Technical and Fundamental analysis of traditional markets 2
Zaktualizowano
Brief summary of my previous analysis and things I've said on twitter:
Bullish on stocks (risk on), but with 2900-3020 being resistance - area good for scalps. We did push into that area and got the first rejection. Today I stupidly didn't short and got carried out thinking the trend would continue not following my original plan.
Bullish on Gold long term, but with 1740 being resistance. So far the price has stayed below, but near 1740. In case of another dollar squeeze we could see Gold go to 1370 and lower.
Neutral-Bullish on the USD. I think the USD could drop another 2-3% and still be on a bull trend. So far the USD is near the same levels as back then. It's holding pretty well and hasn't seen any major downside. Today was the first time after a while that I am leaning more on the dollar finally making its 2-3% down move to scare a few bulls and then go lower. At some point I was too bullish on USD vs EM currencies and I gave back a lot of my profits, but this was the slap I needed to realize I needed to slow down a bit.
Was and still am bearish on oil short term - medium term, and really bullish long term. I don't believe the demand will come back once things start to reopen in 1-2 months and it is clear storage is running out. I thought 0 and negative prices were possible, but didn't expect them so quickly and in such a crazy way. I am not an oil expert and most of my opinions come from my own limited knowledge of the fundamentals of the market and from experts I follow. I was very unlucky as the two brokers I trade on didn't offer trading for the contract that got to 0, so I missed out despite being very bearish :/
Now let's have a look at the current situation:
The US still has the best economy and strongest currency out there. The tech and pharma sector has really seen incredible upside with small stocks really struggling. I am not gonna go into the politics etc, but it is clear that from this the rich are getting richer. QE and the lockdowns are benefiting them tremendously. It is clear we are having a concentration on top stocks which keep leading the way. For how long could this continue? No idea, but I am definitely not ruling out a scenario where stocks make new ATHs this year. With rates at 0 pretty much globally and QE infinity, why buy bonds or hold cash and not buy Amazon etc?
The US is printing the most because it can, but this doesn't mean others won't follow. Most Central banks have made their rate cuts and those that have room will probably keep on cutting. Most have or will announce unlimited QE etc etc. Some are in better position than others, but with the USD being the global reserve currency and the US being the strongest economy, this allows it to print more. Again I won't go into the intricacies of the whole situation, but for now it is clear that there is a dollar shortage which could get much worse despite what the US is doing to ease the problem. Eventually what the Fed does might damage the dollar irreparably but for now I see nothing like it on the charts.
Overall I think for now we are seeing a rally on optimism that things will be fine afterwards, Central banks have it under control + QE + ZIRP. However we could see the following playing out completely: sell the lockdown rumour, buy the lockdown and next sell the reopening. Most people will realize how things won't be the same, this isn't temporary and that the damage is much larger than expected. My view is that normally we should see a drop 50% from ATHs ones people realize that bailouts won't work, revenues will be destroyed, many companies will file for bankruptcy etc... but the fact that no fiat is pegged to gold and they are printing unlimited amounts might actually lead to major indices going to new ATHs will bottom companies get rekt.
Imho we could see stocks move higher another 5-10% from here and even potentially see 3200, but I'd be surprised if that happened. I did my charts earlier and since then the SPX has dropped another 1%
On the charts below you can see why I think the dollar is still bullish and has some room to the downside without breaking its uptrend. The Euro going below 1.064 would signal to me that another dollar squeeze is in the making. If on the other side GBPUSD goes above 1.30 & USDJPY below 104 the dollar is going to get weaker and weaker.
For Gold I believe it can see more upside along with the dollar. For the last 1-2 years they have been going up 'together'. Despite the negative correlation they have, they both went up due to all the uncertainty and money printing, which is most likely going to continue. Remember that the USD is getting weaker against itself (it is getting devalued due to the money printing). Above 1750 I believe it will go up to 1800-1830, drop to 1700-1740 and then ATHs. However this assumes there won't be another dollar squeeze / stock market collapse which is how I expect Gold to hit 1370 (if it does).
Now Oil... In my opinion Oil is going to get crushed as the storage will be full for quite some time even when the economy comes back. From some rough estimates I believe the total demand for oil will be down at least 40% in the next few months, while supply will take quite some time until it drops from production cuts and companies going bankrupt. Speculative 'demand' will also get crushed as people figure out that what they are buying isn't physical oil and stop buying contracts/ETFs they don't understand. Overall I can't see how Oil will go above 45/barrel in the next year and it could actually get to 0 a few times... but after that I believe oil will go much much higher. When demand starts coming back + all the money printing with supply being down significantly... we might see oil skyrocket again going from 10-20$ up to 100$
Bullish on stocks (risk on), but with 2900-3020 being resistance - area good for scalps. We did push into that area and got the first rejection. Today I stupidly didn't short and got carried out thinking the trend would continue not following my original plan.
Bullish on Gold long term, but with 1740 being resistance. So far the price has stayed below, but near 1740. In case of another dollar squeeze we could see Gold go to 1370 and lower.
Neutral-Bullish on the USD. I think the USD could drop another 2-3% and still be on a bull trend. So far the USD is near the same levels as back then. It's holding pretty well and hasn't seen any major downside. Today was the first time after a while that I am leaning more on the dollar finally making its 2-3% down move to scare a few bulls and then go lower. At some point I was too bullish on USD vs EM currencies and I gave back a lot of my profits, but this was the slap I needed to realize I needed to slow down a bit.
Was and still am bearish on oil short term - medium term, and really bullish long term. I don't believe the demand will come back once things start to reopen in 1-2 months and it is clear storage is running out. I thought 0 and negative prices were possible, but didn't expect them so quickly and in such a crazy way. I am not an oil expert and most of my opinions come from my own limited knowledge of the fundamentals of the market and from experts I follow. I was very unlucky as the two brokers I trade on didn't offer trading for the contract that got to 0, so I missed out despite being very bearish :/
Now let's have a look at the current situation:
The US still has the best economy and strongest currency out there. The tech and pharma sector has really seen incredible upside with small stocks really struggling. I am not gonna go into the politics etc, but it is clear that from this the rich are getting richer. QE and the lockdowns are benefiting them tremendously. It is clear we are having a concentration on top stocks which keep leading the way. For how long could this continue? No idea, but I am definitely not ruling out a scenario where stocks make new ATHs this year. With rates at 0 pretty much globally and QE infinity, why buy bonds or hold cash and not buy Amazon etc?
The US is printing the most because it can, but this doesn't mean others won't follow. Most Central banks have made their rate cuts and those that have room will probably keep on cutting. Most have or will announce unlimited QE etc etc. Some are in better position than others, but with the USD being the global reserve currency and the US being the strongest economy, this allows it to print more. Again I won't go into the intricacies of the whole situation, but for now it is clear that there is a dollar shortage which could get much worse despite what the US is doing to ease the problem. Eventually what the Fed does might damage the dollar irreparably but for now I see nothing like it on the charts.
Overall I think for now we are seeing a rally on optimism that things will be fine afterwards, Central banks have it under control + QE + ZIRP. However we could see the following playing out completely: sell the lockdown rumour, buy the lockdown and next sell the reopening. Most people will realize how things won't be the same, this isn't temporary and that the damage is much larger than expected. My view is that normally we should see a drop 50% from ATHs ones people realize that bailouts won't work, revenues will be destroyed, many companies will file for bankruptcy etc... but the fact that no fiat is pegged to gold and they are printing unlimited amounts might actually lead to major indices going to new ATHs will bottom companies get rekt.
Imho we could see stocks move higher another 5-10% from here and even potentially see 3200, but I'd be surprised if that happened. I did my charts earlier and since then the SPX has dropped another 1%
On the charts below you can see why I think the dollar is still bullish and has some room to the downside without breaking its uptrend. The Euro going below 1.064 would signal to me that another dollar squeeze is in the making. If on the other side GBPUSD goes above 1.30 & USDJPY below 104 the dollar is going to get weaker and weaker.
For Gold I believe it can see more upside along with the dollar. For the last 1-2 years they have been going up 'together'. Despite the negative correlation they have, they both went up due to all the uncertainty and money printing, which is most likely going to continue. Remember that the USD is getting weaker against itself (it is getting devalued due to the money printing). Above 1750 I believe it will go up to 1800-1830, drop to 1700-1740 and then ATHs. However this assumes there won't be another dollar squeeze / stock market collapse which is how I expect Gold to hit 1370 (if it does).
Now Oil... In my opinion Oil is going to get crushed as the storage will be full for quite some time even when the economy comes back. From some rough estimates I believe the total demand for oil will be down at least 40% in the next few months, while supply will take quite some time until it drops from production cuts and companies going bankrupt. Speculative 'demand' will also get crushed as people figure out that what they are buying isn't physical oil and stop buying contracts/ETFs they don't understand. Overall I can't see how Oil will go above 45/barrel in the next year and it could actually get to 0 a few times... but after that I believe oil will go much much higher. When demand starts coming back + all the money printing with supply being down significantly... we might see oil skyrocket again going from 10-20$ up to 100$
Uwaga
As expected we did get another push higher. with the potential of another scalp short right on the Yearly pivot.For longer term shorts these are the scenarios I'd be looking at. Until we get a close below 2880, I wouldn't want to have any long term short
Uwaga
The dollar is bleeding still and I think another 1-2% on the DXY or DJ Dollar Index are quite likely at this stage.Remember this is a short term play only as I believe ones we take the next on equities (when and if that happens), the DXY will be 10-20% higher from where it stands now.
If the downtrend starts soon as we are in the 2900-3030 potential top zone, then this weakness on the USD might reverse very very quickly.
Uwaga
Just to be clear, the top zone consists of a few moving averages (200-350 DMAs), the Yearly Fibonacci pivot (R3 weekly pivot + R1 Monthly), 61.8% Fib retracement and some SPX gaps / break down levels.So far it looks like this could be the top, but no full breakdown yet.
Will start a new idea and keep this one link this to the new one.
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