Trading Desk

CL1! NQ1!

Trump TACO'd on Monday morning. Oil was dumped to the low 80s, while NQ gained almost 1,000 handles in minutes. However, the market is tired of Trump's lies, and the spike was entirely erased before the market opened on Friday. Note that Trump pulled a similar TACO move on Thursday right after the market closed by extending the strike deadline by 10 more days. This spike was much smaller than the Monday spike, when Trump extended the strike deadline by 5 days, and it was immediately sold off.

In past TACO moves, the market almost always gave Trump the benefit of the doubt when he extended the deadline. Sometimes, we even saw the market trade above the level it was at before the conflict began after he TACO'd. We all know the U.S. has lost this war unless it decides to launch a ground invasion. WTI was once again hovering around the key 100 level as of the market close on Friday. Dozens of countries have run out of oil reserves, and dozens more are weeks, if not days, away from running out. The situation will only get worse in April. See the chart below from JPM.

CL1! BZ1!

Oil prices start to converge after Trump TACO'd on Monday.

As I mentioned before, Trump cares about only four things: 1) stock market performance; 2) Treasury yields; 3) inflation expectations; and 4) his approval ratings. If you look at past TACOs, the majority of them happened precisely when either Treasury yields hit an intolerable level or SPX dropped to a key support that had to be defended. As the greatest market manipulator of all time, he understands the significance of key levels just like we do.

SPX broke below the key 6.55K level last Friday, and futures tanked further before the market opened on Monday. To fix this, Trump extended the strike deadline on Iran by 5 days before Monday’s open, and NQ gained 1,000 handles in just minutes. More interestingly, abnormal buying in equity futures and selling in oil futures were spotted minutes before the announcement. This was, without a doubt, insider trading that generated hundreds of millions in profit in just 20 minutes. The beauty of technical analysis is that we don’t need insider information to know where the money is flowing. After Monday’s open, I posted a desk note on Trump’s TACO move and stayed bearish on equities despite the headlines. The gist was that the price action from that TACO, despite its intimidating magnitude, did not bring about any structural change to our outlook. On Thursday and Friday, the market accelerated to the downside.

Momentum remains to the downside unless SPX reclaims 6.55K.

“I may have been early, but I’m not wrong.” — The Big Short

As expected, NDX extended to the downside after posting a clean break below the key support around 24.2K last week. Despite Trump’s efforts to pump the market, NDX was rejected at 24.2K from below from Monday through Wednesday.

CA10Y DE10Y FR10Y GB10Y KR10Y

US30Y (U.S. 30-Year Treasury Yield) has broken above resistance. If it doesn't fall back below it, the consequences could be devastating.

Z1! (FTSE 100) backtested the trendline and was rejected.

CL1!  The 100 level remains a strong ST resistance that CL must break to sustain upside momentum.

The next resistance sits around its recent high near 120. Meanwhile, a break below the recent low of 84 would most likely indicate real progress in a ceasefire deal.

BZ1! Brent's technicals remain stronger than WTI's, as the U.S. does not rely on the Middle East to meet its oil demand.

HG1! After breaching the lower bound of the box support, copper has struggled to reclaim it. Unless it reclaims the key 5.55 resistance, momentum remains to the downside.

BTC1!

Market Update
#Bitcoin https://www.meridianresearch.app/notes/ef5d2cb7-82b2-41a1-9101-a392025784e3View note

Chart: Binance BTCUSDT perpetual · Asset Tag: CME Bitcoin futures (BTC1!).

TSLA

METAInevitably, META tested the lower trendline support around 530.

GOOGL, like many other key names, has followed our script over the past few months. After a clean breach below the key 296 support level, selling intensified as expected.

AMZN is clinging to the lower bound of the channel for dear life. A breach below would be devastating.

RUTis clinging to 2.45K for dear life.

DJIDow bounced precisely from our support minutes before the close on Friday. 45K should act as solid ST support. A clean break below would be devastating. I expect a bounce from this level. A break below 45K opens the door to 42K, after which comes 38K.

HTI1! (Hang Seng TECH Index Futures) is clinging to 4.74K for dear life. A clean break below this level opens the door to a test of 4.2K.

SOXX (Semiconductor ETF) must reclaim the trendline. Otherwise, the consequences could be devastating for the broader market, as semis are the bellwether sector of this bull run.

HSI backtested the lower bound and was rejected. If it fails to reclaim 25.3K, further downside is in play.

PLTR (Palantir) was rejected at the backtest around 155. If it doesn't reclaim 155, I would expect it to head lower to retest the recent low around 130, after which comes 100.

US10Y Yields worldwide continue to explode to the upside, as I expected. Higher oil prices for longer -> higher inflation expectations -> higher long-end yields -> lower equity multiples, especially for long-duration names such as the M7. As long as the war continues and the Strait of Hormuz is not back in business, we should expect higher oil prices and higher yields across the globe.