Another week rolls by so quickly.
Global asset markets have seen more weakness over the last week with much lower levels for cyclical commodity themes and a bounce off January lows for many eg copper and a breakdown for iron ore prices in spite of a pull back for the US$ basket. Breakdown (likely false price chart breakdown imo for copper miners, COPX).
US equity indexes have continued their shallow retrace but some key lead indexes like the transports (IYT) and semi conductors (Soxx) provided good evidence of a base consolidation pattern through this week. Wider cyclical indexes like the Russel (IWM) and Nasdaq100 (QQQ) scored obvious new moment and are within a whisker of new breakout higher highs. Given low 10yr rates (lowest for 6 months at sub 4% for 30yrs) this has supported global real estate (S-reits higher highs) recently as commented inc US housing (IYR, XHB). Some lead individual stocks are also scoring higher highs eg FB supporting the generally strong continuation (though likely to narrow) of this bull market.
Gold market wise we hit $1300 so bouncing off this res round number for now. US inflation expectations (TIP) is correlating perfectly with Gold (GLD) at present. It would super charge if the US$ ended her bull market but as yet no price evidence for this in my practice though the swiss team are still in this camp with Fitzpatrick still in the alternative camp.
European risk remains within her bull patterns with the high beta cyclical indexes like the IBEX35 bouncing again and very close to new higher highs. Cyclical Dax under performing the bounce for now but likely new higher highs soon (some price bar evidence of a base around these levels, fading momentum to the down side) ditto ftse100. Asian cyclical risk continues to be under perform, partly geo political and partly continuation of US$ strength theme, which doesn’t assist Asia much, especially HK. (2800).
Currencies have seen volatility step up this week. Of particular note is the GBPUSD which scored a price breakout of her large recent 12m range. False or true? Macro wise, its a breakout on election news which is volatile by nature. To quote Scotia..
“GBP remains the largest held net short, with a sizeable -$8.3bn position. This week’s $0.5bn widening was driven by an increase in risk to both sides, pushing the net toward the $8.4bn record from late March.”
For my money this will open a trading opportunity to get back in short the GBP vs the USD. Some price evidence is emerging of a renewal of the US$ in the pair US$ vs SGD via the price base consolidation. This pair is often a leader for whatever reason. The EURUSD volatile but no clear change of US$ strength as yet.
For my own book picked up some exposure again to US cyclical risk in the last week via QQQs, IYT, and SPY. Also created some Euro GBP SGD borrowings. With excess cash funding new longs as above as well as a little excess cash in CADS (tactical opportunity in the cad) and US$. Overall account with 111% invested at present, almost exclusively long for now.
To the reports:
I’m a little more bullish than the guys here as above. I have to take the new moment long signal albeit i may be a little early if wrong.
Here Fitzpatrick:
Here the most recent CFTC report ref above:
All the best guys
Rich