dxy
Chart of the Day
“The stock market is never obvious. It is designed to fool most of the people, most of the time.” – Jesse Livermore
The low liquidity chop continues to be driven by CB policy and headline risk as we start to settle into the main part of this earning season. As usual, it’s very hard to call this kind of action, all we can do is continue to focus on some of the key dynamics driving the bigger picture view and levels. For the time being, we would continue to focus on intraday action in: financials, crude and the vix. More on this in today’s session…
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Wishing everyone a great weekend ahead.
Chart Update
“The greatest fear in the world is of the opinions of others. And the moment you are unafraid of the crowd you are no longer a sheep, you become a lion. A great roar arises in your heart, the roar of freedom.” – Osho
Today we will be reviewing 3 key charts we have been focusing on this week:
ES > all about the 2600 mark from a day and week close basis now as we wait for Powell to speak today. Don’t forget the Buyback Blackout Period and q4 Earning…
USDCNH > trade for the move back to the opposite side of the range is done and now it becomes very interesting. Remember that this is going to be key for a lot action across the board.
DXY > Moving along nicely for now. Focus will be on how we trade through Powell and how we settle this week but no change in outlook. Our Euro and Yen swings remain in play.
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Chart of the Week
“Your level of success in the world of financial markets is entirely up to you and has nothing to do with what the markets are doing. There will always be bull markets and bear markets. The occurrence of good or bad luck, if luck exists at all, evens out over time. Great success comes about as a result of commitment, a never-ending willingness to learn, steadfast determination, and that rare ingredient, a touch of humility.” – Clifford Bennett
Interesting week shaping up as the whole world should be back from the end of year break. We covered a lot in the latest Weekly Outlook > expect it to be posted here as an open access video sometime tomorrow. In the meantime, here is our chart of the week:
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Waiting for Powell
“It’s not how much you have learned, but how much you have absorbed from what you have learned. It is not how much fixed knowledge you can accumulate, but what you can apply livingly that count.” – Bruce Lee
First NFP release of 2019 but attention will be squarely on Charmian Powell. Will he save the markets? Is he going to stick to his guns? We’ll have to wait and see but the most important chart will be the DXY as the main focus will be on how he tackles recent suspicions that the FED will have to walk back the hiking cycle and possibly even have to start considering cuts…
We will be reviewing our recent and open FX swings and going through positioning in the DXY in today’s webinar session. Remember, as we have been discussing on various platforms, a lot of ‘air’ has been and is being let out of fixed income, commodities and stocks… we are looking at the FX markets as being the next in line…
No change in terms of our bigger picture view on indices. We will be reviewing our roadmap today along with the KEY implications of DXY moves and levels post Powell.
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Major Markets Weekly
“Success seems to be connected to action. Successful people keep moving. They make mistakes, but they don’t quit.” – Conrad Hilton
Here are the weekly charts for the 5 major markets as we start this new year.
Please remember that this week should still be treated as a lower liquidity holiday week. Furthermore, due to the current US government shutdown, it is still unclear if the scheduled economic data releases will go ahead as planned.
Essentially, we are right back where we left off at the end of 2018: a lot of complacency, uncertainty and plenty of headline risk.
Wishing everyone a great 2019! Remember to be realistic with your expectations, trade responsibly and focus on the bigger picture; this is a marathon, not a sprint.
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Early Morning Update
“Strength does not come from winning. Your struggles develop your strengths. When you go through hardships and decide not to surrender, that is strength.” – Arnold Schwarzenegger
As we discussed, there was absolutely no sign of fear in the markets and expected recent lows to be taken out and we are still focused on unfinished business at yearly lows. Once again, the pivotal bull/bear lines proved to be extremely useful in assisting us and we will continue to focus on them. Naturally we would never play for any market to move in a straight line and even if we get a flush and tradeable bounce, those levels will remain our key strategic guides. Primary downside targets are still 4-6% away on most of the indices for these current moves.
We also continue to expect both Nikkei and USDJPY to catch up to recent moves and expect to see plenty of two-way trading opportunity inside these ranges on the way to the bottom-end supports.
The other key chart going into this week, ECB and the upcoming FOMC meeting will be the DXY. We would be very cautious about trying to be aggressive trying to fade ans sustained move and continue to focus on EURUSD. Don’t forget to properly understand Euro weight in this and remember that in an aggressive risk-off environment, especially in the context of China frictions, AUssie and Kiwi will struggle. No change in our base-case outlook.
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Wishing you all a great day and week ahead.
Into NFP
markets managed another miraculous squeeze following yet another host of old headlines but still closed below the key pivotal bull/bear lines. We remain very suspicious of this action and are not seeing this as another key low that will trigger the famous santa rally for a move back into all time highs.
Naturally, especially into NFP, we still see a possible attempt to squeeze these back into proper gap fills but the real focus will be on how we close the day/week and not on intraday shenanigans. Both complacency and headline risks remains very high and we would not be fans on risk-on o/n holds.
The main key chart for NFp will be the dxy. We are still hovering around the 97 mark and unless we see a proper close above 98 of below 96 we will likely continue to see very choppy trading. As already discussed, this is the key piece of the puzzle and we will review our outlook and implications in today’s webinar session.
Remember that even if the usual suspects have been talking about capitulation and reversal, we have see zero panic in the markets. From current levels, unless you see the VIX trading above 30 but really, into the 35s and 40s, this is still pretty much a ‘nothing burger’.
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Early Morning Update
“What we can or cannot do, what we consider possible or impossible is rarely a function of our true capability. It is more likely a function of our beliefs about who we are.” – Anthony Robbins
Most gaps from the Sunday euphoria are done. As discussed in yesterday’s webinar, you have to be suspicious when every talking head, pundit and punter is absolutely certain of any given outcome. As a general rule, we have and will continue to fade these situations.
Our main focus remains on price and on how markets react are specific levels. Remember that this week will likely prove to be pivotal in setting the tone for action into year end.
Here are some of the charts we will be updating and discussing today (charts can be loaded by clicking on the bullet title):
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Nikkei and USDJPY breakdown, range and inflection point.
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Bigger picture Bull/Bear lines in ES/NQ/YM/RTY.
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GOLD $ DXY.
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EURUSD 1.13 rotation + seasonal pattern.
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ZB cyclical support inside chop zone.
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SPX still in range.
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NDX key inflection point.
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Crude, the 200WMA and waiting for OPEC.