Charts of the Day

“Do not permit the events of your daily life to bind you, but never withdraw yourself from them.” – Zen Proverb
Markets remain in grind higher mode as we wait for the last trading session of the week. There is very little edge in trying to fade these steady grinds, especially into quadruple witching.
Remember that today usually results in one of the most active trading days of the year. Furthermore, we will also see S&P and MSCI proceed to the re-classification/re-categorization of information technology and communications sectors and don’t forget that we usually to see tape bombs hit the wires in the latter part of these Friday sessions.
Could end up being a fairly sporty day…
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Wishing you a great day ahead.

 

Chart of the Day

“History doesn’t repeat itself but it often rhymes,” – Mark Twain
As discussed in the past and highlighted again in yesterday’s post, remember to keep an eye on the whole commodity complex. Our focus remains on Gold and the antipodean currencies, notably NZDUSD due to the very one-sided positioning. Furthermore, also in yesterday’s post, don’t forget to keep an eye on bonds. As usual, they don’t matter until they do. There could be a lot of collateral damage-snowball effect should we accelerate through yearly lows / rip through yearly high in yields, in a disorderly fashion.
ICYMI, you can check out our latest Weekly Outlook Video.
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Chart of the Day

“You have to take risks. We will only understand the miracle of life fully when we allow the unexpected to happen.” – Paulo Coelho
More of the same as wait for Mr. Market to sustain a serious move in either direction.
Interesting to note in the o/n session; China comments on them having no interest in currency manipulation and that this would actually be counterproductive. Keep an eye on USDCNH as this has  been a key driver of recent moves, not only in the FX complex but also in the metals. If we continue to see an unwind, especially sub 6.70s, then we could really see GOLD and Commodity currencies get some upside traction.
ICYMI, you can check out our latest Weekly Outlook Video.
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Wishing you a great day ahead.

Chart of the Day

“Faith consists in believing when it is beyond the power of reason to believe.” – Voltaire
As discussed, it’s hard to understand why anyone would want to be aggressively long risk in this kind of environment. Escalating trade tensions, event risk in the Middle East, difficult situation with Russia, more turmoil from Washington, weaker back-end September seasonals, buyback blackout period… just to name a few things. Markets remain extremely complacent.
ICYMI, you can check out our latest Weekly Outlook Video.
All about the Chinese response to the latest round of tariffs and overall follow-through today. Let’s see what we get.
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Wishing you a great day ahead.

Forex & Futures Outlook | 16/09/2018

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Chart of the Day

“Adopt the pace of nature: her secret is patience.” – Ralph Waldo Emerson
As markets continue to grind around at ATHs, we continue to believe that the next aggressive move will be to the downside. In today’s session, we will go through both recent warning signals and new warning signs that are appearing under the surface. The are more and more flashing lights and participants really have to be careful in what could easily end up being another vix-style-debacle.
On the currency side, as we have been discussing, the most interesting development is that the DXY short trade is trying to get some traction. The weekly closes will be key, not on in FX but also in the commodity complex. As we stand, the bulls still have reason to hold on to their view but if we get a little more downside traction, a lot will have to re-position.
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Chart of the Day

“Knowledge is an unending adventure at the edge of uncertainty.” – Jacob Bronowski
As we navigate headline risk and get ready for the BOE and ECB decisions, there is no change to what we discussed in our latest Weekly Outlook Video.
Equities continue to chop around at highs as we wait for the next catalyst for a proper move and once again, we reiterate, something has to give as this divergence between the US and the rest of the world will not continue ad infinitum.
The most interesting recent development is the DXY trying to get some downside traction as we continue to focus on the failure in the 96s and expect a retest of the 50WMA before we get more clarity on the bigger cyclical direction. We remain open to what price will tell us but as for now, we are still leaning to the downside.
Remember that there are a lot of stretched positions that still need to unwind if this DXY downside gets traction. Apart from the commodity complex, notably we had highlighted CHF and NZD with the former having played out and the latter still very much in play.
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Chart of the Day

“Nothing defines humans better than their willingness to do irrational things in the pursuit of phenomenally unlikely payoffs. This is the principle behind lotteries, dating, and religion.” – Scott Adams
No real change to what we discussed in our latest Weekly Outlook Video. We still have to see what we get out of the BOE and ECB as Global markets continue to trade with a heavy tone.
The easiest way to get a feel for where we stand is just to plot the daily charts of pretty much any market around the world and you will see that they are trading heavy below the 50/100/200 DMAs while US indices are still sitting close to ATH. As you can see in the chart of the day, the ‘two generals’ are still working hard to prop the US up.
Something has to give and we suspect that it will probably end up being down to some kind of headline but one thing is certain, this divergence between the US and the rest of the world will not continue ad infinitum.
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Wishing you a great day ahead.

Chart of the Day

“Do not spoil what you have by desiring what you have not; remember that what you now have was once among the things only hoped for. ” – Epicurious
ICYMI, please check out our latest: Weekly Outlook Video.
Once again, we expect this week to potentially be pivotal in confirming or invalidating the current cyclical moves that are trying to get traction. A lot of data on deck coupled with a busy Central Bank schedule and mounting headline risk should be the ingredients for some very interesting action.
Focus remains on the DXY and the tech sector where Apple and Amazon will continue to be in the spot light.
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Wishing you a great day ahead.