Morning folks, short and sweet this morning as this is something new I want to do each Saturday morning my time, after the close of Business In New York and the week’s end.
Basically when I sit down to think about what I want to say and what I’m thinking for the weekly I also run a heap of spreadsheets with charts and lots of data. I also run my simple system spreadsheet which generates the signals which I then put into the daily note. .
Folks I’m sure you’ve notice that for all the rhetoric I write on Money and Markets, Geopolitics and Economics each day it’s the charts and system which is often the key decision tool for me.
The reason I spend so much time on the macro rhetorical side is because when the techs and the rhetoric line up it’s usually where i make the big plays.
Anyway this is a long winded way to say that each Saturday you’ll now get a dedicated short note on my Positioning thoughts and the system. This, I hope, will then allow you to have a look at your own charts and protocols and see where maybe my thoughts and system accord with OR CHALLENGE your own.
I hope then this is where I can add real value.
There are plenty of moves this week and they speak to a USD under pressure and a continuation of the risk rally. That means my medium/long terms bonds rhetoric is being overpowered by the price action.
As at CoB NYC 12042019
The buy or sell represents the current positioning of the system. Green means change in MACD direction and thus a signal to generate an order.
Orders are based on the break of the relevant level from the previous bar. Simplest is High or Low of the previous day.
But in choppy markets I often suggest that a second bar of confirmation is required to trigger the actual action
Positioning Thoughts – 13 April 2019
These are the core views impacting markets and suggesting positioning. Please note changes on any given day will now be in PINK
The Fed was pretty dovish and has signalled the hurdle for a rate hike is much higher than that for a cut. For the moment the outlook expressed by various Fed speakers and the Fed itself is one of patience and data dependence.
The Fed has been joined in its dovish tilt by major central banks across the globe. The ECB and maybe the RBNZ are the most dovish, but the tilt globally reflects genuine concern not to allow individual countries and the globe to tip into recession. That risk has receded a little because of this central bank dovish tilt. Central banks, no all of us, are watching the data.
Using the S&P 500 as the bellwether – The weekly JimmyR trend indicator remains up and price remains above both the 15 and 30 emas reinforcing that uptrend. I’ve written recently that we might see higher prices if for no other reason than technically support is holding. Earnings season kicked off with a JP Morgan induced bang and was aided by some good news from Disney and a big M&A transaction. So we are above 2,900 on the week’s close of the S&P 500 for the first time since September 2018. We’ll see how it goes, and there may be setbacks – but for the moment the daily and weekly trends remain up. As uncomfortable as that may be. Rhetorically though it still feels like a time to lighten longs, own puts, and drag stops up close me thinks. Maybe own puts for a month.
Important STOCKS and RISK editorial: This is a most hated rally with my twitter feed polluted by folks who want to be right rather than make money on the swings. So, don’t get too bearish folks, we will if we need to, but don’t be a rusted on bear ( or a bull for that matter). My sense is we need to trade lower eventually to find support. But if it comes in then the outlook will brighten. Trading is about making money.
CHINA and GLOBAL GROWTH:
China is stimulating – that is is positive and the market is reacting to the less awful data flow. The China CESI score is back in positive territory at 31 having improved sharply in recent weeks.
Global growth is slowing, the IMF said in April that whereas a couple of years back 70% of the globe was growing now the reverse is true. This should be a big handbrake for risk assets but is mitigated by the central bankers dovish pivot. But no one cares at the moment.
I believe strongly the Fed’s pivot can extend the expansion beyond where the recessionistas say it will end. As readers know I have a very “RBA” and Australian take on this.
The USD is just in a big old range and has again reversed off the top of that range in DXY terms and the bottom in Euro terms – key levels that need to break for the eventual big USD surge are 97.70/98.00 and 1.1165/85 in DXY and EURUSD terms respectively.
I need to see the USD do better against the SGD, CNY/H, and CAD before I get too excited the break is coming. Indeed the downside for a test of support seems much more likely first. This has allowed Euro and others to lift and the AUDUSD (recall my heretical thoughts) to test very important downtrend resistance.
Structurally I’m a USD bull, but at the moment it is under a little pressure – still in these ranges though
I am structurally a bond bull at present. But the price action in the 10’s bears watching. I’ve been happy to be long at 2.55% structurally but recognise the weekly close at 2.57% could easily see rates 10/20 points higher before the buyers come back.
Here’s a response in a conversation I had with a Sub yesterday on Twitter who called me out for cognitive dissonance on not being a recessionista but still liking bonds.
“It’s a question of time frames as usual – Trading or investing??? Today, this week, this month, this year, next? – different answers Stocks dip, bonds rally – we could see that Close above 2.55% and we may see 2.82% again… But lowflation equals value in FI, just about entry”. That last bit is the key, but tactically it might be better to see where stocks and thus bonds go as this reflation trade right no gains traction.
Gold and silver seem to have a lot of support in the investment community – after the next big collapse that is as Jim Rogers told Anthony Cruedele in his podcast recently. Short term though they do look on the brink of a decent dip. But the levels have to break. Until then we’ll have a rangey period now for a while before the next trend re-emerges. Big old range – $1275/$1330 – or the start of a big fall? Jury is out at present. Watch $14.85/90 for silver.
Copper will like have a deficit market in a couple of years. And having bottom out at a very long term trend line a few years back the overall market looks constructive. Nearer to hand the price action is such that it has climbed back toward resistance. But it needs to break $2.98/3.02 to really kick higher. Otherwise wide sideways range.
Oil’s uptrend looks set to be tested as the Russians seem to have settled on an increase in production and not wanting prices to push as high as the Saudis seem to want them. That’s seen momentum stall in Crude but with the overall uptrend still intact. Falls of $2-4 a barrel may be in the offing to see if that trend can hold.
Medium term if we haven’t seen the peak it looks close and a decent pullback may be in the offing.
Have a great day
@gregorymckenna on Twitter
|The Information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any particular trading strategy. Readers should seek their own advice. Reproduction or redistribution is ONLY allowed with permission. Please speak to Greg McKenna to obtain same.