USDJPY
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USDJPY
I received many PMs asking why there had been no updates. There were plenty. Most either remained under platform review and were never approved, or were published and later removed by the platform.
These commentaries are highly time-sensitive. I rarely repost deleted commentaries once the moment has passed because the trade is usually gone by the time a delayed post clears. Reposting them afterward only makes a real-time call look like hindsight, especially to those who never had the chance to read the original.
Long-term subscribers know we used to log every trade in a public sheet for anyone to scrutinize. That system is sadly no longer allowed. The same applies to many other things, which is why so many posts disappear. Our team is working on a solution, with a beta test scheduled for 26Q4. Stay tuned.
Since so many of you asked, here is a summary of what I published this week, including both the posts that remain available and those removed by the platform.
At the start of the week, I reiterated that SOXX had broken down two weeks earlier. Before last week's relief rally, I had said one was due, that it could offer bears a very good entry, and that SOXX should print a new low this week.
On Tuesday, the Korean market was capitulating. I expected a rebound in the second half of the week.
On FOMC day, I expected equities to slide into the decision and the Fed to hold rates, creating a positive surprise and pushing the indices into positive territory. The initial reaction followed that script. Trump then threatened to strike Iran, long-end yields surged, and the equity move was erased into the close.
Also that day, I said NQ1! had bottomed and was set for a VST move toward a level I cannot write here.
By the close on FOMC day, ES1! sat near an exceptionally important support level that I cannot state here. I expected an immediate bounce over the following sessions. I also warned that if no bounce came, the next session could become the largest down day of the year. The gamma buildup, combined with ES, NQ, and KOSPI all breaking major support from deeply oversold conditions, could accelerate rather than exhaust the selling if the market failed to bounce.
When the MOF intervened again yesterday to support the yen, I said the cycle could only be broken in one of two ways. The MOF must deploy enough firepower to push USDJPY low enough to trigger a self-reinforcing move lower. Alternatively, the BOJ must hike aggressively and signal that more is coming. I doubt the Takaichi government wants that outcome. A violent carry unwind would hit global risk assets, including Japanese equities, and damage the equity backdrop Trump is trying to protect into the midterms. Trump would not be too happy to see that either.
If neither happens, the third path is the familiar rinse and repeat. USDJPY grinds back toward the YTD high, perhaps makes a new high, the MOF intervenes again, and the pair eventually grinds higher once more.
The other escape route for this entire macro setup is a real Middle East settlement, a signed peace agreement, and Trump on his knees begging Iran's Supreme Leader to reopen the Strait.
The current equity bounce could still be a dead-cat bounce or a broader bear-market rally. The alternative is another leg to ATH, with the final bull-market top delayed until September or October. For now, watch my NQ resistance level.
Please refer to the PDF for the charts and levels.
XAGUSD remains inside the compressing wedge. As long as the ascending trendline holds, another test of the descending trendline remains in play. A confirmed break above the descending trendline opens the door to further upside. A sustained break below the ascending trendline puts 48 back in play.
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For bulls to take control of the session, NQ1! needs to reclaim 28100. If it does, the index could extend toward 28500 intraday.
KOSPI Daily
SPX Daily
I expect another positive session like yesterday and a test of the low 7.5K today. However, keep in mind that an increasing number of IBs are expecting a rate hike at today's Fed meeting. That is slightly bearish for equities, but it also sets us up for a positive surprise.
I expect the Fed to keep rates unchanged, which could trigger an intraday spike toward the 7530 area. However, these up-and-down spikes remain fadeable until we see a clear change in trend, as the market is currently choppy.
Meanwhile, momentum stocks have been destroyed and are extremely oversold, so that could change any day now. If ES1! manages to reclaim the 7530 area, the next major resistance is around 7580–7590. On the downside, the 7410 area is a defined swing support. If it breaks, the 7330-7350 zone will be the next major support.
I expect an immediate bounce in NQ1! toward the 28800 area over the next few days, roughly 1,000 points above current levels. ES and NVDA have remained resilient over the past few days, while NQ has lagged after breaking below key support, with semis dragging it lower.
KOSPI very likely bottomed on Tuesday. As I said earlier this week, I expect it to bounce later this week.
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NIFTY1!
06181.HK kept grinding lower as its luxury positioning continued to unravel, exactly as I warned.
Excerpt from Tactical Positioning | Week of 07.13:
"6181 has positioned itself as a luxury gold brand, with its products priced at a significant premium to competitors. Traditional luxury fashion houses command that premium through heritage, craftsmanship, and status. 6181 has failed to establish the first two. As gold falls, the frenzy fades, and the stock price tanks, it will likely struggle to sustain the third. That makes its luxury positioning increasingly questionable.
If 6181 cannot rebuild that positioning over the coming years, its valuation will likely converge toward peers, leaving further downside as the multiple compresses."
The technical map proved surgical again. Last week, 6181 was rejected at the descending trendline around 400. I warned that a break below the prior low around 350 would confirm another leg lower. That break came today. Price opened below 350 and was dumped straight to 300 on sharply higher volume. 350 is now the first resistance. Unless 6181 closes back above it, the breakdown remains intact and the path of least resistance stays lower. Even then, the descending trendline remains the controlling resistance.
Yesterday's PA was particularly interesting. The TACO came as expected. Crude slid, yields came off their highs, gold and silver bounced, and equity futures traded green.
The higher oil -> higher yields -> stronger dollar / lower gold and silver / lower multiples for long-duration equities chain went into reverse, giving Trump exactly what he wanted.
That relief lasted only until the cash open. SOXX reversed sharply from my 533 level and led U.S. equities lower. The rest of the cross-asset chain held. Equities did not.
KOSPI failed its backtest of 7.1K and is now moving through the air pocket toward 5.8K, dragging risk lower during Asian hours today. SPX is holding the last line of defense for U.S. equities. NVDA is also sitting on key support, while NDX remains in the danger zone. For U.S. equity bulls, NVDA, NDX, and SPX need to bounce over the next few sessions and pull away from these levels.
I expect the Korean market to rebound later this week. If Trump keeps TACOing, that could set up a rally into the midterms. If NVDA and SPX lose their respective supports over the coming days and KOSPI fails to bounce from 5.8K, winter begins. A renewed Trump escalation would accelerate the same path.
KOSPI is now moving through the air pocket toward 5.8K. I expect the Korean market to rebound later this week.
00700.HKIf you had followed our technical levels closely over the past few months, you would not have been caught off guard by the recent crash. You would have made substantial profits on both the way up and the way down.
See our previous Tactical Positioning notes on HTI, HSI, and a wide range of Hong Kong stocks, A-shares, and Chinese ADRs.
700 has given back most of its post-breakout gains and is now backtesting the descending trendline. As long as the trendline holds, 480-490 remains in play. A sustained break below would turn the breakout into a fakeout and shift the path toward the long-term ascending trendline around 400.
SOX I showed you the charts below a month ago, just as SOXX peaked, and laid out the exact path semiconductors followed during the dot-com unwind. Since then, SOX has tracked that path with remarkable accuracy.
601899·Closed@32.38 has shown relative strength over the past two weeks alongside the rally in copper. After failing to hold above 32.4, price is now backtesting the ascending trendline.
In late June, I flagged 25 as the line in the sand and said a bounce was very likely. The bounce came as expected.
601899 remains largely a function of gold and copper. Should oil stay elevated and keep yields grinding higher, equities should sell off, with gold and copper likely following. A sustained break below the ascending trendline would weaken the setup and shift the path back toward 25.