Loading...
BTC1!
Hope I saved a few
Chart: Binance BTCUSDT perpetual · Asset Tag: CME Bitcoin futures (BTC1!).
SPX NDX ES1! NQ1!
Trump visited China this week, but it was so uneventful that even Axios couldn’t find anything to write fake news on. And without it, yields broke out and equities sold off. The market has gone vertical for six weeks. In the latter half of the move, breadth was so weak that the majority of the rally was accompanied by less than 50% of stocks being up. Market conditions are now so extreme that only a few historical periods are comparable. There are only two instances where the market rallied in this kind of vertical fashion: 1929 and 1999. And they did not end well. I am not a semiconductor expert, just as I was not an internet expert twenty years ago. But whatever the technological change may be, one thing does not change: human nature. The greed, the fear — at the end of the day, it is still humans pressing the buttons and placing the bets, and algos are amplifying human nature to an extreme. I sense the same greed, the same exuberance, and the same fall that will follow.
AU10Y AU30Y CA10Y CA30Y DE10Y DE30Y FR10Y FR30Y GB10Y GB30Y KR10Y KR30Y
XAGUSD Silver managed to pull off a rather untimely breakout above the key 80.8 resistance on Monday.
I wrote before Tuesday's market open: "Silver has broken above the key 81 resistance level. It is important to note that gold has not confirmed silver's breakout. Gold remains range-bound between 4660 and 4770, as outlined in the previous tactical positioning. Additionally, oil is back above 100, as I predicted. I continue to expect a retest of the recent highs around 115-120 for Brent and WTI (West Texas Intermediate crude). Higher oil should add further upward pressure on yields, which in turn creates downside pressure for both gold and silver. So while silver's breakout is constructive, the macro backdrop is not yet fully supportive. Nevertheless, for bulls, the textbook entry is to wait for pullbacks toward support, with stops placed just below the support area."
Silver then surged toward 90 shortly after, confirming my tactical precision, before reversing after testing 90 on the logic I have repeatedly emphasized: higher oil prices -> higher yields -> sustained pressure on silver, and vice versa.
For bulls, a breach above 80.8 opens the door for a test of 88-90. For bears, wait for a confirmed breach below the major trendline around 72.
CL1! Oil is back above 100, as expected. I called the local low when oil was dumped below 90 last week on fake peace-deal headlines.
There is nothing new on the Iran front, as the Strait remains under Iran's control and there is no sign of real progress on a peace deal.
Inventories are depleted in many countries, and the remaining inventories are being drawn down at a worrying pace.
I continue to expect a retest of the recent highs around 115-120. A break above 118-120 opens the door to 140. A break below 90 opens the door to a test of the low 80s. A break below 80 would suggest real progress toward a peace deal.
BZ1! Oil is back above 100, as expected. I called the local low when oil was dumped below 90 last week on fake peace-deal headlines.
There is nothing new on the Iran front, as the Strait remains under Iran's control and there is no sign of real progress on a peace deal. Inventories are depleted in many countries, and the remaining inventories are being drawn down at a worrying pace.
I continue to expect a retest of the recent highs around 115-120. A break above 118-120 opens the door to 140. A break below 90 opens the door to a test of the low 80s. A break below 80 would suggest real progress toward a peace deal.
For BZ (Brent futures), a breach below 100 opens the door to a test of 86, and a breach below 86 would suggest real progress on a peace deal. Above 118-120, the ATH around 140 comes into play.
HG1! Copper tested the upper channel, as I expected. The sharp rise in yields on Friday exerted heavy pressure on the commodity complex. Despite strong fundamentals, copper was not exempt.
For now, this is not a confirmed break above the upper channel.
US10Y (U.S. 10-Year Treasury Yield) closed right at the multi-year downtrend resistance line. This is perhaps the only real resistance global long-end yields have left. A sustained breach above opens the door to a test of the 2023 high, after which we could see a repeat of the 1970s-1980s stagflation era.
NQ1! 1h, the upper channel must hold. Otherwise, we should see a test of the lower channel in the coming days.
US30Y Trump must find a way to suppress yields next week; otherwise, the tide turns.
Significant price action in bonds, as US 2-year yields jumped above 4% and 30-year yields jumped above 5%. These are the most important levels to watch.
The 2-year yield had been suppressed for two months by constant tweets and fake news from Trump every time it hit the 4% wall. If we manage to leave a clean close above these two key levels today, the subsequent moves could be magnificent, especially considering the overextended rally we have seen in equities over the past 4–6 weeks.
Note that DXY is also attempting to break above 99. This is the key resistance level we identified after the ceasefire. As long as DXY stayed below this level, it was supportive for equities, and we have indeed seen a nonstop rally in equities over the past month. A break above 99 could accelerate the downside in equities.
USDJPY is also heading higher despite MOF/BOJ intervention efforts. As I pointed out before, Japan must buy yen violently enough to push USDJPY below 155 and sustain it there for a few days. Otherwise, this intervention will be futile, with tremendous paper losses on the yen it buys and continued pressure on its FX reserves.
More importantly, it weakens the MOF's toolkit, as the market would start to see the MOF as incapable of controlling USDJPY. USDJPY has been actively managed through verbal intervention over the past decade, with occasional actual intervention. Our model shows that the true USDJPY should be in the 300–330 range.
If the MOF loses control of 160, we should see a violent grind higher in USDJPY. That said, I do not think we would see it move much higher unchecked, as the MOF will likely intensify intervention, and as USDJPY grinds toward 170, the BOJ may be forced to change its stance on rates, which could prevent further yen depreciation.
Oil remains relatively low compared with where bond yields and SPX are trading. Over the past two months, we usually saw SPX lows coincide with oil around 120, 2-year yields around 4%, and 30-year yields around 5%. As of this writing, oil remains around 100. Any significant move higher in oil could accelerate the downside in the coming days.
Turbulence ahead. Brace, brace, brace.
XAUUSD Gold remains range-bound between 4500 and 4840, and our levels continue to act as precise resistance and support.
Higher oil prices -> higher yields -> sustained pressure on gold, and vice versa.
We saw gold freefall on Friday as yields rose sharply.
As yields break out above multi-year resistance, I expect continued pressure on commodities.
A break below 4.4k opens the door to a test of the major trendline around 4.2k.
BTC1!
Market Update
#Bitcoin
Contrary to what many might have misunderstood from this chart, as long as Bitcoin remains inside this channel, the structure is bearish.
Chart: Binance BTCUSDT perpetual · Asset Tag: CME Bitcoin futures (BTC1!).
USDJPY recouped 80% of today's intervention-driven loss in under two hours. As mentioned before, "we should see faster and faster recoveries after each intervention." The BOJ must push and sustain USDJPY below 155, or it will burn through its FX reserves at an exponentially increasing pace.
XAGUSD has broken above the key 81 resistance level. It is important to note that XAUUSD has not confirmed silver's breakout. Gold remains range-bound between 4660 and 4770, as outlined in the previous tactical positioning.
Additionally, oil is back above 100, as we predicted. I continue to expect a retest of the recent highs around 115–120 for Brent and WTI. Higher oil should add further upward pressure on yields, which in turn creates downside pressure for both gold and silver.
So while silver's breakout is constructive, the macro backdrop is not yet fully supportive. Nevertheless, for bulls, the textbook entry is to wait for pullbacks toward support, with stops placed just below the support area.
VIX (Cboe Volatility Index) appears to be building a base around 17 as SPX (S&P 500) prints new ATHs.
NVDA (Nvidia) managed to hold my 196 support before reversing and closing above the key 208 level on Friday. This is a very bullish signal. A sustained close above 208, and perhaps a rally from here, would suggest an end to the consolidation over the past six months.
However, the steep rise in the semiconductor sector is flashing warning signs, as it increasingly resembles the classic pattern of a euphoric stage, often followed by a devastating correction. NVDA did not contribute much to this rally, but it is not immune to drawdowns once a correction is due in SOXX (Semiconductor ETF). For bulls, I would not chase it here. The entry opportunity was on the pullback toward 196. For bears, watch SOXX closely, along with key memory/storage names such as SNDK (SanDisk) and MU (Micron).
