80 replies to this topic

[dTraderB]

I am partially short, wanted to go flat on Friday's late plunge but partially hedged so decided to hold SHORTS. 

Will reopen one or 2 HEDGE LONGs if market drops another 2 %. But, most likely I will go flat on a minor drop on Monday. 

 

My FF is a RELIEF BOUNCE followed by resumption of this decline below ES 4300

 

I welcome this decline and any more of it because it is an opportunity to build a long for the seasonally bullish Q3. 

 

Favorite candidate is AMZN and some of those AI stocks.  I will sell CALLS on them as soon as I accumulate a few hundred. 

 

Small HANGSENG AND FTSE A50 LONG. The Chinese mist deliver now or else face difficult times. I am losing confidence in their 

ability to turn it around. BUT, will hold LONGS and add on any decline during next few days. I have been doing quite well on buying the dips and taking profits - even intraday as was the case on Friday, but this can be risky if markets lose hope and confidence on the success of Chinese stimulus. 

[dTraderB]

Solidly down

https://www.marketin...-highs-new-lows

[dTraderB]

My TLT CALLS got hit hard but the UVXY CALLS helped partially

Building a big TLT LONG and will close some more UVXY CALLS on market declines

 

BUT THIS! Can FED raise rates with this? 

US 30-Year Mortgage Rates Rose Sharply This Week

According to Bankrate.com‘s data, the 30-Year fixed-rate mortgage reached 7.39% on Thursday, the highest rate since November 2000, but slightly dropped to 7.38% on Friday. This increase was driven by a notable surge in US Treasury yields, which serve as a reference for mortgage rates. The spike in yields was triggered by concerns among bond investors about an influx of government-debt issuance, the strength of the job market, and a downgrade of the sovereign credit rating. Additionally, Japan’s recent tighter monetary policy contributed to this trend. As Japanese long-term yields rose, the largest foreign holders of US Treasuries, Japanese investors, became less interested in US bonds and demanded a premium.

[dTraderB]

FED will now err again by overtightening?

"...After the Fitch Ratings' downgrade and the Treasury's plans to borrow $1 trillion, it's worth looking at other assets besides equities. The 10-year US Treasury Yield Index ($TNX) rose to the highest 2023 level as equities sold off. After the July jobs report, 10-year yields moved lower, but remain above 4%. This brings up the next pointmortgage rates. The 30-year fixed-rate mortgage is close to 7%, the highest rate in about two decades.

It's almost as if the forecast for how long the Fed will continue to raise interest rates keeps getting pushed out further. While some data seems to be trending in the right direction slowly, others seem to be supporting the idea that inflation is still around. If the 10-year yield hovers around 3.75%, it would be healthy for stocks, but if the 10-year yield continues to remain above 4%, stocks may sputter.

Another area to watch closely is crude oil. Price rose to the April 2023 levels, and, if price breaks above $84 a barrel, it could soar higher. If this happens, it could impact inflation, since energy is a large component of household expenses."

https://stockcharts...._eid=8d085491f3

My TLT CALLS got hit hard but the UVXY CALLS helped partially
Building a big TLT LONG and will close some more UVXY CALLS on market declines
 
BUT THIS! Can FED raise rates with this?  US 30-Year Mortgage Rates Rose Sharply This Week
According to Bankrate.coms data, the 30-Year fixed-rate mortgage reached 7.39% on Thursday, the highest rate since November 2000, but slightly dropped to 7.38% on Friday. This increase was driven by a notable surge in US Treasury yields, which serve as a reference for mortgage rates. The spike in yields was triggered by concerns among bond investors about an influx of government-debt issuance, the strength of the job market, and a downgrade of the sovereign credit rating. Additionally, Japans recent tighter monetary policy contributed to this trend. As Japanese long-term yields rose, the largest foreign holders of US Treasuries, Japanese investors, became less interested in US bonds and demanded a premium.

[dTraderB]

Very BEARISH POLL... RELIEF BOUNCE

Helene Meisler (@hmeisler) posted at 10:33 PM on Sat, Aug 05, 2023:
The results are in and folks are looking for more downside.

Thanks so much for voting each week!!! https://t.co/IBOoJZIq1J

[dTraderB]

"With both technical and sentiment readings suggesting this correction may have further to go, it is likely wise that investors rebalance portfolio risk accordingly.

Tighten up stop-loss levels to current support levels for each position.
Hedge portfolios against more significant market declines.
Take profits in positions that have been big winners.
Sell laggards and losers.
Raise cash and rebalance portfolios to target weightings.
Have a great weekend."

https://realinvestme...h-drops-rating/

[dTraderB]

Adding HSI & A50 LONGS as they drop.... CHINA faces a critical juncture and I think they will have to throw the kitchen sink and more ....

 

ES holding up well so far, dropped, but still not plunging. Will try to go FLAT if it drops below Friday's close and shows any sign of making a ST LOW. But for now, I prefer a small SHORT on US markets

 

Global bond yields in focus

The U.S. yield curve steepened by 20-30 basis points last week - the biggest steepening since March - and the steepening of the 2-year/30-year yield curve by 30 basis points was one of the biggest weekly moves in over a decade.

 

Perhaps counterintuitively, from a stock market perspective at least, this is partly due to the resilience of the U.S. economy. The 'soft landing' or even 'no landing' narrative is gathering momentum, and JP Morgan on Friday became the latest Wall Street bank to remove or delay their U.S. recession call.

 

U.S. fiscal worries are also growing, however, and the Bank of Japan's recent 'yield curve control' surprise has lifted Japanese bond yields. All else equal, financial conditions are tightening, and despite a strong U.S. earnings season scorecard, stocks are feeling the squeeze.

 

Asia's corporate earnings season picks up this week, with Alibaba the standout in a trickle from China, and Sony and Softbank among a flood of big names from Japan.

 

Several potential market-moving data releases and events in Asia are also due, as well U.S. consumer price inflation for July. Economists polled by Reuters expect the annual rate to rise to 3.3% from 3.0%.

 

On the economic front, the main focus will be Chinese trade, lending, producer price and consumer inflation data. Investors will be hoping for signs that deflationary pressures and weakness in import and export activity this year are finally abating.

 

If not, the pressure on Beijing to inject substantial stimulus into the economy will only intensify. On its own, cutting banks' reserve requirement ratios will not be enough.

 

The Reserve Bank of India, meanwhile, is expected to keep its benchmark repo rate on hold at 6.50% on Thursday and hold it there through March 2024.

 

Monday's calendar in Asia is fairly light, with Indonesian Q2 GDP and Thai inflation for July the main releases. Indonesia's economy is expected to have grown 3.72% in Q2, rebounding from a 0.92% contraction in Q1, but slow slightly on an annual basis.

 

[dTraderB]

BILL AUCTIONS are usually non-events but they will be closely observed this week and near future

 

"  

"The sell off in back-end rates is concerning," Anshul Sehgal, Goldman Sachs co-head of U.S. rates trading, said in an emailed note to clients.

 

"In terms of equities, they have been trading growth recently, rather than multiples, so unclear what the impact will be, especially as there are cross-currents both ways in terms of what this move means for GDP."

 

For now, the equity space is looking a little calmer.

 

Futures on Wall Street are signaling a slightly higher open, although European equities are shedding around 0.4% - playing catchup following a late drop on Wall Street on Friday - and Asian shares were a fraction lower on Monday.

 

The more upbeat Wall Street mood might be because a tightening in financial conditions could give the Fed another excuse to ease off the pedal when it comes to further tightening or even cut interest rates sooner. 

 

"Overall, this should actually reduce the chance of another hike from the Fed, the material tightening in FCI's (financial conditions indexes) does some of the Fed's work for it, and if we see another 75bp sell-off then it might actually accelerate the process of them cutting back to neutral," Goldman's Sehgal said.

 

The dollar index, which fell to a one-week low after Friday's payrolls data, is up around 0.2%, benefiting from a weaker euro after German industrial production dropped more strongly than forecast in June.

 

Yields, meanwhile, are a touch higher across the U.S. curve, rising around 3-5 bps.

 

Attention this week is already turning to Thursday's critical U.S. CPI report for signs that disinflation has really set in after June's report showed the smallest annual increases in consumer prices for two years.

 

[linrom1]

Market Wizard Goes Short for First Time

 

[redfoliage2]

The market is trying to make a ST bounce, but I see bounces are likely to be sold  ...................

Edited by redfoliage2, 07 August 2023 - 11:31 AM.