What do you see

Going back to basics is a good process reminder in the macro businesses every once in a while. Reviewing one's long held beliefs, areas of strength and taking a simple view of the macro picture can sometime reveal interesting points. Why have I been fighting this market, how did I miss this move and most importantly, what is the current set up are some basic questions every macro trader needs to ask themselves.

Are you wrong or are you early? The answers offer two very different learning outcomes. If you are wrong, then clearly your market model or informational inputs need adjustment. If you were simply  early, then how can you work on the timing. (Note its a lot easier to rationalize you were early vs wrong. If you cannot admit you are wrong sometimes good luck in the markets). Even when you are correct in the market analysis from the beginning, there is always something to learn, perhaps this trade can be automated for future use?

For me going back to basics involves a nice dose of looking at the charts. While chart reading can easily be taken to the extreme with complex Elliot wave counts, Gann lines etc, or simplified away with moving averages, in the hey-day of macro trading from what your author knows, many a billionaire global macro trader primarily armed himself with a hefty dose of chart reading (along with an understanding of the business cycle and monetary policy, which pre QE was not something every market participant understood). While today macro is global, interconnected and much more specialized, a glance back at the charts every once in while helps this author to gain perspective.

Below are a few price charts most macro players will be aware of, with the names, prices and time frame removed. Can you guess which is each one? What do you see in the charts?

You author has also found that fundamental charting works pretty well too but is away from his trusted Bloomberg today. Do let us know in the comments section if you would like to see a fundamental "chartology" follow up.


Chart 1: This is your author's favorite looking long chart. A long complex correction looks to have formed over the long term, while in the short term we almost went back to the lows but now look to be heading higher. This set up offers a nice risk/reward trade to buy at market and put a tight stop near the recent low

Chart 2: OK I cheated a little and added in a 50% fibo retracement from the long term high which nailed the recent high to almost the tick. Your author isnt sure if this is a bullish or bearish set up, though obviously the recent double top was a nice trade missed.

Chart 3: Looks like a clean base break out to me, with some consolidation working the over bought conditions out.

Chart 4: Another bottoming type chart, but unlike Chart 1 this one hasn't proven to me its bottomed just yet. A longer term moving average has been added to help point out the previous point but an astute chart reader should also see a bottom has been tested multiple times but with little follow through. At some point bottoms like these hold and the trend changes. But right now your author is probably more bearish than bullish on the chart. 

Chart 5: Probably you have seen this chart many time and can guess it right away. I can't help but be bullish, at least until the previous swing highs are taken out on the downside.