Giving our regular contributor Shawn a little rest, I thought I would add a few different charts that have caught my eye recently
1) Dax - French Election Gap Fill - looks like a good risk reward opportunity to me. Max 5% stop loss and can probably even do much less.
and the longer term chart just for comparison.
2) Euro Yields. Testing previous resistance. If you think EU taper is still in the cards and yields will steepen this could be a good time to get in. German 5 and 10 year yields below
3) Hard Commodity Bull market. Take a look at Copper and Chinese Steel. Pretty impressive. I have been betting they would turn earlier in the year (see china credit growth below) but clearly the underlying fundamentals are strong (for now).
4) Kospi perhaps setting up for a re-test of multi year range. As long as EPS are above prior range I think its a good trade, though estimates will always lag price
5) Last but not least, lets remember that the Chinese economy is a big influence on EM and global demand and unlike the EU or US economies, its still a black box to most. Given that credit is a major driver of the Chinese economy, credit growth argues that you should be cautious on a 12-18M horizon. But for now, party on
1) Dax - French Election Gap Fill - looks like a good risk reward opportunity to me. Max 5% stop loss and can probably even do much less.
and the longer term chart just for comparison.
2) Euro Yields. Testing previous resistance. If you think EU taper is still in the cards and yields will steepen this could be a good time to get in. German 5 and 10 year yields below
3) Hard Commodity Bull market. Take a look at Copper and Chinese Steel. Pretty impressive. I have been betting they would turn earlier in the year (see china credit growth below) but clearly the underlying fundamentals are strong (for now).
4) Kospi perhaps setting up for a re-test of multi year range. As long as EPS are above prior range I think its a good trade, though estimates will always lag price
5) Last but not least, lets remember that the Chinese economy is a big influence on EM and global demand and unlike the EU or US economies, its still a black box to most. Given that credit is a major driver of the Chinese economy, credit growth argues that you should be cautious on a 12-18M horizon. But for now, party on
11 comments
Click here for commentsNice collection there.
ReplyAt some point we may slap up some charts from the vol ETF universe. IPA and I are now both agreed that there is a significant risk of one or more products becoming very illiquid. Things will get very interesting when that happens. Another margin hike from the brokers thrown into the mix at this point and there will be some changes of underwear before the end of the week...
Overheard at the pension fund:
ReplyCHAD: Brad? I got Risk on the line again.
BRAD: Tell that mo-fo to kiss your fat Tar Heel ass, man. The BSDs are trading here.
THAD: Yeah, bro, like, show that wuss our last month's performance numbers and he can SYD.
CHAD: RIsk wants to know what our VaR is… (pause) … but I didn't tell him about the leverage.
BRAD: VaR? Fuckin' VaR? What's that shit? Performance, bro. Up 80% last quarter, is what it is, mo-fo.
THAD: Yeah, bro. [High fives BRAD]. That's what I'm talking about, bro.
CHAD: I made shit up for the VaR, like always, btw what is the leverage today?
BRAD: Fuckin' TWO HUNDRED, man. When spooz sold off today, your bro here DOUBLED DOWN on their ass.
THAD: Hell yeah!! [Looks inside his desk drawer for more cocaine]. Wanna do a line, bro?
CHAD: (mumbles) F-ck it…. these frat boys are more insane than I thought.
BRAD: VIX is going to zero, bro. SVXY going to the sky, y'all. Alabama for the SEC. Go TIDE!!
THAD: Hell yeah!!
CHAD: Risk was talking about reflexivity. He says VIX is over 15 now.
Our position is sucking giant donkey d*ck.[pause] Do you guys understand what hysteresis is?
BRAD: No man, but I know where his sister is… (laughing). Risk…. he can SMD.
THAD: Yeah, man. He can SYD.
CHAD: (mumbles). Oh God, this isn't going to end well….
[CHAD scrolls through job postings at muni bond fund].
CHAD: You guys ever heard of Long Term Capital Management?
BRAD: [Scratches head} No….
CHAD: They almost crashed the global market by using leverage on an arb that "always worked".
Until one day it didn't...
BRAD: Shoulda DOUBLED DOWN is what they shoulda done.
THAD: Yeah man. Double down. Hell yeah!!
CHAD: (whispering into phone) Hello… can I talk to Risk please?
FADE TO BLACK - (or is it red?)
You guys checking out nat gas today? Looks like the same mo-fos LB is talking about are covering en masse. Look at that volume on a boring August day! Mo-fos are going to learn how to bet on the weather. 23% miss on the build in the middle of mildest weather I've seen on the East Coast in God knows how many summers. All it will take is for NYC 2-week forecast to show a 90-degree day and we'll be trading above $3.10 in one daily candle.
ReplyThose who pared XRT longs a few days ago should look into picking some up towards $39 level. Don't wanna see a consecutive close too much below that though. Keep stops tight, say $38.50-ish and look at DDS for hints of a bounce (blood bath as I type). It gave us a nice heads up on this selloff with engulfing on 7/31. Look for buyers to come in around $55. I don't love them, I just trade them. These cats will have nine lives before they disappear for good.
what do you think of XLE here IPA. I came in the morning looking at a Brent breakout, and now its a nice reversal.
ReplyVix 3M -VIX is inverted, usually a good sign of vol reversal. Will probably look to fade tomorrow. Lets see what asia does over night. Have a feeling it might be a washout. Interestingly, HK growth stocks have held up so far
Hmm…. VIX up 60% in just a few days. Want to bet we see more announcements of margin increases on a number of vol ETFs? Come to think of it brokers may not stop there, may want to extend that to the passive investment products as well….
ReplyThis is the way the game is played. The punters have been lulled to sleep, and now the sheep are going to get fleeced. Plenty of ways this can go, but a classic gap and crap day tomorrow is one possibility. All across America millennial passive investors will be asking themselves what the word DOWN means.
Another is an almighty vol spike overnight and into the open, and a massive whoosh down in the spooz, followed by a slow squeeze, after it is announced that Donald and Kim Jong Un plan peace talks at Mar A Lago brokered by Vlad, to be followed by a mutual admiration communiqué….
@abee, I like XLE into the end of the year. This being said, a major fight is coming up at $64. Whoever wins gets to carry the torch for a few weeks. The overall equities weakness is weighing it down. Also, if WTI gets above $50 for more than a day it would give the green light for integrateds to rally. Crude thought about it and then said "f*ck it, not fighting the risk off". I totally understand...
ReplyLooks like an early bounce after a modest drop at the open might be the most likely scenario today…. there may be one more pool party for the vol selling crowd this weekend, but sentiment has clearly shifted.
ReplyIm not sure if sentiment has shifted LB. Not even a 3% drawdown in Spoos yet. Though EU stocks taking it on the chin still. 200 day moving average coming up on most indexes. Specifically EU small caps are down big today and were the outperformers in the bull run.
ReplyKinda interesting that Treasures arent really moving. German yeilds are still falling.
Keep your eye on HYG, thats the key, IMO. Lots of spreading with HYG, VIX and Small caps, so it captures all of it in the mix.
We're going to need to launch a new blog called "The Adventures of Brad, Thad and Chad."
ReplyBrad, Thad, and Chad are scratching their heads. VIX and SVXY are both down. Oops...
ReplyGuys, check out KRE. About to test the bottom of the 5-month $51-56 box. I say this may be the time it punches thru and proceeds chewing on stops. Target $46, measured box breakdown move, mid BB on monthly, backtest of Jun - Nov 2015 highs.
Big bro XLF is also looking double toppish here. Neckline at $23 is a key support that needs to hold and may act as a magnet. So, possible 12% and 7% respective declines on the banking ETFs for ya. SVXY is gonna love that action, I am sure.
Thanks for sharing your thought!
ReplyPlease let me know what BBG tickers are used for the very last chart on China Credit.
Thanks