem ready to give up on the company, but they may need a little encouragement.