# (Bull) Market April 2021



## ducati916 (28 March 2021)

So there are still a couple of days left in March, but, what the hell.

What to expect (as per seasonality) in April:

Looks like a promising month to be in the market.










Last month's returns:






Rotations? 

Daily v Weekly (next month I'll add the Monthly also)

So in Growth v Value, plenty of room for a bounce. If it bounces, does it resume its bull move or slip into a down trend?










Discretionary v Staples:

Will rising support in the form of MAs provide that support?













Looking at the Tech. wreck of 2021:









The headlines are for more pain to come. Do you trust the headlines? If not, then ARK ETF is an ETF based on the growth stock mantra.











To be continued in post #2

jog on
duc


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## ducati916 (28 March 2021)

From post #1

ARK:






Pretty beaten down. It all depends if you think the growth mantra can return.

Another look at the rotation to date:






Mr flippe-floppe-flye:









Interesting. I haven't seen that story yet, but it always happens. You would think that the 'professionals' would understand the issues around leverage by now given that this has happened so many times in the past.

Oil News:

*Friday, March 26th, 2021*

Oil has bounced around with significant volatility this week, dragged down by slow vaccinations, lockdowns, and speculative outflows, but pushed back up on Suez Canal bottlenecks. Analyst sentiment is also all over the place.

_*Goldman remains bullish. *_In a Friday note, Goldman Sachs noted bearish fears, but struck an upbeat tone: “We continue to view the decline in prices as overshooting the shifts in oil fundamentals,” the bank said. “In particular, we expect a slower ramp-up in OPEC+ production this spring to help offset both slower EM and EU demand recovery and higher Iranian exports, with global demand still set to increase sharply through the summer.”

_*Bank lending to fossil fuels down 9%. *_Bank lending to fossil fuels declined by 9% in 2020 due to the pandemic and the ensuing downturn. The 60 largest banks lent more than $750 billion to 2,300 fossil fuel companies in 2020, down from $824 billion in 2019, according to a report by Rainforest Action Network, Reclaim Finance, Oil Change International, and other non-governmental organizations

_*$3 gasoline nears. *_Average retail gasoline prices rose to about $2.88 per gallon in the U.S. last week. Analysts say $3 is likely by summer.

_*Moody’s cuts ExxonMobil.*_ Moody’s cut *ExxonMobil (NYSE: XOM) *to Aa2 from Aa1, with a stable outlook. “ExxonMobil's large increase in debt in 2020 and accompanying deterioration in financial leverage metrics following the onset of the coronavirus pandemic looks unlikely to be fully reversed in the next few years,” said Pete Speer, Moody's Senior Vice President.

_*World’s largest coal miner bets on solar.*_ Coal India Ltd., the largest coal miner in the world, said that it might shift into solar panel manufacturing. “Coal as you know, we’re going to lose business in the next two, three decades. Solar will take over (from) coal slowly as a major energy provider in the coming years,” the company’s chief executive said.

_*Equinor makes North Sea discovery.*_ *Equinor (NYSE: EQNR) *made a “significant” new oil discovery near the Fram and Troll complex in the North Sea.

_*Federal Reserve to scrutinize climate risk.*_ The U.S. Federal Reserve said that its new Financial Stability Climate Committee (FSCC) will focus on the potential threats climate change can pose to the broader financial world.

_*Fossil fuels talking loudly about ESG.*_ Fossil fuel companies have gone from barely talking about ESG issues, to mentioning it hundreds of times in the first quarter of 2021, according to a Bloomberg analysis.

_*Glencore trader charged with manipulation. *_A former oil trader at mining company *Glencore PLC (LON: GLEN)* was charged with manipulating fuel oil prices

_*Clean energy bubble? *_Bloomberg Green explores the prospect of a financial bubble in the clean tech sector.

_*Dallas Fed: Shale resumes growth.*_ The new Dallas Fed survey offered glimmers of optimism. From a reading of just 18.5 for the fourth quarter of 2020, the business activity index of the survey soared as high as 53.6 over the first quarter of this year.

_*Shale costs creep up.*_ The average cost to drill a new well in U.S. shale rose to $52 per barrel according to the Dallas Fed survey, up 6% from last year. Cost inflation due to fewer service providers has contributed to higher costs.

_*Ovintiv sells shale assets for a third of original cost.*_ *Ovintiv (NYSE: OVV)* sold Eagle Ford assets to Validus Energy for $880 million, after paying $3.1 billion for those assets in 2014.

_*Asian market soft, pressuring prices. *_Chinese refinery maintenance and renewed lockdowns in Europe put pressure on crude, forcing traders to mark down prices. “Barrels are struggling to find homes in the export market as Asia still isn’t buying and Europe is struggling as well,” said Scott Shelton, energy specialist at United ICAP.

_*Goldman: EVs grapple with higher costs.*_ Rising demand for battery metals and minerals will lead to an increase in EV battery costs, Goldman Sachs analysts said in a note, pointing out that this could lead to an increase in EV prices.

_*World’s most controversial pipeline shift to hydrogen?*_ Moscow is silently investing in the production of hydrogen, potentially aiming to make it flow through its new NordStream 2 pipeline.

_*Suez bottleneck causes trade problems.*_ Automakers have been forced to scale back production due to global supply chain problems related to semiconductors. The supply chain problems are about to get worse due to the blockage of the Suez Canal. The blockage could also delay the delivery of at least 10 LNG cargoes to Europe. At the end of the week, it appeared that global shipping began rerouting around Africa as the outage continued.

_*Permian methane emission back to pre-pandemic levels.*_ Permian methane emissions are back to pre-pandemic levels according to EDF.

_*API endorses a carbon price. *_The most powerful oil lobby in the U.S., the American Petroleum Institute (API), came out in favor of a carbon price, although it did not endorse a particular tax or price level. The move is a substantial change of position, and the head of the group said that it came from internal pressure, particularly from the European oil majors.

_*Canada’s Supreme Court upholds carbon tax. *_In a 6-3 decision, Canada’s Supreme Court ruled that a carbon tax is constitutional.

_*China boosts oil and gas spending.*_ PetroChina is planning to spend $36.6 billion in capex this year, making it the world’s top spender, just above *Saudi Aramco’s (TADAWUL: 2222) *$35 billion. The top spender from the western oil majors is *Royal Dutch Shell (NYSE: RDS.A)* at $20.5 billion.


The energy market is clearly in transition. Whether it ever makes it, I guess we'll find out in time. For the moment though I think POO is more or less (+/- $10/barrel) roughly where in a re-opening, it will sit.

Obviously Europe has f**ked-up its distribution of vaccines and chaos as usual reigns in Brussels. The US however seems to making progress. No idea re. China. The point being, at some point, probably later this year, re-opening will take place.

My position now (always subject to revision) is that 'inflation' is a non-event. Not happening. I know CPI is horribly manipulated and every week I spend more at Countdown than I did the previous week, but CPI inflation is irrelevant. PPI inflation is the deal and it (as long as the Fed. stays out) is being managed by the Bond Vigilantes.

So the headlines are very negative 'growth' stocks currently. I think they bounce. Not only do they bounce, they rotate back into leadership. So aggressive positioning sees you buy back into the sector next week. More conservative traders wait and watch the price action to confirm.

What is the duc watching?









Apart from FB which I hate, looks ok as far as holdings. It has been smashed. Really, I'll just be working on an entry. The vol. is not an issue.

And SPACS:






If you buy this s**t, well best of luck.

jog on
duc


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## reasonableman (29 March 2021)

Hi Duc, new to the forums. Looking to find a network of fellow traders focused on US mkts. 

So that list above (below XLC chart) is current portfolio, or just a watchlist?


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## ducati916 (29 March 2021)

reasonableman said:


> Hi Duc, new to the forums. Looking to find a network of fellow traders focused on US mkts.
> 
> So that list above (below XLC chart) is current portfolio, or just a watchlist?





Those are (the list below) the major positions held within XLC ETF. I'll be adding XLC sometime this week. Probably Tuesday.

Jog on
duc


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## ducati916 (30 March 2021)

So an interesting start to the week, with Mr flippe-floppe-flye's heads up from last week, the Hedge Fund blow-up dominates the news:













Even Barron's leads with this story:




















So 'Media' stocks: which are exactly the stocks contained in the ETF XLC. The interesting thing is that the Chinese versions if they are in there at all, are very small % holdings.

So I purchased XLC this morning. Buy the blood-in-the-streets.

So how is the overall market responding?

So far:

Vol. is still subdued, but, I would expect it to go higher.






When looking at the shorter time frame, the inference is higher vol. Usually with HF blow-ups, the overall market's reaction can be a bit behind as the news and repricing is assimilated.






The market by sectors:

XLC seems (for the moment) to have stabilised, which is about right. Most of the selling in those names will have occurred last week. The risk is that other sectors catch the selling fever due to forced liquidations in the media names. Essentially, I don't want to sell my media stocks because they are already discounted by 50%, but I have to sell something. So I sell something that is profitable to make the margin call.






Bonds are up. Which means that yields are down. Probably either (a) a run to safety or (b) DXY higher/Bonds higher or (c) a bit of both.






My model has yields still going lower. So a continued run higher for DXY, which was the thesis.

I'll be watching the commodities markets. There are still lots of media stories around 'inflation'. Inflation is currently not a thing. The re-opening, as it gradually factors in around the globe will re-establish disinflationary forces. For the moment at least, the Bull lives on.






jog on
duc


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## ducati916 (31 March 2021)

That should have gone here:

*Market Movers*

-   * Chevron (NYSE: CVX) *is the leading contender to purchase the 145,000-bpd Puget Sound refinery in Washington State from *Royal Dutch Shell (NYSE: RDS.A)*.

-   * Devon Energy (NYSE: DVN)* said its first-quarter production would decline by 8% due to the Texas freeze.   

-    *Vine Energy (NYSE: VEI)* announced a bond sale to raise $950 million in senior unsecured notes due in 2029. Vine Energy recently launched an IPO and raised less money than it had hoped.

*Tuesday, March 30, 2021 *

Oil prices fell on Tuesday as the Suez Canal was cleared and concerns about global bottlenecks eased. Traders are now focused on the upcoming OPEC+ meeting, which most observers believe will result in an extension of cuts, and the impact of Covid-19 on oil demand in Europe.

_*OPEC+ poised to extend cuts.*_ Saudi Arabia wants OPEC+ cuts extended through June. Russia, the leader of the non-OPEC group in OPEC+, favors a rollover of the alliance's oil production cuts while seeking a slight increase for itself to meet higher seasonal demand.

_*Total evacuates staff from Mozambique.*_ *Total (NYSE: TOT) *and other international contractors evacuated some staff from Mozambique over the weekend as insurgents advanced to the coastal town of Palma, a hub for the country’s nascent LNG industry. Total’s $20 billion project is the largest foreign investment on the African continent but now appears to be at grave risk. 

_*Iran and China sign an economic and security agreement. *_Iran and China signed a wide-ranging economic and security agreement, billed as a “strategic partnership” that will last 25 years. Details remain sparse, but the move likely paves the way for more Chinese investment in Iran’s oil sector and also open up more room for exports. The WSJ also says that the two countries could set up a joint bank that would help Iran evade U.S. sanctions. Reuters reports that Iranian oil exports are expected to continue to rise in March.

_*Sinopec to ramp up hydrogen investment.*_ Sinopec, the largest oil refiner in Asia, announced plans to shift towards carbon neutrality by 2050, a plan that leans heavily on hydrogen. 

_*Abu Dhabi debuts Murban contract.*_ Abu Dhabi allowed trading in its futures contract, Murban, on the Intercontinental Exchange (ICE). The move is aimed at bolstering the emirate as an international oil trading hub.

_*Biden invites China and Russia to climate summit. *_President Joe Biden is including rivals Vladimir Putin of Russia and Xi Jinping of China among the invitees to the first big climate talks of his administration, according to the AP. The event will be held virtually April 22 and 23.

_*Exxon and Chevron cautious on shale drilling. *_*ExxonMobil (NYSE: XOM)* and *Chevron (NYSE: CVX)* have dramatically scaled back drilling in the Permian compared to a year ago. According to Rystad, the two majors accounted for 28% of Permian drilling activity in the spring of 2020, a share that is now down to less than 5%. “We essentially hit a pause button,” said Chevron Chief Financial Officer Pierre Breber, according to Reuters.

_*Will U.S. shale exploration surge?*_ Cheap financing and higher crude oil prices could kick off another round of drilling in U.S. shale, despite promises to exercise restraint.

_*Questions on Shell’s bet on LNG.*_ The Wall Street Journal reports that massive billion-dollar bets on LNG appear riskier as the energy transition gains momentum. *Royal Dutch Shell (NYSE: RDS.A)* spent over $50 billion to purchase BG Group in 2015, a large wager on the future of LNG. But the gas era could be short-lived as countries leap frog to renewables. Shell has written down gas assets and lowered its forecast for demand growth.     

_*Shell links executive pay to climate.*_* Royal Dutch Shell (NYSE: RDS.A) *has proposed linking director’s pay more closely to its climate performance, while also severing the link between LNG production. 

_*Vanguard and BlackRock make net-zero emissions plans.*_ *BlackRock (NYSE: BLK) *and Vanguard Group are among 43 investment firms managing more than $22 trillion in assets that are joining Net Zero Asset Managers initiative.

_*Natural gas prices are stuck.*_ The U.S. natural gas benchmark is set for several months of below $3 MMBtu price analysts and EIA forecasters say. The agency cited declining demand for heating in the spring along with rising American dry natural gas production.

_*New Mexico adopts flaring regulations. *_New Mexico regulators adopted new regulations that end routine flaring from Permian drillers. They can still flare in the event of an emergency, but no longer simply as a fact of doing business. 

_*Biden announces offshore wind push. *_The White House announced Monday an ambitious plan to expand wind farms along the East Coast and jumpstart the country’s nascent offshore wind industry. The Biden administration is targeting 30 GW of offshore wind by 2030.

_*Biden infrastructure plan to include orphan wells. *_One aspect of President Biden’s forthcoming $3-$4 trillion infrastructure proposal (to be unveiled Wednesday) is a big push to clean up abandoned oil and gas wells. 

_*EIA: Battery boom on U.S. grid. *_The EIA laid out a long-term forecast for energy storage in the U.S., and in its reference case, the U.S. sees 59 GW of battery storage by 2050, a figure that could be much higher if renewables accelerate.

_*Aramco resists dividend cut. *_Despite a 44 percent drop in its 2020 profits, the Saudi Arabian government has instructed majority-state-owned Saudi Aramco to stick to the US$75 billion per year dividend payout for shareholders that it pledged at the time of its IPO.

jog on
duc


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## ducati916 (1 April 2021)

So a bit of a bounce today:






With the beaten down sectors leading the move. 






Overall the market is in neutral. The trend higher is not yet confirmed and the rally could meet increased selling. It may not.






The Options market is also meh. Undecided.






NYMO stuck in MOR. Undecided.






And Mr flippe-floppe-flye.






Markets are at an inflection point. They could go either way.

Currently there is no inflation. I expect rates to fall back to 1.5%. This will occur gradually as commodities sell off. I would expect POO to stop rising at the rate that it has. I would also expect it to consolidate in the medium term between $50/$70






Once the market confirms that 'inflation' is not a 'thing', then stocks will continue their rise. Now whether that incurs a rotation back into growth names from the defensives and value plays, very possible, we'll just need to keep a close eye on things:









The defensives have found support. The value plays will have to resolve on a chart basis probably next week at some point. Either way, we will get some insight/clarity on the market reasonably soon. 


jog on
duc


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## ducati916 (2 April 2021)

The choppiness remains.

We have Bonds down, Commodities up and Stocks up and the DXY down. The stocks component is however a reversal of yesterday's stocks.












The NASDAQ is up strong. Now the NASDAQ is essentially 'Growth Stocks'. When the NASDAQ is strong, it is risk on.

Its components:










We are looking good for April (seasonality) and on the Presidential Cycle:






Overall financial market returns through March:









The issue is that the markets cannot quite decide whether inflation, disinflation, other, is a thing.

The small caps are off their highs and have fallen back below that resistance level. Mid caps are back through. We need everyone back through.






Now these sectors are cyclical risk on. These are re-opening bets. Business as usual. Pent up demand.






Taking a peek inside Industrials:






But then we also have the risk off sectors: Utilities, Staples and Real Estate doing well. Someone is wrong. We just don't know who it os at the moment.

Mr flippe-floppe-flye is more concerned with selling subscriptions currently:









Whatever sector you are in currently, it is likely you are up one day, back down the next. Chop. It can be tough (other than pure day trading strategies) to hold positions or want to hold them, unless you are convinced that you know how this will all resolve. After the fact, it will be very easy to find evidence that the signs were all there suggesting the final direction. It will be easy because the signs exist now for either outcome. The decision however needs to be made now, not with the benefit of hindsight.

What then is the answer?

Market neutral. You win if the market falls, you win if the market rises. You lose a little if it goes nowhere. This is not a market that will go nowhere for long. As the bets build up on either side, positions will be liquidated toute suite once a move occurs. This will along with the trend followers who jump on board the winning side, will create a big and clear move to either risk on/off.

So for what it's worth, my speculations:

(i) Interest rates (TNX) were sitting at 1.73%. My model said 1.52%, rates should continue to weaken by 20+/- basis pts;
(ii) Lower TNX, higher commodities, but only to a point: that point is POO $70. This price is still the driver of inflation; and
(iii) Stocks higher, which will include growth stocks: a gradual rotation back into cyclical and NASDAQ growth; and
(iv) DXY will continue higher, also capping to a level, commodities.


While that scenario or any other scenario plays out, stocks will continue to churn and chop.


jog on
duc


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## ducati916 (2 April 2021)

The DXY, if not immediately, but in this environment, sooner rather than later, is going to have an impact.

This may even be the chart that decides the issue. Currently SPY is at new all-time-highs. DIA/QQQ still below. SPY is betting that DXY breaks through the EMA resistance and moves back to previous highs. DIA/QQQ are taking a wait and see approach.

As I said, there is evidence for the winning side wherever you look (especially in hindsight). The trick is to make the right call now. That is a x2 resistance. A tough nut to crack. There is some horizontal support (not drawn) but how strong is that, given that it's back in 2015/2017?

Any currency traders with any insights? Feel free to wade in.

If it fails, we will potentially see Bonds reprice lower (higher yields), which could/should, reinforce DXY, as a falling DXY puts 'inflation' as a thing back on the table.

If it breaks through, then the Bond market is currently a little high, and should reprice lower, by my estimate 20 basis pts.








Time will tell.


jog on
duc


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## qldfrog (2 April 2021)

Great post, a side remark: in the comparative market result for the last year, quarter and month, i could not help noticing the heavy fall on China and Brazil coming up again.
Would that be a play of interest for you:
Short China, long Brazil?
It is pretty fair to say they have been going too far last year/quarter : down for Brazil with covid fear, and up for China with opposite reasoning.
They will balance again


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## ducati916 (2 April 2021)

qldfrog said:


> Great post, a side remark: in the comparative market result for the last year, quarter and month, i could not help noticing the heavy fall on China and Brazil coming up again.
> Would that be a play of interest for you:
> Short China, long Brazil?
> It is pretty fair to say they have been going too far last year/quarter : down for Brazil with covid fear, and up for China with opposite reasoning.
> They will balance again





In theory, yes. However there would need to be an extensive analysis completed before you knew how exactly you were going to trade the pair. So: (i) how tight is their correlation, (ii) what is their relative performance over which time periods, (iii) is there an entry currently that makes sense, (iv) in what time frame?

China is (was) a significant buyer of commodities. Brazil is a supplier of commodities, but not the only supplier (Canada, Australia, Brazil, Africa, Russia, Arabs, etc). Is that historical relationship still the current relationship?

Put up an analysis if you wish.

jog on
duc


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## Smurf1976 (2 April 2021)

OPEC have announced a production increase of 2 millions barrels per day, a substantial amount:









						OPEC and allies agree to boost crude oil output
					

The group is restoring production that was slashed last year to support prices as demand sagged during the worst of the pandemic recession, which sapped demand for fuel.




					www.theage.com.au
				






> The group will add back 350,000 barrels per day in May, 350,000 in June, and 400,000 in July. Meanwhile Saudi Arabia will over the same period restore an additional 1 million barrels per day in cuts that it made on its own.




That's a fairly large output change, OPEC generally doesn't make single announcements on that scale it's normally a lesser volume and implemented as a single step not gradually.

How that influences the overall situation I don't know but thought I'd post it here given that thoughts of inflation typically involve oil somewhere in the mix.

PS - I've no idea what the aluminium pictured in the article has to do with it. Pretty much nobody smelts aluminium using oil as the power source, it's simply too expensive for that purpose, so it doesn't have a lot to do with the subject.


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## gartley (2 April 2021)

SPX edging toward 40 week Projection range of between 4148 to 4288 ( only 3.3% away from lower part). Dynamic price projection suggesting 4416.
Short term AD line showing small divergence in DJIA but nothing yet in other indexes.
Have decided to exit  and step aside most trades here and will focus only short term stuff pending signals as market is approaching caution/danger zone in months/weeks ahead


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## ducati916 (4 April 2021)

Starting with oil news:

*Friday, April 2nd, 2021*

Oil prices rose despite OPEC+’s decision to increase production. In fact, rather than a bearish move, investors interpreted the decision as a vote of confidence in demand. “The [supply] deficit that we’re already in is likely to accelerate,” Jeff Currie, head of commodities research at Goldman Sachs Group Inc., said in a Bloomberg Television interview

_*OPEC+ agrees to gradually increase production.*_ OPEC+ decided to add more than 2 mb/d over the next few months, betting on rising demand. The deal calls for a 350,000-bpd increase in May, followed by the same amount in June, and then by 450,000 bpd in July. At the same time, Saudi Arabia will ease its voluntary 1 mb/d cuts by July. OPEC+ surprised markets last time around by maintaining cuts, this time they surprised in the other direction after analysts expected no change.

_*Pioneer Natural Resources nears $6 billion deal for DoublePoint Energy.*_ *Pioneer Natural Resources (NYSE: PXD)* is nearing a $6 billion deal to acquire *DoublePoint Energy*, a cash and stock deal, according to Reuters.

_*Shale output to erode. *_U.S. shale production is set to decline through at least 2022, according to BNEF. By the end of the year, the industry could lose another 485,000 bpd. “It could be a while before U.S. oil companies feel comfortable growing production again,” BNEF analyst Tai Liu said in a note.

*Total and Shell see lingering refinery issues. Total’s (NYSE: TOT) *Port Arthur refinery may be offline for another three to four weeks for repairs after an unplanned shutdown during the Texas freeze. *Royal Dutch Shell (NYSE: RDS.A)* is having problems with its Deer Park refinery as well. Meanwhile, *ExxonMobil (NYSE: XOM)* said it would take an $800 million hit related to the storm.

_*Oil companies win one climate court case, lose another. *_A federal appeals court rejected New York City’s effort to hold oil majors accountable for climate change, a big win for the industry. 

_*EVs gain in Biden’s $2.25 trillion infrastructure plan. *_President Joe Biden introduced the outlines of his major infrastructure package, which would have far-reaching effects on the energy industry. The bill calls for $174 billion for EV recharging stations. “For the EV sector, the Street has been awaiting this day since Biden was elected,” an analyst with Wedbush Securities wrote in a note to clients. *ChargePoint Holdings Inc (NYSE: CHPT)*, the largest owner and operator of EV-charging stations in the U.S., jumped as much as 24%

_*Aramco could reduce dividend. *_Aramco could pay less than the originally planned $73.5 billion to its Saudi state shareholder in order to prioritize investments, Crown Prince Mohammed said earlier this week, opening the door to the oil giant to relieve some of the pressure on its balance sheet

_*Renewables gain too. *_The infrastructure plan calls for a 10-year extension of wind, solar and battery tax credits. It also calls for incentives to build out 20 GW of long-distance transmission. 

_*Oil’s surprise gain in Biden’s plan.*_ Bloomberg notes that Biden’s infrastructure plan, which leans heavily on clean energy, would also stoke demand for asphalt, boosting heavy crude blends. 

_*Is Russia About To Invade Ukraine?*_ While the world is focused on OPEC news and Easter preparations, the Ukrainian crisis is heating up and there is a real threat of a military confrontation involving Ukraine, Russia, and Belarus.

_*California turns to energy storage.*_ California is expected to add 1.7 GW of energy storage this year, enough to power 13 million homes. The state is hoping that the batteries will help head off blackouts this summer.

_*Energy storage to take $277B from the grid.*_ Energy storage will become a $277 billion market between 2020 and 2050.

_*ConocoPhillips takes a hit from hedges. *_Oil prices are up sharply this year, but *ConocoPhillips (NYSE: COP)* said that its first-quarter results would take a $600 million hit from its acquisition of Concho Resources and hedges. The incident highlights that many companies would miss out on the oil price rally due to hedges they locked in at lower prices. According to Reuters, many independent companies hedged their production at an average between $43 and $45 per barrel.

_*Santos announces LNG FID.*_* Santos (ASX: STO)* announced an FID on its Barossa joint venture, a $3.6 billion LNG export project in Australia. Santos had to take on a greater share of the project than it had previously wanted.

_*Europe lockdown to hit demand.*_ Oil demand will take a hit from new lockdowns in Europe and slow vaccinations. Rystad Energy says it could prevent 1 mb/d of demand from coming back this year. 

_*Two countries leading on offshore drilling.*_ Lower lifting and breakeven costs at the most prolific offshore oil regions off Brazil and Guyana are setting the stage for a rebound in offshore drilling in South America, which will be one of the main growth drivers of global offshore activity this year.

_*Europe gas storage depleted.*_ Diminished natural gas storage in Europe could provide a jolt to the global gas market as the year wears on.

_*Canada’s oil sands face pressure to transition.*_ Canada’s oil sands producers are posting stronger cash flow than expected, and investors praised producers for returning cash to shareholders and to pay down debt. However, they are also under growing pressure to plan for the energy transition. 

_*World Bank revises lending policy.*_ The world bank revised its climate change commitments but stopped short of halting all funding for fossil fuels.

So for April seasonality, very bullish. This chart goes back 100yrs:






The fundamental case for buying big Tech:







The technical case for waiting for a pullback:






Stocks are increasingly seeking to raise additional capital in this stage of the bull market:






Gold not having any fun currently. A turnaround in DXY might have an impact (positive): see next chart.






DXY at an inflection point: looking at FXE/DXY, I would say that DXY is going to pullback. We will have a period of DXY weakness, which could also mean a rally in gold and their Miners. If you are playing in this field, buy the Miners.








Mr flippe-floppe-flye and Archegos:

















jog on
duc


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## qldfrog (4 April 2021)

Just an info /warning for people following this thread and interested in the US and VIX: I found the VIX probably too low at the moment so thought:
hum could get more VIX ETF ? Would be a good time:
I bought someVXX in the past , all happy to have this cushion ready for the next fall but had a second look at the chart before placing my order..hum..this is not an ETF, but an ETN and it is IMHO seriously flawn, a bit like OOO on the ASX
https://investorplace.com/2017/04/ipath-sp-500-vix-short-term-futures-tm-etn-vxx-the-quick-guide/
DYOR


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## ducati916 (6 April 2021)

Indices are up. Individual sectors are mixed, but generally up.






Some sectors running hot...






And Mr flippe-floppe-flye's take:










We have DXY lower, possibly ready to trend back down. Because it's an inflection point, it may chop before resuming either the new trend lower or resume its trend higher. 

Interest rates are higher and my model has 1.58% as the correct price, which means yields should slow...but atm they do not seem to be. With DXY 'looking' to go lower, rates might be fearing the return of 'inflation'.

Basically the markets are noise currently. There is no really strong clear signal. Something will emerge in time. For the moment it is more about staying out of trouble.

Gold:

Like many others that follow gold closely, I also think that gold is reaching an area where it could rally. I prefer the miners. This would certainly be consistent with a weaker DXY. Yields are rising, but on a nominal basis. Real yields are still negative, thus, gold can easily rise in that environment.

However, gold rising, is a warning for stocks. Not today obviously, but if the rally in gold takes hold, it will be, especially if the fall in DXY takes hold contemporaneously.









Obviously the other market that bears watching are the commodity markets. Oil in particular, with the news out of SA, an increase of 2M/barrel/day, the POO should stabilise: ie. it will stop going up so fast. It may find a trading range. This could be consistent with 10yr yields rising softly, DXY falling and gold rallying.

That is an 'inflation', but not in commodities: in asset prices.

jog on
duc


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## ducati916 (6 April 2021)

Markets are about as complacent as they have ever been in the last 20yrs.

Feeling good? Feeling confident?






jog on
duc


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## ducati916 (7 April 2021)

Market sort of poised, which will become clearer when Mr flippe-floppe-flye's observations are added.

Overall, stocks are meh today after yesterday's big run higher.







Individual sectors are meh.






Bonds are higher. Risk off. DXY is lower (unrelated) I think. DXY was signalling lower in any case.







Gold higher. Risk off.






A pause. This is my inflation gauge. Why? We will I'm sure find out in time.






Miners, which have been reasonably robust in refusing to go lower, are now showing signs of a move higher. Risk off.






Some news:

This has implications. The trouble is, they are going to be so diverse, with some of them just totally unexpected, who knows how this plays out. All that can be said at this point is: this is important.







Surely we see this with Quants and algos all of the time.






Now from Mr flippe-floppe-flye:















Now, not actually addressed, but relevant:

A Hedge Fund blowing up is bad and in the past has had repercussions. This time, the market seems to have merely shrugged. Always a worry. However, a major Bank blowing up is something else again.

Now, whether or not it actually blows up remains to be seen. Essentially, does it get a bail out. History would suggest yes. However, public opinion being the way that it is currently, ie. lots of small businesses gone to the wall, possibly politically, that is not such an attractive move.

So let's say no bail out. What happens if CS does blow up? 

That could explain the run to safety in the Bond market. Junk bonds also turned lower as safety was sought. We also have the move to gold, which with the miners, has been going on for a couple of weeks already.

The whole thing may just blow over. Or it may not. Watch credit spreads.


jog on
duc


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## ducati916 (7 April 2021)

Oil news:


-    U.S. energy consumption declined by 93 quadrillion BTUs in 2020, a 7% decline from the year before. That is the largest annual decline since EIA data collection began back in 1949.

-    By comparison, U.S. energy consumption declined by 5% from the global financial crisis in 2008-2009.

-    Unsurprisingly, transportation took the biggest hit, with a 15% decline in energy use.

*Market Movers*

-    *Occidental Petroleum (NYSE: OXY)* plans to build a pilot bio-ethylene plant, using sequestered CO2.

-    *Canada’s Inter Pipeline Ltd (TSE: IPL) *received C$408 million from Alberta to build its Heartland Petrochemical Complex. 

-    *BP (NYSE: BP)* said it reached its $35 billion net debt target ahead of schedule and will provide an update on share buybacks later this month.

_*Tuesday Aril 6, 2021 *_

Oil prices sank on Monday as coronavirus cases surged around the world, leading to renewed lockdowns. The city of Mumbai went into lockdown, suggesting a forthcoming hit to oil demand in India. Oil prices rebounded on Tuesday, although the trend is not exactly bullish, with WTI stuck at around $60. 

_*OPEC+ bets on demand. *_The loosening of OPEC+ production cuts shows the group believes demand will continue to rise.

_*Oil bounces on stronger economic outlook. *_The IMF upgraded its 2021 GDP forecast for the second time in three months, noting the speed of the vaccine rollout. The U.S. is now becoming the focus and engine of global economic recovery with a fast vaccine rollout and substantial fiscal stimulus. “We’ve had these wild moves for the better part of the past ten days,” Bob Yawger, head of the futures division at Mizuho Securities, told Bloomberg. “There’s a recovering economic picture, with an improving vaccine situation in the U.S., on one side of the equation. It’s supply versus demand here for control of the market.”

_*Goldman Sachs cuts Chevron. *_Goldman Sachs downgraded *Chevron (NYSE: CVX)* to Neutral from Buy, noting that the oil major already trades a premium to some of its peers.

_*Exxon sues Energy Transfer over pipeline dispute.*_ *ExxonMobil (NYSE: XOM)* subsidiary *XTO Energy* is suing *Energy Transfer LP (NYSE: ET) *for disputed payments on the Dakota Access pipeline. The suit alleges that Energy Transfer overcharged XTO when the oil producer shifted oil flows to another pipeline. 

_*Soaring methane as drilling bounces back.*_ U.S. oil production remains about 2 million bpd lower than its pre-pandemic levels. Still, methane emissions are already back to their levels from before the coronavirus.

_*U.S. and Iran discuss reviving nuclear deal.*_ After a rocky start, the U.S. and Iran are making progress on a diplomatic thaw. Iranian oil exports have already been inching up this year, and a breakthrough in talks could see even more.

_*Iran oil won’t shock markets.*_ “With OPEC+ appearing to manage its exit for now, supply concerns will likely shift to the potential return of Iran to the JCPOA (Joint Comprehensive Plan of Action) agreement,” analysts at Goldman Sachs said in a note on Monday.

_*India cuts oil purchases from Saudi Arabia after price hike.*_ India will buy some 36 percent less crude oil from Saudi Arabia next month, unnamed sources told Reuters soon after the Kingdom said it would increase its official selling price for oil for its Asian buyers.

_*European battery majors emerging. *_Europe is scrambling to build out battery manufacturing capacity as EV sales pick up. Backed by billions in EU subsidies for both EVs and battery manufacturing, competition is heating up between Northvolt AB in Sweden, Britishvolt Ltd. and France’s Automotive Cells Co., and *Tesla (NASDAQ: TSLA)* and *Volkswagen (OTCMKTS: VWAGY)*. BNEF forecasts Europe’s share of battery manufacturing rising from 7% in 2020 to 31% by 2030.

_*Lawsuits from Texas freeze proliferate.*_ At least 30 lawsuits related to natural gas contracts have been filed in four states since the February freeze, according to the Wall Street Journal.

_*Pioneer’s takeover of DoublePoint shows shale’s signs of life. *_The $6.4 billion acquisition of *DoublePoint Energy* by *Pioneer Natural Resources (NYSE: PXD)* is the largest purchase of a private shale driller since 2011. The deal is a sign of further consolidation in the U.S. shale industry, but also one that shows “signs of life,” according to the Wall Street Journal.

_*JPMorgan cuts Pioneer.*_ JPMorgan cut *Pioneer Natural Resources (NYSE: PXD)* to Neutral from Buy following the $6.4 billion takeover of DoublePoint Energy. The bank said that the acquisition “fits like a glove” and would improve cash flow, but also noted that the purchase price was high. 

_*Shell invests in aviation fuel maker.*_ *Royal Dutch Shell (NYSE: RDS.A)* has invested in a sustainable fuels company LanzaJet, which is building an “alcohol-to-jet” facility to produce sustainable jet fuel.

_*Renewables overtake nuclear worldwide.*_ Renewable energy generated more electricity around the world in 2019 than nuclear, a milestone that is unlikely to be reversed. A separate report finds that renewables account for 82% of total capacity additions worldwide last year. 

_*European companies saw energy transition coming. *_*Enel (BIT: ENEL) *and *Iberdrola (BME: IBE)* began their energy transitions years ago, making them now powerhouses in renewable energy. That puts them ahead of the game compared to the oil majors. Reuters looks at how this unfolded.








jog on
duc


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## qldfrog (7 April 2021)

ducati916 said:


> Market sort of poised, which will become clearer when Mr flippe-floppe-flye's observations are added.
> 
> Overall, stocks are meh today after yesterday's big run higher.
> 
> ...



One point to add: i assume CS is Swiss.
When DB needed help, it got it directly and implied: the german government was bankrolling DB.
But in Switzerland, there is real democracy and people (in the street) still have power.i somewhat doubt that the Swiss government aka Swiss citizens would put billions to save CS nilly willy.
CS could be helped by the US or EU...Whose citizens may not like taxes going to save a "Swiss" entity
In any case not as easy as for DB or Citibank etc if it is required.
PS : i have not illusion vs the Swiss-ness of CS, just a name..but the power of a name...


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## qldfrog (7 April 2021)

ducati916 said:


> Oil news:
> 
> 
> -    U.S. energy consumption declined by 93 quadrillion BTUs in 2020, a 7% decline from the year before. That is the largest annual decline since EIA data collection began back in 1949.
> ...








An interesting first graph: in 2020, with covid, if you exclude US and Europe, world oil consumption did not even decrease so we should not be surprised to see even stronger demand in coming year regardless of US and EU green battle.
Time will tell but that would explain the OPEC confidence in raising  production caps.
Note: @ducati916 
 Mr Ducati : is this posting of mine just noise in your thread or does it add some value? I can abstain if you consider these out of place👍


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## ducati916 (7 April 2021)

qldfrog said:


> View attachment 122461
> 
> An interesting first graph: in 2020, with covid, if you exclude US and Europe, world oil consumption did not even decrease so we should not be surprised to see even stronger demand in coming year regardless of US and EU green battle.
> Time will tell but that would explain the OPEC confidence in raising  production caps.
> ...





Absolutely post!

It gets very boring talking to oneself.

For tomorrow, look at the VIX: I wouldn't be surprised to see an uptick or two and stock sectors or the overall market, get a little jumpier.






jog on
duc


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## ducati916 (8 April 2021)

The EOD charts are cautionary:

The breadth just isn't there. This sort of divergence is never good. Add in the range issue in NYMO, stocks are losing some momentum. And the PUT/CALL ratio is at an extreme.












Today, its choppy again: Energy coming back, but nothing much moving.






Mr flippe-floppe-flye:






Cryptos are having a (rare) bad day:








The market just has an eerie feeling to it. 






Nothing concrete from stocks.

Bond yields are off. Even at the short end, which pushes them into negative nominal territory. That is a run to safety. That is something that I pay attention to.






VIX is down: but just too low.






Caution is the better part of valour in the current circumstances.


jog on
duc


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## ducati916 (9 April 2021)

Things are seriously overstretched. Warning signs everywhere. Timing is of course the crucial question.

The market sitting at or near all-time highs.






Underneath those all-time highs, the internals continue to flash warning signs:

The VIX at its most complacent. But stretched.






NYMO turning down while the market trades higher.






Only 70% of stocks are above their 50 day EMA. The trend is concerning.






Yesterday, lots of PUT buying. We have seen recently that the volumes of Options have gone through the roof. This market can and does have an effect on the underlying market.








Gold is (and particularly the Miners, is looking a wee bit bullish. 






10 yr Bonds and the long end of the curve have been losing yield as my model predicted. Of far more concern is the short end of the curve:











This is a classic run to safety. DXY, all set to resume its loss of value has also paused. Why? Does it really matter? Pick your own causation. For the moment, the internals and associated markets are nervous. Will it amount to anything? Who knows.

Mr flippe-floppe-flye:











And a chart on social media use:






I like and use YouTube, the rest, IMO, garbage.

jog on
duc


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## Smurf1976 (9 April 2021)

qldfrog said:


> An interesting first graph: in 2020, with covid, if you exclude US and Europe, world oil consumption did not even decrease so we should not be surprised to see even stronger demand in coming year regardless of US and EU green battle.
> Time will tell but that would explain the OPEC confidence in raising production caps.



Adding to that, US oil production hasn't rebounded to pre-COVID levels and remains down significantly.

There's an abundance of information here:





__





						US January Oil Production Continues Slow Slide – Peak Oil Barrel
					





					peakoilbarrel.com
				




No point me repeating it all but if you just want the short version well then scroll through that article and look at the charts. There's a lot of them but pretty much all show the same basic pattern of a steep dive early last year followed by a limited rebound which has now faltered.

Note that Tight Oil is what most call "shale".






Conventional oil - that's oil which isn't shale, isn't tar sands needing to be mined, etc. What most people think of as oil - drill a well in the ground to access it.










There's a lot of charts in the link but all the same basic pattern. Steep plunge, partial recovery which has run out of go.

I'll leave others to work out what that might mean for the price but on the physical supply side, there's no ongoing production boom in the USA.

And no, it's not all due to the Texas power failure:






The US isn't the whole world of course but it's extremely significant when it comes to oil since, pre-COVID, it was the largest producer marginally ahead of Russia and Saudi Arabia. Crucially, the US has also been the primary source of production growth at the global level in recent years. So it's not the world but it's significant.


----------



## ducati916 (10 April 2021)

So starting with oil news:

*Friday, April 9th, 2021*

Oil prices are set to post a loss this week, following several days of up-and-down trading. The story is the same – a jockeying between market tightness and concerns about demand amid spreading Covid cases and lockdown measures.

_*Biden admin to decide DAPL’s fate. *_The Army Corps of Engineers is scheduled to appear in a U.S. court on Friday to decide the fate of the Dakota Access Pipeline. Last year, a court vacated a critical permit issued by the Army Corps during the first days of the Trump administration. The pipeline was allowed to remain online despite lacking the permit, but the court ordered the Army Corps to conduct a more thorough environmental assessment and come up with a new justification for continued operations of the pipeline, or to shut it down. The Army Corps, now under President Biden, has been silent on the issue but will make a decision on Friday.

_*Permian output to rise.*_ “The number of completed wells in the Permian basin during the first quarter of 2021 exceeded the required output maintenance level, so oil production is set to rise in the current quarter – but will likely slow again later in the year,” Rystad Energy said in a note.

_*Exxon explores the sale of its polymer business.*_ *ExxonMobil (NYSE: XOM)* is exploring a sale of its Advanced Elastomer Systems division for as much as $800 million.

*Repsol to furlough refinery staff on energy transition concerns. Repsol (BME: REP) *plans to furlough 830 workers at two refineries citing lower demand and uncertainty regarding the energy transition.

_*Shell threatens to leave API and other industry groups.*_ *Royal Dutch Shell (NYSE: RDS.A)* is threatening to leave the American Petroleum Institute, the Texas Oil & Gas Association and the U.S. Chamber of Commerce unless they take a stronger stance on climate change. API and the Chamber are the most powerful oil and business lobby groups in the country, respectively. Earlier this year, *Total (NYSE: TOT)* left API for similar reasons.

*Shell to turn an upstream profit. Royal Dutch Shell (NYSE: RDS.A)* said that its upstream unit would return to profitability in the first quarter for the first time since the start of the pandemic.

*Aramco weighs pipeline sale for $10 billion. Saudi Aramco (TADAWUL: 2222)* is in advanced talks to sell up to a 49% stake in its oil pipelines to a consortium of U.S., Chinese and local investors.

_*Oil majors’ rush for offshore wind crowds sector. *_Oil majors are rushing into offshore wind auctions in the North Sea, pushing up auction prices and crowding out big developers.

_*Jet fuel demand showing signs of life. *_Jet fuel demand is picking up, according to refiners.

_*EPA to propose new auto rules by July.*_ The EPA said it would propose new fuel economy standards for cars and light-duty trucks by the end of July. The agency is rewriting Trump-era rules that weakened fuel efficiency.

_*EIA cuts oil production forecast. *_U.S. oil output may average 11.04 million barrels day this year, according to the EIA, down from last month’s forecast at 11.15 million after the Texas grid crisis. The agency lowered its 2022 forecast by 100,000 bpd.

_*Norway’s sovereign wealth fund invests in clean energy.*_ Norway’s $1.3 trillion wealth fund made its first investment in clean energy infrastructure, buying 50% of a 752-MW offshore wind farm.

*GM to make an electric pickup. GM (NYSE: GM)* said it would make an electric version of its Chevy Silverado pickup truck.

_*White House considers 50% climate target. *_The Biden administration is considering announcing a goal of a 50% reduction in GHG emissions by 2030 (from a 2005 baseline), which would double the previous commitment made under the Obama administration. The U.S. is set to host an international summit later this month, so the announcement could occur in advance of those talks.

_*Mexico refinery explosion.*_ A massive fire erupted on Wednesday evening at an oil refinery operated by Petroleos Mexicanos (Pemex) in the city of Minatitlan in the eastern Mexican state of Veracruz

_*Investors rush back to oil stocks. *_Despite the surge of ESG-related equities, investors are flocking back to oil and gas stocks, at least for now.

_*Phillips 66 cancels Bakken/Rockies pipeline.*_ *Phillips 66 Partners LP (NYSE: PSXP)* canceled the Liberty Pipeline, a proposed oil pipeline that would have carried Bakken and Rockies oil to Cushing, OK. The company took a $180 to $210 million impairment.

*Equinor and SSE plan the first hydrogen plant in the UK. Equinor (NYSE: EQNR)* and SSE Plc are working to develop the world’s first hydrogen power plant in the UK.

_*White House considers Tellurian executive for Nord Stream negotiations. *_The Biden administration is considering appointing Amos Hochstein as a special envoy to negotiate the halting of the Nord Stream 2 pipeline. Hochstein was formerly in the State Department under the Obama administration before leaving to work for *Tellurian (NASDAQ: TELL)*.

_*BlackRock raises $4.8 billion for renewables.*_ BlackRock Inc. has raised $4.8 billion to invest in renewables, double its initial target. Meanwhile, Bank of America said it increased to $1 trillion its goal of financing low-carbon projects.

_*Biden to announce climate disclosure rule.*_ U.S. climate envoy John Kerry said at an IMF event on Wednesday that the Biden administration “is poised to issue an executive order that will require disclosure” of climate change-related risks by publicly traded companies. “It’s going to change allocation of capital,” he said. Bloomberg reports some details on that executive order.

_*U.S. Intelligence: Climate change to drive instability. *_A new report from the U.S. National Intelligence Council says that climate-driven chaos will fuel global instability and migration in the future.

This week ends with Tech. on top and Energy on the bottom:






Bonds & Commodities have been choppy all week:









Market valuations horribly stretched, but that could continue for quite some time.















News:











And Mr flippe-floppe-flye:







Nothing really much to add from yesterday. Mostly noise. No real signal, internals are weak. Various markets are positioning for what they believe might eventuate, but there seems to be low commitment to anything. The Tech. end of the market was the place to be this week, predicated largely on the 10yr coming off of the boil.

The 10yr coming off of the boil is essentially the market discounting the inflation fear. As can be seen, inflation currently is not a thing. With commodities (oil) having a bad week, the market can also lower rates, which it has.

This is potentially (enter your own causation here) in response to lowered growth expectations going forward. Looking @Smurf1976 charts yesterday, I'm taking it that the market believes that the Arabs can fulfil the demand lost from US supply as and when needed. I guess we'll find out when we find out. 

Rising (fast) commodities would have been a headwind to stocks. With that fear allayed (for the moment) the bull market is safe to move forward on the macro-fundamentals: the internals are stretched, which means we are still prone to fast sell-offs. For the moment however, that becomes a BTD opportunity.








The one remaining issue is DXY. If DXY (up today) continues weakness and sells off, this will again raise the inflation thing. I still have DXY as a short. If the sell-off picks up steam and particularly if it breaks the recent low, then I think markets will start to boil.

Often currency trends and flows can have significant lead times, with nothing much (seemingly) occurring during periods of weakness/strength. I don't think this is one of those times.

A hard sell-off in DXY will trigger commodities higher and rates will follow pretty quick. All are bad for stocks, particularly as we have seen Tech. and Tech. related.






So because I am short DXY, I am long gold miners and hedged in stocks. We'll just have to wait and see whether that actually plays out.


jog on
duc


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## ducati916 (11 April 2021)

Weekly wrap up:

Looking at the market first:

Commercials are selling less.






Market at all time highs.

PE and Yields and 1 yr comparison:











VIX very low.






Where VIX may go: as you can see, the probabilities don't argue lower.










Commercials also selling less.






Commercials buying less.






Commercials buying less, but the last couple of weeks saw a real turnaround.







The overall impression is that commodities are set to move higher, DXY lower and gold higher. All of which are not great for stocks, which are currently pretty much priced for perfection.

Because these markets are such a mess, all can change tomorrow.






Some 'insider' transactions:
	

		
			
		

		
	

















A biotech. hand grenade. Does it blow up higher? Certainly the insiders and Options market say yes.


jog on
duc


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## ducati916 (13 April 2021)

New week, same old, same old:

Stocks slightly lower






Bond yields slightly higher. DXY slightly higher.






Commodities slightly lower






Cryptos even






Sectors:






A worthwhile read: https://www.marketwatch.com/story/how-much-higher-will-this-bull-market-go-11617981444?mod=home-page

Highlights below:












Mr flippe-floppe-flye:






Related to the article:






Crypto. Wow. If you could have got in near or at the beginning and stuck the wild ride, wow. All I would say is (a) to invest in BTC you have to be a disciple, (b) to trade it, no issues except for the fact the initial difficulty of trading it. Now it is easier.


Markets remain messy while 'stuff' (the fundamentals and projections or best guesses are thrown out there) traders/investors take positions or sit on the sideline awaiting clarity (confirming data) or technical signals.

On the 'Dump' thread, a day trading strategy was compared to a longer trend trading system. It did well. The reason (obviously) is that in a messy market, a good day trader can do really well. Actually a good day trader can do well in any market, however, a really good trend (if you catch it) will generally outperform our day trader. Most day traders rely on massive leverage to generate $ returns. The % returns on capital are tiny, as in 0.2% etc. Therein lies the risk if you are trading in a less than optimal manner.

The 'noise' to 'signal' ratio is very high. So much so that I'm only looking at weekly and monthly charts currently. The day charts are just too full of noise.

This chart is a real concern:






That is the general message: overstretched. The issue (as always) is in the timing. Exit or short too soon, you are an idiot or lose money. Too late, and open profits disappear.

At the end of last week we had the indices rip higher into the close. It didn't make a dent in this chart. Only 70% of stocks are above their 50EMA. That means 30% are below.

With the market at all-time highs, this divergence will, at-some-point, come home to roost if it does not pick up. Now today, with a gentle decline, it will be interesting to see how those numbers change.







jog on
duc


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## ducati916 (17 April 2021)

The week's summary:


So the 10yr moved lower in yield as suggested by the model. The model suggested 1.58%, currently sitting at 1.56%. As the chart below depicts, the 10yr is now sitting on a dynamic support point.

Which way it goes is a guess.






Inflation, as a result of the fall in yield, has upticked, indicating that relative to $TNX, commodities are moving higher. This is currently nothing to really be alarmed about, simply keep an eye open.







Stock sectors this past week:

The 'defensives' have outperformed: Utilities and REITS (XLRE). Is that broader participation or signs of a toppy market?

XLRE is also benefitting from






Hedge Funds have (again) moved into this area.






We had consumer news during the week:

Retail Sales. On fire.










Where were these sales concentrated:










You would expect a greater demand for petrol, unless they are all TSLAs and you would be right, at least in the shorter time frames.

*Friday, April 16th, 2021*

Oil prices moved higher this week after the demand outlook improved. While Covid cases are up significantly from a few weeks ago, and travel restrictions have proliferated, demand still looks strong and on the rise.

_*IEA raises oil demand forecast. *_The IEA raised its oil demand forecast for 2021 by 230,000 bpd, citing improving vaccination efforts and U.S. stimulus.

_*Exxon spends huge sums to defeat proxy moves. *_*ExxonMobil (NYSE: XOM)* is spending above $35 million to block proxy votes by activist shareholder Engine No. 1, and could spend as much as $100 million, according to Reuters, although Exxon disputes that figure. Analysts say it could become one of the biggest proxy fights in history.

_*New Zealand becomes first country to require climate disclosure.*_ New Zealand became the first country to require banks, insurers and investment managers to report the impacts of climate change on their businesses. The law affects banks and insurers with assets over NZ$1 billion, and all equity and debt issuers listed on the country's stock exchange.

_*Oil majors’ struggle to sell $110 billion in assets.*_ Large oil and gas companies are looking to sell off a combined $110 billion in assets to raise cash and pay down debt. But they may struggle to find buyers, according to Reuters. “This is not a very good time to sell assets,” *Total (NYSE: TOT) *CEO Patrick Pouyanne said.

_*California fracking ban dies in state legislature. *_A proposal to ban fracking statewide in California fell short in the state legislature this week.

_*Bitcoin power consumption jumped 66-fold since 2015. *_Energy consumption for Bitcoin mining is up 66 times and the associated emissions are destined to receive greater scrutiny, Citigroup warned. Bitcoin uses more energy than the entire country of Argentina. The New York Times also did a deep dive on the issue.

_*Chevron invests in offshore wind for first time. *_*Chevron’s (NYSE: CVX) *venture capital unit invested in Ocergy Inc.’s floating offshore wind turbines. “To my knowledge, this is the first investment by a U.S. oil major in offshore wind,” said Anthony Logan, a senior analyst at Wood Mackenzie Ltd.

_*Exxon cuts Guyana production due to compressor problem.*_ *ExxonMobil (NYSE: XOM)* cut its Guyana oil production by 75% down to 30,000 bpd due to a problem with a compressor on its offshore platform.

_*BP halts production at Shetlands oil field.*_ *BP (NYSE: BP) *suspended production indefinitely at its Foinaven crude oil field west of Shetland.

_*Pioneer warns of price war if shale moves too fast.*_ *Pioneer Natural Resources (NYSE: PXD)* CEO Scott Sheffield warned that OPEC+ would engage in a price war if U.S. shale grew production too quickly. “If we grow another million barrels a day next year, we’re going to have another price war in my opinion going into ‘23,” he said.

_*Exxon may exit Iraq’s West Qurna 1. *_Iraq’s oil ministry said that *ExxonMobil (NYSE: XOM)* may exit the West Qurna 1 oil field. The ministry said it is looking for buyers. Exxon operates the massive 500,000-bpd field.

_*Investors around the globe looking for ESG.*_ More than 80% of affluent investors in Hong Kong, China, Singapore and the UK say that environmental and ethical issues matter, and only a third have their investments tied to ESG factors, according to HSBC Asset Management. The data suggests there is an appetite for ESG investments.

_*WoodMac: Global energy transition to result in $10 Brent by 2050.*_ Stricter climate policy could accelerate the energy transition, and a steep drop in demand could begin by 2023, according to Wood Mackenzie. Demand could fall to 35 mb/d by 2050, with Brent averaging between $10 and $18.

_*Goldman Sachs: Oil demand to peak by 2026.*_ Goldman has been bullish on oil demand in the short run, but expects “anemic” demand after 2025 and a peak by 2026.

_*Biden expected to propose 50% cut in GHG. *_The U.S. is hosting a virtual climate summit next week, and ahead of that meeting, the Biden administration is expected to announce a 2030 greenhouse gas reduction target of 50%.

_*Report: 2035 100% EVs is possible.*_ A new report shows that, with the right policy, it is technically and economically feasible for all new car and truck sales to be electric by 2035.

_*Shell opposes climate proxy vote.*_ *Royal Dutch Shell (NYSE: RDS.A) *is pushing shareholders to oppose a climate resolution filed by activist investor Follow This.

_*Shell warns of stranded assets.*_ *Royal Dutch Shell (NYSE: RDS.A) *says that it will have produced 75% of its proved oil and gas reserves by 2030, and will produce only 5% after 2040.

_*North American oil bankruptcies hit 5-year high.*_ Oil and gas bankruptcies in North America hit their highest first-quarter level since 2016, according to Haynes and Boone. There were eight bankruptcies in the first quarter.

_*The largest U.S. gas driller wants methane regulations. *_*EQT (NYSE: EQT)*, the largest natural gas driller in the U.S., called for stricter limits on methane. The Pittsburgh-based company supports Congressional efforts to repeal the Trump-era rollback on methane limits.

_*Permian pipeline crisis. *_A few years ago, Permian drillers suffered price discounts due to inadequate pipeline capacity. Now they have the opposite problem: too many pipelines and not enough oil.


Mr flippe-floppe-flye:






Dodgy coin:






Says it all really.

Overall the market has continued to rise this week to new all-time highs.






Obviously you cannot be short this market. Conversely, to be long, means to be holding a frothy position. It comes down to whether you are trading the indices or sectors or individual stocks. The market, is higher. Sectors are marginally higher. The second best performer this week Materials:






Conveys a mixed message. Message 1 is that the world economy is opening up and growing again. Message 2 is that this is likely to be inflationary.

When looking at DXY (which is still looking to move lower) we cannot really just consider what I will call US dollars. We need to look at Eurodollars, which is actually quite hard to find data on, as both positions actually produce the complete dollar situation.

For the moment, DXY is the best we have. As already stated, the chart is suggestive of a continued move lower. A move lower is inflationary. This raises 2 potential scenarios: (a) $TNX continues to fall, which will likely contribute to a lower DXY or (b) $TNX finds support and yields start to rise again.

Re. (a) My model suggests 1.58%. This would mean consolidation for a period of time. The Fed. has reiterated their message that they want higher inflation, which means YCC is still on the table. The rise in inflation (currently as depicted above being only marginal) is not yet a 'thing' and so I think will continue in the shorter term. The move higher this week of the defensives, XLU, XLRE, both of which are yield plays, suggests that bets are being laid that $TNX continues lower or consolidates.

Re. (b) $TNX finds support and yields start to rise again. Any nascent inflation will likely be nixed. DXY may move sideways. Sectors of the market (Tech.) will again struggle. This (could) might depend on why yields rose in the first place: (a) aggressive short sellers forcing prices lower or (b) selling from China/Japan/Europe.

Consumer demand is robust as demonstrated via the data. As economies re-open, that trend is likely to continue. That will continue to drive demand for commodities. Therefore they will rise (broadly speaking) which, if $TNX consolidates or falls (as will DXY), will place increased inflationary forces before the markets. The Fed. will not hinder this process, at least in the immediate future. Rising PPI will eventually cut into profit margins within sectors of the market.

All of this will take quite some time to play out. Therefore, the Bull remains intact, although unstable.


Short term, the market will continue to be choppy, with sectors displaying messy behaviour. I do expect a bit of a dip in the over-all market as stocks are pretty stretched. It will be a BTD situation or an entry point if you have been on the sidelines.

As for 'Black Swans', while far more common than financial theory allows for, they are also far less common than the perma-bears advocate. They (BS) are 'unexpected'. Therefore situations that are contemplated, discussed, argued, etc. are probability wise, unlikely to constitute the next BS. For example the China invades Taiwan issue. The probabilities I would argue are astoundingly low. The reason being that China is and has been waging an economic war that has been resoundingly successful to date: why change a winning strategy.

Therefore absent a true BS, any decline in the indices will be short term profit taking, rebalancing, etc. and becomes a legitimate BTD situation. I think that this will likely happen next week at some point. Sentiment (measured via VIX) is almost at all time complacency levels. Some bad earnings reports, economic data, whatever, could spook the market to take some profits off of the table.


jog on
duc


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## qldfrog (17 April 2021)

ducati916 said:


> The week's summary:
> 
> 
> So the 10yr moved lower in yield as suggested by the model. The model suggested 1.58%, currently sitting at 1.56%. As the chart below depicts, the 10yr is now sitting on a dynamic support point.
> ...



Another potential BS trigger:
Ukraine: with Biden and democrats back, the anti Putin rhetoric is back and the Ukrainian president seems keen to put some heat on the issue with the backing of EU and US.
Not big in a world wide view but could be enough to trigger a small fall.
BTD opportunity if this happens in my opinion too


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## ducati916 (18 April 2021)

So the BIG picture:

Nothing particularly new here. If you were not aware that the market was historically overvalued, you have obviously been living in a cave.











There are no returns available from Bonds. As an asset class they are dead.






Which brings us nicely onto the really important chart: This is a chart of the final bubble. We have had the stock bubble, 1982 - 2000. Imploded. Fed. bailed out the market via low interest rates, created the Housing Bubble via sub-prime lending. Imploded. Fed. took interest rates to ZIRP. COVID blew up the markets again, which with rates at ZIRP required NIRP and the creation of the Sovereign Debt Bubble, which we are currently in.

Some additional dates on the below chart:

June 8 1946: 121.4%
Oct. 1 1929: 16.34%
Oct. 8 1987: 48.56%
Jun 1 2001: 55.2%
Jun 1 2008: 64.2%
April 2021: 125%






Where were Stocks the last time that the US had debt ratios similar? The peak just before 1950 (identified). Stocks went on to bottom in 1949, just prior to the next great Bull market that ended in 1969.

You can see that Stocks don't do great in an inflationary environment. Stocks prefer DIS-inflation (every thing hates DEflation).






The following charts just provide some context around where relative prices are.

Oil, which can be (historically) one of the most inflationary and volatile commodities is very low as against gold. Now there are many arguments that green energy is here and can replace much of the demand for oil. I personally don't think so.

Current prices for oil I think are at the $55 - $75 range. But if (and we will see that this is the only way forward) inflation takes hold, that range could easily move significantly higher.

So essentially what we have is that the only area not currently in a bubble are commodities.






Housing: Gold, again, very low. Houses as we will see are (a) unaffordable for many and (b) already entering another bubble themselves.







Clearly the NASDAQ has entered bubble territory once again.






Housing is also back into bubble territory.











Real interest rates are negative (-2.56%). This is the 1 year.

After WWII, real interest rates in the US went (-14%) with the YCC implemented by the Fed. In the de-industrialised world (Germany, Japan, Russia, England) they went to (-60%) real yields.

In other words, when Sovereign debt levels go to these levels, INFLATION is the only answer that government has. The 1929 period was where defaults (Company) were allowed to happen. That period was so painful economically, that it has been abandoned as a choice.

The Fed. has already told us that inflation is the only way forward.

The issue is that the Fed. thinks that it can control the inflation once it actually takes hold. You can see from the chart below and the 1970 - 1980 period just how high nominal rates had to move to actually create a real positive return.






So to create that inflation, either (a) nominal interest rates go deeper ZIRP, which destroys your banking system or (b) commodities trade towards bubble levels. There is a third possibility (c) which is that the banking system is shut down world-wide and all Central Banks move to a digital currency, which allows a deep ZIRP.

For the moment, option (b) is going to happen.

The US can no longer sell Treasuries to foreign governments. This means that the only way to service Sovereign debt, Welfare, Social Security, Defence, is to print money. This is pretty much true for all G7 nations as the COVID crisis blew their debt loads out of the water. All will inflate. Possibly 1 or more might be forced into a default and actual deflation. That will be really ugly as it will likely be the falling domino that takes down a whole host of other dominos.

The Fed. has with a % of its newly created money, bought stocks: ETFs. The Fed. is directly a player in the stock market. The Fed's debt liabilities, while the stock market is high, are less than its assets. Obviously, in a collapsing stock market this reverses. This creates another less obvious risk.

Using Germany as the example when the Weimar Republic blew itself up via a hyper-inflation, gold took you through the chaos.






Which raises the argument for BTC. as an extreme inflation hedge. Currently the BTC infrastructure, mining, storing, etc. requires the energy consumption of Argentina. That is a real cost, that in an inflation or even a hyper-inflation, is a real and rising cost, how does that work out?

If you can perfectly time the market at the top, then you don't really need to worry about allocations currently. But on a macro-picture,
Short DXY, Long Gold and most (all)  commodities, Short Bonds at the long end higher yields until capped by YCC, which will signal the explosion higher in commodities and Stocks (eventually) Short.

Ray Dalio proposed the 'Forever Portfolio' which he copied from this chap: https://en.wikipedia.org/wiki/Jakob_Fugger


Of course the difference I guess is, investment (like the example above) is about staying rich. Trading is about trying to get rich.




jog on
duc


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## qldfrog (18 April 2021)

A note on oil:
As already mentionned, there is an incredible push in the West for a new "green" economy:
EV s right and left on the news, push to decarbon and basically to bankrupt oil companies with banks and investment funds under massive, sometimes government based push to stop operating: closing wells, stopping exploration....
Yet the most optimistic reports i have heard about, is for a 100% EV for new cars in 2035..which means still producing ICE in 10y time,while using oil burners in Europe and the US all winters
I will not even go into the actual feasibility for a chinese or indian, even less african  consumer to purchase an EV considering the cost now and in the future of batteries.  if it is possible to get enough lithium etc.
And i witnessed first hand the car ownership in China, still among top priority for the emerging middle class
So considering how oil production especially shale, depends on ongoing exploration for new resources, one does not need to be a genius to predict that either we hand over all production to China...who will do BAU and then resell to us at a premium and with political leverage.
Or we will enter into a penury crisis phase with oil price going thru the roof and creating geopolitical tensions with this time China as the new US in the Gulf repeat scenario.
A lot of $ for the wise move.
So where can we invest in oil, but without the penalties striking the western producers.


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## ducati916 (20 April 2021)

Markets open weak:






I guess the story is BTC:











And with the basic story, Mr flippe-floppe-flye:

















SPACS and NFTs also having a bad day at the office:






So I guess what happened above is pretty much this:







This market has been compared to any number of past Bull markets. It does share 1 characteristic with the great 1920's Bull market: the huge involvement of the little guy...the retail trader, who really knows very little and is playing to an extent with 'house money'. It will end badly. In a Bull market, everyone looks like a genius. The denouement, when it arrives, will wipe many of them out.

The thing is 'when'. No-one really knows 'when' arrives for real. Yes, we have a 'top' of sorts, but it may well (most likely) just be a short term BTD type of top. The 'actual' top will only be recognised not in the top, but the failure to regain the high and to move higher, with the grind lower. It is unlikely that we get a flash-crash type of top and another speedy descent into a Bear market.

This Bull still has (I'm guessing, another year in it) time to move higher, if, the market is going to move to an inflationary top rather than a deflationary crash. The odds are far higher for an inflationary top than a deflationary crash. The problem will be the high rotation through the sectors. They will remain very choppy.

While that scenario plays out, with the Fed. eventually stepping in with YCC, stocks will continue higher. Commodities will become very volatile, which we are already seeing in Oil, as they contend with rising yields capping the inflationary pressures marginally until the Fed move to YCC and then commodities will unleash.

DXY will in the meantime also fuel inflation through a downtrend. I don't expect a collapse, but I do expect a long grind lower. Gold I expect to bounce between the twin forces of a declining DXY, but, also struggle against rising yields, until they are capped.

Cryptos. No idea. They are 'new' and pretty much untested. I personally wouldn't touch them as a longer term holding. Trading them will also be difficult with the volatility, meaning you have to trade smaller. Trading smaller is a waste of effort if you have cash to allocate. They are also very difficult to hedge or off-set. You are pretty much either long or short and for that reason I have zero interest in them.


jog on
duc


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## Craton (20 April 2021)

Interesting Bull threads, thanks.
Just a thought or two from a retail investor, me...

I'd say from a layman's perspective (and, shame on me, without any facts and figures) that the sectors were not performing all that well before CV19. Lots of issues on the table like climate change, corporate/banking stuff up's, China's muscle flexing, natural disasters, low interest rates so on and so forth. Thus, the down ticks on the markets when CV hit was probably a good thing, certainly was for this contrarian.

I suspect that a lot of people are expecting a rebound across the sectors as the globe comes out of quarantines, vaccinations roll out and there is a sense of general optimism going forward. Well the world didn't collapse totally around our ears did it?

My guess is that markets have been pushed higher in early anticipation of that rebound. Will the push higher last any longer is a great question and one that only history can answer. Ah but to have a time machine, lol.

Keep up will the great posts, fascinating times these.


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## ducati916 (20 April 2021)

Craton said:


> Interesting Bull threads, thanks.
> Just a thought or two from a retail investor, me...
> 
> I'd say from a layman's perspective (and, shame on me, without any facts and figures) that the sectors were not performing all that well before CV19. Lots of issues on the table like climate change, corporate/banking stuff up's, China's muscle flexing, natural disasters, low interest rates so on and so forth. Thus, the down ticks on the markets when CV hit was probably a good thing, certainly was for this contrarian.
> ...




So really from the post above, the last 200 days:









Now if instead you utilised x3 ETFs for some of those sectors:






Not quite BTC, but pretty good.

Other areas of the market and the indices themselves:







jog on
duc


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## gartley (20 April 2021)

Back in Feb the SLTD Delta suggested a major top in this market within the next few months. This could be at hand now:






The static 40 Week cycle projection range has been reached between 4165-4288





The weekly dynamic projection is presently 4450. There are no other projections above this that are outstanding.

The  current pattern of trend has formed a rising wedge pattern





The chart below  shows that price to have thrown over the upper pink 86 bar cycle band suggesting the excursion away from the nominal is too far too fast.  This suggests it's a high probability that a correction back to the opposite 32 bar blue band should materialize at 3185. That's a 10% decline.....  If this market does continue trending to 4450, we are talking 5.5%, not worth the risk IMO


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## gartley (20 April 2021)

Sorry bulls.......


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## ducati916 (21 April 2021)

Well the correction is upon us. How deep it goes will of course be the question. Currently defensive sectors are holding up the best, some rising XLU & XLRE.







VIX is moving from very low levels:






Obviously keeping an eye on it. If we are going to BTD we want to buy it as close the the bottom as possible. This is not it.

Mr flippe-floppe-flye is less optimistic:






His point is a valid one. We have so many new retail traders in the market currently that lack experience of the markets or possibly the wrong experience. That is to say, they only know one direction. Some magical force will enter and markets will again go up. This time, they are probably right. The Fed. is absolutely committed to higher asset prices. This will be a BTD. Just not today, although I'm sure many will BTD today. We'll see.

Oil News:

*Tuesday Aril 20, 2021 *

Oil prices posted modest gains on early Tuesday morning following reports of an outage in Libya, but demand concerns sent prices falling as the day progressed. 

_*Discounted oil a headache for OPEC. *_Rising Iranian oil imports into China had forced other producers, including Russia, Angola, and Brazil, to cut the prices of their crude in order to keep it competitive.

_*Texas landmen switching to renewables. *_The shale boom resulted in a boom for landmen, who find, sell and flip tracts of land to drillers. These days, more landmen are pivoting to renewables.  

_*BP aims to end flaring by 2025.*_ *BP (NYSE: BP)* said it would spend $1.3 billion to build more pipelines in order to capture natural gas in an effort to end flaring in the Permian by 2025.

_*Inventory glut at an end. *_The inventory buildup during the pandemic is nearing normalization, according to Bloomberg. “Commercial oil inventories across the OECD are already back down to their five-year average,” said Ed Morse, head of commodities research at Citigroup Inc. “What’s left of the surplus is almost entirely concentrated in China, which has been building a permanent petroleum reserve.”

_*IEA: Global emissions surging. *_The IEA expects global greenhouse gas emissions to surge by 4.6% this year, one of the largest annual increases ever recorded. “This is a dire warning that the economic recovery from the Covid crisis is currently anything but sustainable for our climate,” said Fatih Birol, IEA’s executive director, in a statement.

_*U.S. climate summit. *_The Biden administration is hosting an international climate summit this week, where the U.S. will unveil new climate targets and attempt to woo other nations in stepping up their ambition.

_*Oil industry looks to carbon offsets for each barrel. *_*Occidental Petroleum (NYSE: OXY)* has tested the practice of offsetting the carbon that each barrel of its oil holds. Sources told Reuters that Occidental paid $1.3 million in offsets for a shipload of crude, which added about 65 cents per barrel. The company has marketed its oil as carbon-neutral. 

_*Gas faces $100 billion in stranded asset risk. *_Natural gas is falling out of favor, and gas-fired power plants could wind up getting mothballed much sooner than expected. Analysts expect major banks to begin tightening financing restrictions on new natural gas projects, and some European utilities can’t find buyers for their gas assets. “Gas will be a repeat of coal but quicker,” said Catharina Hillenbrand von der Neyen of Carbon Tracker.

_*Lithium giant emerges.*_ A planned $3.1 billion merger between *Orocobre Ltd. (ASX: ORE)* and *Galaxy Resources Ltd. (ASX: GXY) *is the largest mining sector M&A deal so far this year and could create the world’s fifth-largest lithium producer.

_*U.S. refiners looking for heavy crude. *_U.S. refiners were forced to source their heavy crude from somewhere else after the United States sanctioned Venezuelan crude oil. Now, U.S. refiners may again be forced to resource crude oil as French bank Natixis stops funding the Ecuadorian oil trade.

_*Banks face pressure to phase out fossil fuel lending.*_ Investors with $11 trillion in assets under management have called on the world’s largest banks to phase out fossil fuel lending. 

_*China's oil buying frenzy may end this month.*_ Higher Chinese crude oil imports and increased domestic production led to a jump in crude volumes directed to storage in the world’s top oil importer in March, according to calculations by Reuters columnist Clyde Russell based on official data.

_*Libyan oil disrupted.*_ Libya’s oil exports from the port of Hariga have been disrupted over a budget disagreement with the country’s central bank. “If the 120,000 bpd Al-Hariga port remains closed, we estimate that more than 100,000 bpd of Libyan oil production could be shut in,” Rystad Energy said in a note. 

_*Exxon and Shell want to profit from carbon capture.*_ *ExxonMobil (NYSE: XOM)* and *Royal Dutch Shell (NYSE: RDS.A)*, among other oil companies, are looking into expanding carbon capture services that they could offer to heavy industries such as steel and cement. 

_*Exxon pitches $100 billion in carbon capture.*_ *ExxonMobil (NYSE: XOM)* said that if the U.S. government puts in tax breaks, it can build a $100 billion carbon capture project near Houston. The idea would consist of capturing 50 million tons of CO2 annually beginning in 2030. There are no signs that the Biden administration is considering the idea. 

_*Can the energy sector maintain its crazy momentum?*_ Is the pessimism in the fossil fuel sector overdone? Can investing in oil and gas still pay off over the long term? After years of underperformance, the U.S. energy sector has been displaying flashes of brilliance that suggest that it’s still got some legs to run.

_*Coal miner’s union warms up to transition. *_The head of the U.S.’ largest coal-mining union said on Monday that it would back the Biden administration’s shift away from coal so long as there are specific investments and benefits to Appalachia and priority for coal miners obtaining renewable energy jobs. The shift in position is a major boost for the Biden administration’s infrastructure package.

I'm definitely an oil bull. However, the correction in oil stocks is not yet over:






Still some time to run before we can buy again.

Cryptos:











China already has a digital Yuan. It is trading as we speak. The US has more to lose than most, re. Reserve Currency pre-eminence. So you just know that the digital dollar is just round the corner.

What are the ramifications?












I guess we're going to find out.


jog on
duc


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## ducati916 (21 April 2021)

Looking again at the big picture:

Demographics are not moving in the major economies favour:






As a result, productivity is falling:






But productivity is falling for other reasons also. As government, specifically Central Banks increase their Balance Sheets we get government crowding out. More and more of the economy becomes dependent upon central planning or socialism. Productivity also takes a further hit through government keeping zombie companies afloat. Government crowding out also results in greater dependency on government welfare: now euphemistically called 'Universal Basic Income' (UBI).






The disinflation (import) driven by cheap imports, in an increasing zombie economy, is lost to more expensive imports (inflationary) and a lower standard of products. China has a massive problem of companies that competed for market share (cheap prices, actual losses) now need to repair their Balance Sheets (higher prices). The Arabs learned from China the advantages of destroying competition through a loss making grab of market share.

DXY will continue its decline. This is a capital outflow. Capital seeking more attractive returns elsewhere, probably Asia.

The Fed. will never be able to rectify their Balance Sheet. The Fed. however will need to bankroll the next crisis. The only real way that this can happen is to bundle the current $4T in debt into a Perpetual Bond at 0% or 1% interest and inflate it away over decades. This allows them to then build a new tower of debt.

I have spoken re. the forces in 1987 that caused the crash, without any recession into the economy in earlier posts. This looks increasingly probable. All the macro forces are present.














With DXY declining, and rates rising (absent YCC) at some point, probably 2% (possibly slightly higher) allocations move into reverse and Mutual Funds start to rebalance: this can and probably will trigger (a) the algo's and (b) the retail trader/speculator, who was never present after the 2008 top into the 2009 bottom. It will be interesting to see how badly hurt the retail element of the market are.

In 1987:







Earnings:

The consensus seems to be: there is enormous pent up demand that will explode once the economy opens up. Possibly true. That will reflect into 1Q numbers and then fade away. It cannot be sustained as while people have been saving, they are unlikely to spend indefinitely, even if they could, which of course they can't.

There are going to be massive disappointments, probably not this quarter, but, dangerously into the third quarter of re-opening if it continues apace. Think September/October.









In the absence of productivity growth, Companies will increasingly rely on accounting tricks and fraud to make those earnings expectations.

A flash crash, 1987 style is definitely on the cards.

Now I don't think it is until later in the year. However, the shallow dips that we have currently, down 3% - 4% and then buyers show up and the market moves to new highs, conditions those newer retail traders to BTD. Why not? It has proven from the lows last March to be a highly profitable tactic. The issue of course is when the first dip degenerates into a cascade of selling lower.

With the advent of China issuing a Yuan digital currency, potentially the banking industry is broken. I have now sold all banking related ETFs. The banking industry until it proves otherwise is now off limits, certainly for a year or so while the ramifications of all this work themselves out.

President Biden is looking inward to fiscal policy, rather than outward with Foreign Policy. There has been a thread devoted to China's annexation of Taiwan. With the US so internally centric, I think China grabs Taiwan and it is a fait accompli before the US reacts. With Taiwan, China gets control of the semi-conductor industry leader.

Magazine Cover:






Some sort of warning in there.


jog on
duc


*Just looking at the VIX futures:






Up 14%. Probably not a good open tomorrow unless that comes down significantly.


----------



## ducati916 (22 April 2021)

Sectors continue to churn.

Meanwhile:






And Insiders:







So the Insiders are selling their shares, however gained (Options awards etc.) and I suspect retail are buying those shares on margin. As long as stocks only go up, this is not a problem. The problem arises if (a) margin is not continuously extended, (b) there is enough selling to start issuing margin calls or (c) a mini crash that triggers algo. selling combined with margin calls.

Insiders are very aware of the valuations of their own stock. They also realise that they need to sell at these valuations to monetise. They also know that they will always get more stock as a result of Options awards as part of their compensation.

We could also argue that 'margin loans' probably will continue (in this environment) to be extended. Why not, liquidity is everywhere. But unless you believe that the 'margin call' is also history, which we know after Archegos, that it is not, then, at some point there is a problem.

The problem will likely start in the debt markets.

The issue I think is this: markets to the downside, when it is serious, have speeded up. The bear in 2000 was slow motion (which probably was an issue in itself) and even 2008 took a long while to finally roll over. 2020 was very fast. 1987 was very fast. I also think that if (when) this market blows up, it will also be very fast like 1987.

Inflation is starting via PPI inflation to register on CPI inflation:






The 10yr is having a bit of a break currently. We'll see if it remains +/- 1.6%.

The oil glut is gone. Half the world is still in some form of lock down. Re-opening is starting. Oil supply is all over the place currently.

From the 1970's






I was there sitting in the car on days that your licence plate allowed you to fuel. There are some really big numbers being projected for oil: Goldman has $100/barrel, I've seen $300/barrel. I think $75/barrel is likely before settling somewhere in the $60/barrel region. But who knows. What does $300/barrel do to stocks?


Meanwhile Mr flippe-floppe-flye:






While this current weakness remains a BTD and BTD buyers have already shown up, I don't think this is the low of this correction. I still think the Bears have a little gas left in the tank to move prices lower. While the sectors are very messy, up 1 day down the next, the rotation from growth to value continues beneath the surface. The rotation (quietly) to inflation hedges also continues. Gold is consolidating sideways in time, it seems to have found its current low.

The thing with Gold now is: stop watching the 10yr as a prediction of where gold might go. Gold can rise against nominal rate rises that are in real terms less than that of inflation. Currently (but this is subject to revision) real rates are below the inflationary rate. If oil picks up for any reason, that trend will only accelerate. Rates will also move higher, but, if as the Fed. has signalled, YCC is put in place, watch out below. That is when we see a 1987 type of collapse.

jog on
duc


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## Smurf1976 (22 April 2021)

ducati916 said:


> There are some really big numbers being projected for oil



Underlying energy demand seems much stronger than I think many realise.

Quite a few countries have had shortfalls of electricity and/or gas supply in recent months, it's not just one or two, and we've seen things like the incredible spike in LNG prices which occurred a few months ago not long after the crash.

Natural gas LNG netback price in Australian Dollars per GJ. Source = Australian Competition and Consumer Commission (ACCC) data. There's no single spot price for LNG as there is for most commodities but this gets reasonably close given the calculation is driven by exports from Queensland:

November 2019 (pre-pandemic = $6.72

July 2020 (low point) = $2.29
August 2020 = $2.36
September 2020 = $3.14
October 2020 = $4.71
November 2020 = $5.71
December 2020 = $7.61
January 2021 = $8.73
*February 2021 = $19.62*
March 2021 = $8.56
April 2021 = $6.48

Meanwhile there's a very similar event going on locally in Victoria at the moment as I've detailed in this thread here with extreme price volatility for natural gas: https://www.aussiestockforums.com/t...ation-and-storage.29842/page-245#post-1118828

My focus on the energy industry is more physical than financial but there's certainly demand there across all fuels and not just in any one country. So I'd be alert for surprises on the financial side - strong demand doesn't leave much room for production mishaps etc.


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## ducati916 (23 April 2021)

The market had a fast spike lower:







Why?

It's what markets do. There will be all manner of causal explanations post hoc. All just noise.






The defensive end (absent XLI) held up or are holding up currently, better than the leadership sectors. Although if the decline continues, I'm sure they'll join in also.






Does the falling EMA help us out? No idea. My guess is we go through it before coming back down.

Mr flippe-floppe-flye:






Right now (as in for the next couple of hours), it's an algo market. There will be wild price swings, lower, higher, as the machines trade with each other. Human traders (if they are smart or have seen this before will just grab a coffee and be entertained) should avoid trying to trade the market until the machines ramp down.

The thing with a fast market is that it is pure noise for the most part, 90%+. There is a little signal in there, but you won't see it until the machines take an oil break and prices calm down. The interesting thing is whether the newer retail traders try and day trade in this market, long or short, thinking that their sh***y platforms can outperform the machines, located within the exchanges and latencies of milli-seconds. I just placed a trade (sell order) prior to this post and was executed $0.08 higher than my limit. Why? Pure luck and a machine running the price higher at that moment. A minute later, the price was $0.15 below my limit. This is in a sedate ETF that was in the leadership today XLRE.

Current:






We'll have to wait and see if the market calms down a bit now. If it doesn't and the decline maintains its momentum into the close, there will be some very nervous market participants for tomorrow's market heading into the w/e.


jog on
duc


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## qldfrog (23 April 2021)

ducati916 said:


> The market had a fast spike lower:
> 
> View attachment 123166
> 
> ...



What do you read in this?




Since logged this morning Russell 2000 has been green whereas the major indexes are deep in red.
Could it be that  trading robots do not  deal with Russell 2000 tickets as too small,?


----------



## ducati916 (23 April 2021)

qldfrog said:


> What do you read in this?
> View attachment 123168
> 
> Since logged this morning Russell 2000 has been green whereas the major indexes are deep in red.
> Could it be that  trading robots do not  deal with Russell 2000 tickets as too small,?





Essentially yes.






The machines need a lot of liquidity in the actual stocks themselves as they are not just trading say the futures contract for 'X', but also a basket of stocks associated with that futures contract.

So they might buy 1000 futures on NASDAQ and sell 50 million shares (or whatever) on a basket of NASDAQ stocks, the idea being that the stocks fall a little bit more than the index. There are so many different ways that they do it. Some just follow and front run the momentum, executing customer orders before the customer and then filling the order to the customer scalping a penny or two. To do that, you need liquidity and plenty of it.

You can't compete with their speed. Day traders require fast executions, especially if you are only really scalping pennies. When the machines get busy in a fast market, you have to step aside.

jog on
duc


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## qldfrog (23 April 2021)

ducati916 said:


> Essentially yes.
> 
> View attachment 123169
> 
> ...



Thanks,is there a way to measure machine trading ratio reliably?
That's an interesting indicator


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## ducati916 (23 April 2021)

qldfrog said:


> Thanks,is there a way to measure machine trading ratio reliably?
> That's an interesting indicator




Yes there is.

Most brokerages run a TICKI program. Essentially it measures the Dow Industrials (only 30 stocks and all have deep liquidity) for buying/selling pressure.

So at an extreme buying the most that can show is +30. The least (-30). If it is +22/(-22) there is an active algo playing (with size) in the market. Most times, it is transient, only lasts a few seconds.

Today however, for whatever reason, they all came out to play and hung around for a while.

The duc wanted to trade today as well (of all days). So I took a deep breath and waded in. As I was interested in the sedate end of the market, not too bad. I also opened a position in SLV. Got a pretty decent fill. Obviously commodities were not on their radar today or they had already finished for the day.







jog on
duc


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## qldfrog (23 April 2021)

ducati916 said:


> Yes there is.
> 
> Most brokerages run a TICKI program. Essentially it measures the Dow Industrials (only 30 stocks and all have deep liquidity) for buying/selling pressure.
> 
> ...



Thank you


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## Dr.Stock (23 April 2021)

As always thank you duc for your effort and analysis


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## ducati916 (24 April 2021)

Start with the oil news:

Oil prices held on at the end of the week, set to close out mostly flat from a week earlier. Oil prices are trapped between horrific downside risks, mostly in India, offset by growing optimism in the U.S. and to a lesser extent in Europe.

*India’s oil demand in doubt*. India posted several days of record-setting Covid-19 cases, and Bloomberg reports that demand for fuels could plunge by 20% in April. “Given the grim situation, it’s likely that the lockdowns could be in place for several weeks or even a couple of months,” said Senthil Kumaran, head of South Asia oil at industry consultant FGE. “India’s total key oil products demand will see a significant pullback.”

*Biden pledges 50-52% cut in GHG; other countries up commitments*. President Biden announced a goal of cutting emissions by 50-52% by 2030 at the climate summit on Thursday. Canada boosted its target from a 30% cut to a 40-45% cut. Japan raised its target to 46%, up from 26%.

*Natural gas rally over*. Bank of America said that natural gas “throws in the towel,” noting that the month of March saw weaker-than-expected industrial demand and warm weather, leading inventories to end the month at 1.78 trillion cubic feet, higher than anticipated, which erased the inventory deficit relative to the five-year average.

*Natural gas production on the rise*. Even as demand hit a lull, production in natural gas is ramping back up after a roughly 18-month hiatus. Rystad Energy came out with a note predicting strong production gains for the next three years and beyond. Both Rystad and Bank of America said the Haynesville shale, in particular, is looking strong.

*China promises pullback on coal.* China’s Xi Jinping said that China would “strictly limit” coal consumption over the next five years and then begin phasing it out after that.

*U.S. Senate to repeal methane rollback*. The U.S. Senate will repeal the Trump-era pullback on methane regulations next week.

*New York sues Big Oil.* New York City sued *ExxonMobil (NYSE: XOM)*, *BP (NYSE: BP)* and *Royal Dutch Shell (NYSE: RDS.A) *for deceptive ads claiming their products were “emissions-reducing.”

*Chevron lobbies U.S. against Myanmar sanctions*. The New York Times reports that *Chevron (NYSE: CVX)* is lobbying the U.S. government to not place sanctions on Myanmar, following the military coup and brutal crackdown that has unfolded in the country since February. Chevron operates a large natural gas project in the country along with *Total (NYSE: TOT)*.

*White House reveals climate finance strategy*. The White House unveiled its international climate finance strategy, which includes pushing lending arms of the government – U.S. International Development Finance Corporation, the Millennium Challenge Corporation and the Export-Import Bank – to virtually eliminate fossil fuel lending, except in extraordinary circumstances.

*Small companies buy Big Oil’s assets*. The supermajors are pledging billions in low-carbon energy investments and committing to net-zero goals over the next decade. Meanwhile, smaller oil and gas companies are snapping up the shed assets.

*Are peak demand forecasts accurate?* Goldman Sachs believes oil demand will peak in 2026, while BP Plc believes the highest global demand growth is already over, and International Energy Agency (IEA) thinks the peak could come later, in 2030. However it’s framed, it is clear that the oil and gas industry is facing a turbulent future.

*UN-backed climate finance group managing $70 trillion announced*. The Glasgow Financial Alliance for Net Zero (GFANZ), a UN-backed group of assets managers, banks, investors, and insurers launched this week. The group's 160-plus members are responsible for over $70 trillion in assets, and “will work to mobilise the trillions of dollars necessary to build a global zero emissions economy and deliver the goals of the Paris Agreement," the announcement states. Participants include Barclays, Morgan Stanley, Citigroup, Munich Re, the Zurich Insurance Group and many others.

*California to ban new fracking permits*. California Gov. Gavin Newsom is expected to announce a ban on new fracking projects beginning in 2024.

*Lithium era just beginning*. It’s been a big week for lithium, with a multi-billion-dollar mega-merger, a new major production deal in Chile, and funding for Europe’s first large-scale lithium refinery in Chile. Things are looking up for the vital battery metal.

*Halliburton sank on “moderating” fracking forecast*. *Halliburton (NYSE: HAL)* beat the consensus on earnings but saw its share price sink after it said that it expects fracking activity to moderate in the U.S. in the second quarter.

*Total terminating contracts in Mozambique*. As militant attacks show no signs of going away, *Total (NYSE: TOT)* is terminating contracts with some companies in Mozambique related to its $20 billion LNG export project. Analysts say the delay on the project could be at least a year.

*Biden admin unwinds Trump auto policy*. The Biden administration will restore the authority to California to set its own fuel economy standards tighter than federal standards, following the Trump administration’s effort to repeal that authority.

*Public lands drilling pause extended*. The U.S. Department of Interior extended its drilling pause on federal lands through June, a policy that mostly only affects the southeastern corner of New Mexico.

*12 states call for ICE ban*. 12 U.S. states called on the federal government to ban the sale of gasoline-powered vehicles by 2035.

*Kinder Morgan $1 billion Texas windfall*. *Kinder Morgan (NYSE: KMI)* said that it took in a $1 billion windfall from the Texas electricity crisis in February. “[W]e view KMI’s large beat as a ‘zero-sum-game,’ meaning someone (i.e. buyers of the gas) had to pay the bill, which could make for some interesting utility earnings calls,” Citigroup said.

At week end:

Well the dip was aggressively bought. To get it, your timing would need to be absolutely perfect, buying the close yesterday.






Overall for the week, the defensive sectors of the market were the place to be.






Reflected:













The still remaining question of inflation. Will it run hot or just right or not at all? At the moment, it is heating up from cold to tepid. Whether it makes the transition to warm and onto hot, we'll just have to wait and see. Certainly if the Fed has any say in the matter it will move to hot...then it remains to be seen if they can prevent it from boiling over.






$TNX looks as if it has found short term support to move to higher yields on the daily.






On the weekly, not so much:






The stock market is (obviously) trading on the weekly and that rates will continue to (a) decline or (b) go nowhere for a while: ie. correct through time.

BTC:

I put this chart up in the BTC Bulls thread. Ignored.

Which rather infers their mindset and bias. Simply on a chart basis, BTC has run far and hard. We know (in the past) that it has demonstrated a propensity to return to the 50EMA at some point. Sometimes earlier, sometimes later. This would (could) be the later return. If so, that takes it to either a 20 handle or (total panic) an 11 handle.






Mr flippe-floppe-flye has been true to his name:










There are still divergences within the stock market in breadth, but, not important obviously to the BTD crowd. April is certainly living up to its seasonality projection, in fact (which is why I start the month with the seasonality projection) each month this year has followed its script almost to perfection.

I raise this issue simply because @peter2 and @Skate have touched on seasonality in their respective threads in the past 24hrs or so. All manner of analysts will follow cycles and cyclical theories, many very successful and intelligent (Felix Zulaf). The 'Sell in May and go away' is mentioned (Peter & Skate) and Mr Skate identifies the Sept/Oct period as being particularly dangerous (in the past) to his systems driven approach.

So examining this for a moment:






What I do know is that the Sept/Oct. period was/is harvest time in the US. Historically, the banking system used to extend finance to farmers during this period, pulling back the availability of margin loans to the stock market. Absent margin to (presumably) BTD, declines would run far deeper in this period. Savvy stock market (manipulators) players would, at this time launch co-ordinated bear raids pushing the market lower aided by margin calls.

Seasonality was definitely a thing. Whether (or how much) it remains a thing, I am informally keeping track of, as can anyone simply by collecting the seasonality data as we progress through the year.

Which makes we curious: we have currently (in April) some really messy charts, many areas are overextended. Internals are horrible. Yet, the market has simply refused to break more than say 2%. May as a seasonality is not good (see start of this thread). April is 100% up. Yes 100% up. It is living to expectation so far. May however is a different story, not terrible, but less than April. June/July both 100%. Exit for the 3 worst months: Aug/Sept/Oct. Re-enter Nov/Dec. 

I'd be interested to see a systems chap test it. It is supposed not to work.


jog on
duc


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## qldfrog (24 April 2021)

ducati916 said:


> Start with the oil news:
> 
> Oil prices held on at the end of the week, set to close out mostly flat from a week earlier. Oil prices are trapped between horrific downside risks, mostly in India, offset by growing optimism in the U.S. and to a lesser extent in Europe.
> 
> ...



Surprised to see US up on a Friday.
For a systematic exit in the bad months you need to use a quick ramp up strategy otherwise you basically miss nearly 5 months of the year .
If i have time , will try a backtest comparison of a full exit then reenter for that  period.
Have all a great weekend


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## ducati916 (24 April 2021)

Some interesting data:

Certainly the present resembles the past. Currently we are seeing choppy and messy markets. History suggests that this will resolve into continued bullish impetus moving forward.






Again, the move off of the 2009 low, eerily similar. Will Year 2 also be as close? Certainly we are seeing rotation from 'Growth' to 'Value', which is high to low beta. Also Utilities are picking up currently.






Again, history providing some perspective.









As I trade a lot (pretty much exclusively) of ETFs, this was interesting. Now while I was aware, it may not be something everyone checks. If you are aware, then your strategies will (probably) already reflect this weighting (lots of ways to play this).









Finally Gold. I like gold and silver currently. Obviously many do not.






The general gist being that year 2 of a big move off of a Bear market low, tends to be messy with many naysayers sitting in the wings predicting another bust etc. Previous lows, marking the start of  new Bull markets, demonstrate just how far a bull can run before it runs out of steam.

COVID was a 1987 type of experience. It was not a Bear market, hence, the very rapid recovery in markets. That is one narrative. A second narrative will have COVID as the start of an economic crisis, which 'should' drive a Bear market. The market data currently supports narrative #1. The macro-valuations (also market data) support narrative #2.

What is fact: that is there significant disagreement over the 2 narratives. Many are taking positions based on their 'beliefs'. Some are sitting out waiting to see. At some point, markets will resolve in one direction. Those that are wrong will at some point throw-in-the-towel and jump sides and those on the sidelines will join the winning side (mostly). This will result in a big move.

Those sitting on the sidelines spectating will say: I'll jump on the winning team. The thing is this: when a market churns as it has been, the move when it comes is big. The spectators miss the opening move and wait for a pullback to jump on. The pullback to the b/o point never materialises. It just keeps moving higher, fuelled by those closing losing positions.

It's a tricky one. Both narratives have a strong case.


jog on
duc


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## Skate (24 April 2021)

ducati916 said:


> 1. New Bull markets, demonstrate just how far a bull can run before it runs out of steam.
> 2. Many are taking positions based on their 'beliefs'.
> 3. Some are sitting out waiting to see. At some point, markets will resolve in one direction.
> 4. The spectators miss the opening move and wait for a pullback to jump on.
> 5. The pullback to the b/o point never materialises. It just keeps moving higher fuelled by those closing losing positions.




*Nice summation *@ducati916
Adding an Aussie twist - there are more blue bars than red bars indicating the strength of the Aussie market. The ribbon displays the period precisely. This is the very reason why we are all rolling in it at the moment. 

*I should also comment *
Trading the red bars have been difficult but not impossible.






Skate.


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## Smurf1976 (24 April 2021)

ducati916 said:


> *Natural gas rally over*. Bank of America said that natural gas “throws in the towel,



Something everyone with an interest in gas should always remember is that it's a regional market far more than it's a global one. 

It's a commodity where it's entirely possible to have a price spike in one place and a crash in another at the same time since, unlike say gold, oil or wheat, gas is problematic to transport without first having built costly and somewhat complex infrastructure. 

For some random examples of that concept to illustrate the point, spot price right now in:

USA (Louisiana) = $3.35 AUD / GJ

Melbourne = $6.41 AUD / GJ

Adelaide = $11.00 AUD / GJ

Prices are for example only to illustrate the point that it's an extremely local market. Be cautious if trading anything based upon it - it won't work to trade an Australian domestic gas producer based on a chart of prices somewhere in the US for example and even within the same country it may come down to something far more local due to pipeline constraints (or there not being a pipeline at all).


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## qldfrog (24 April 2021)

Skate said:


> This is the very reason why we are all rolling in it at the moment



I wish you were right Mr Skate


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## qldfrog (24 April 2021)

qldfrog said:


> Surprised to see US up on a Friday.
> For a systematic exit in the bad months you need to use a quick ramp up strategy otherwise you basically miss nearly 5 months of the year .
> If i have time , will try a backtest comparison of a full exit then reenter for that  period.
> Have all a great weekend



A long post: bear with me:
using my Daily Guppy system on XAO, not a superstar but reacting quickly so good to compare
initial capital: $63400
*THIS IS FOR RELATIVE COMPARISON ONLY AND THERE IS NO ASSUMPTION THESE RESULTS COULD HAVE BEEN ACHIEVED*
Working all year
from 01/01/2011 to 01/01/ 2021




with the equity curve:




now, same period/XAO
I add after my sell/buy algorithm
// seasonality
sellAllSeason= ( month() == 8 )OR ( month() == 9 )OR ( month() == 10 );
Sell=IIf(sellAllSeason,True,Sell);
Buy=IIf(sellAllSeason,false,Buy);
we are 100% out august to october included
Worse results:








let's try to exit in february, september and october (as per statistically bad month..[see 1rst post this thread]:
even worse:




with equity curve:




lastly, what about exit in May, back in November?
much lower DD, better win rate and decent risk adjusted average return BUT worst performance overall by far:




with equity curve:




Hope this is useful to some


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## Gunnerguy (24 April 2021)

ducati916 said:


> Start with the oil news:
> 
> Oil prices held on at the end of the week, set to close out mostly flat from a week earlier. Oil prices are trapped between horrific downside risks, mostly in India, offset by growing optimism in the U.S. and to a lesser extent in Europe.
> 
> ...



Great post, analysis and comments !!


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## ducati916 (25 April 2021)

I guess this is more a roundup of the crazy stuff with cryptos:










Then the wild ride in Dodgy:






BTC looks absolutely responsible next to this shite.

Mr flippe-floppe-flye (who provided the crazies):






Now the more normal stuff.

The 'Tax' scare:






Short Interest data:















Takeaway:

The sectors with the lowest SI are doing better than those with high SI. Unlike that brief period where the high SI outperformed.


Retail volume declining. Not sure why.






Historical look at the data around 4 consecutive quarters of 5% growth. The thing not highlighted are the market valuations of these various time periods.

1982 was the bottom of a particularly brutal bear market that started in 1969 as an example and a PE of 7.9. The 1953 market was a PE of 9.8. The 1958 market was a PE of 14.

The current PE is 40+

I wouldn't be in any hurry to rely too heavily on this.






Gold: make of that what you will.






The takeaway is simply this: markets are a bit crazy atm. for whatever reasons you wish to assign. That doesn't mean they can't get crazier, they can. This is not a value market, as in you could buy stocks with a pretty decent dividend yield and hang on for 10yrs or so. This is a momo market. Momo markets mean that what is hot today is stone cold tomorrow. They require a lot of trading in and out of asset classes.

Just re. valuations: the valuations can correct in two ways, either separately or in combination. The first is a price correction. Prices fall. The second is through an increase in earnings. The third is a combination of 1 & 2. 

Do you think earnings are going to increase, across the board, to the point where the valuations are somewhere near normal? If the answer is no, then once the markets stop going higher, they are going to go lower, possibly a lot lower.

So we already know that there are 2 types of disaster that could cause this: (a) deflation (collapse in debt) and (b) inflation. The 2 possibilities are polar opposites. Both have real risks associated. No one knows which will occur. Type (a) market looks like 1929 - 1933. Type (b) looks like 1969 -1982.

Type (a) is by far the worst outcome for society. The Fed. will throw in everything and probably blow up DXY in the process. So the Fed. is actively working towards (b) and have confirmed on numerous occasions exactly this.

To be cont.


jog on
duc


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## ducati916 (25 April 2021)

So if inflation is thing, what are the charts looking like?

Pretty reasonable:












Energy could probably be bought now, Agriculture and Base Metals you would probably want to buy the pullback, either that or buy a partial position to fill on a pullback.

Examples of commodity ETFs:



























Lots of ways to play these.

Or of course you could buy BTC at $50K.


jog on
duc


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## ducati916 (25 April 2021)

Just looking at 'Seasonality', how about this chart:






jog on
duc


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## ducati916 (26 April 2021)

Looking ahead to next week, we enter an earnings period.

https://www.foxbusiness.com/markets...nings-federal-reserve-decision-top-week-ahead

Short selling (as from the earlier data) is if not dead, pretty damn low.






And the Hedge Funds are leveraged up:






Paradoxically, this has had an effect on technical analysis methodology:






The sell signals, trigger their 'sell' levels, but stocks just keep going higher.

I noticed this effect a few weeks ago and moved all my charts/indicators out to the weekly timeframe, which, obviously is a slower signal. The daily time frames just contained too much noise, little if any signal. If it continues, you can jump out to monthly charts, then quarterly and yearly. However, it will not continue that long.

Insiders selling:






And BTC:






This will be an interesting week for the Hodlers. The chart (previously posted) suggests that a pullback to the 50EMA is not out of the question, which is a 20 handle. That would do some damage to Corporate Balance Sheets (TSLA) never mind the smaller fry. Bill Millar is now a Hodler of BTC. turning him into a billionaire, buying at an average price of $500/coin. He is in the $1M+/coin camp.


jog on
duc


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## ducati916 (26 April 2021)

Skate said:


> *Nice summation *@ducati916
> Adding an Aussie twist - there are more blue bars than red bars indicating the strength of the Aussie market. The ribbon displays the period precisely. This is the very reason why we are all rolling in it at the moment.
> 
> *I should also comment *
> ...





Mr @Skate chart is a weekly, which continuing on from the previous post, avoids the current issues with the daily charts and the breaking of daily technical indicators.

I just had a look at the 'Monthly' for the S&P500. The 'indicators' that I use have only just triggered the 'sell' criteria. The Weekly (has) already triggered last week, of which the 'dip' was very aggressively bought.

With the sheer volume of liquidity in the markets now, I think that the 'Daily' chart is purely to finesse an entry/exit based upon at least a Weekly signal, if not a monthly.

The issue is this: when the collapse comes, it will trigger on the Daily if not Hourly charts. That is to say (looking at BTC) it will compress time and be very fast.


jog on
duc


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## ducati916 (27 April 2021)

Nothing really interesting happening.

Higher Taxes, meh:







Sell in May and go away, data:






Sectors: Energy having a bounce.






BTC seeking to reverse the sell-off. It will be very important for the Bulls to get back above that 50EMA.






If they fail to do so, then watch out below, the losses will accrue rapidly. Do not underestimate the 'hate' (some, many) market players have for BTC. Call it envy, schadenfreude, but it is a 'thing'.

Inflation still creeping higher:






Which means that yields will also start moving higher. My model has re-adjusted higher to 1.68%.

TNX: Has found support and ticking higher. Currently at 1.58% but destined higher.






The question then becomes: how high before the Fed move to YCC?

I think at the low end, 2%. At the high end 3%. That is quite a spread. If/when it happens we know (a) Gold/BTC would move higher, (b) DXY lower, (c) Commodities higher. The question is (d) Stocks. How long would they hang on in an inflationary environment before breaking? Possibly we will find out.

Mr flippe-floppe-flye:






jog on
duc


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## ducati916 (27 April 2021)

So have a look at this chart:

Now I cannot annotate it, but, using your imagination, draw two straight lines connecting the highs and lows. They converge as a triangle a little into the future of where we are.

Now I have no idea whether this 'triangle' resolves as a price triangle might, but if it does, which way do you think it moves?






If it goes the way I think, then:




jog on
duc


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## ducati916 (27 April 2021)

So the VIX.

Weekly:






Commodities:






As the saying goes; be careful what you wish for, you might just get it.


jog on
duc


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## ducati916 (28 April 2021)

Markets are meh. Very slow.

Sectors are rotating very slowly. Nothing standing out particularly.








DXY still weak. Adding fuel to the inflation fire.







10yr yields higher, taking fuel away from the inflation fire.






Commodities themselves are probably over-extended and need a rest, except for possibly Energy.

So now we go to a series of charts that show what happens in Year 2 of a Bull market:















So (in order from above) looking at the valuations:















We see that the valuation metrics all improved. PE moved from a higher number to a lower number. Inflation was trending lower from 1882 throughout this extended period. Interest rates were trending lower from the 1982 period, but trending higher from 1975 to 1982.

The thesis is that chart wise, fundamental wise, essentially the same digestion period is required. Earnings will improve, bringing PE ratios lower. A lower multiple, then allows for further multiple expansion.

The issue is inflation. Inflation (apart from the 1969 - 1982 period) was benign in the above examples. The PE actually dropped from 1976 into 1982. Today, we have, at least according to the Fed. little to no inflation. The Fed. is seeking to ramp up inflation. Assuming they get it, then the past will differ from the future in this respect. Interest rates are showing a propensity to rise. The great Bull market in Treasuries is over, or it is until the Fed. moves to YCC. DXY has been all over the place.

Extrapolating from past charts, for this analysis and conclusion, is dangerous in that we are not really looking at an oranges v oranges situation.

At these valuation levels, it is very much a guilty until proven innocent situation, shoot first, ask questions later market. The prevailing TINA psychology and FOMO reality makes for a very dangerous market. 

Countervailing that mindset we have a strong recency bias, where the speed of the decline caught many off-guard and many came back to the market very late in the rally. Simply that the circumstances were (they believed) untenable for the market to rise. That belief that another (fast) decline is (or should be) just round the corner, is still with us. 

We have rampant speculation: NFT's, SPAC's, Crypto's, Meme Stocks, you name it, we have it. This makes for a very dangerous market.

So you can't be outright short this market. That is a money losing proposition.
You have to be long.

However, given that an outright long position is playing with matches on a powder keg, you need a fast exit plan. The issue is (I think) that we have had so many examples of BTD, that when a serious decline occurs, it will not be recognised for what it is until too late (once again).

It is a conundrum.


jog on
duc


----------



## ducati916 (28 April 2021)

So oil news:


-    New debt and equity issuance from U.S. E&P companies totaled $4.4 billion in March 2021, the most since August 2020.

-    In fact, new financing has been on the rise steadily for each month since September 2020. Low-interest rates and higher oil prices have improved access to capital.

-    The EIA forecasts U.S. oil production rising from 10.7 mb/d in 2Q2021 to 12.2 mb/d in 4Q2022.

*Market Movers*

-    *The California Public Employees’ Retirement System (CalPERS)* said on Monday it plans to vote for Engine No. 1′s four director nominees to *ExxonMobil’s (NYSE: XOM)* board.

-    *Saudi Aramco (TADAWUL: 2222)* is considering a sale of a stake in its natural gas pipeline network to free up cash.

-    *Range Resources (NYSE: RRC)* beat earnings consensus.

*Tuesday Aril 27, 2021 *

Oil prices posted some modest gains on Tuesday, despite the worsening conditions in India. “If the grim trend continues, the oil demand loss India will experience could be the single largest reduction in absolute terms that any country has suffered since the beginning of the pandemic,” Rystad Energy said in a note. The firm added that there is some optimism around the plans by OPEC+. “Should OPEC+ turn a blind eye to India though, the gains may quickly evaporate,” Rystad added.

_*Oil prices up on OPEC+ cuts. *_The OPEC+ group will not hold a full ministerial meeting on Wednesday as planned, delegates at the Joint Ministerial Monitoring Committee (JMMC) agreed at their meeting on Tuesday, signaling confidence in the current plans to ease the production cuts as of May despite surging COVID cases in major oil importer India.

_*White House wants 80% clean energy standard. *_The Biden administration is pressing to include a clean energy standard in the infrastructure bill, which would require the U.S. electricity grid to source 80% of its electricity from carbon-free sources by 2030. That would be up from 40% today. A recent report finds that such a target can be reached at no added cost. But it will require a lot more long-distance transmission and energy storage.

_*Exxon makes new Guyana discovery. *_*ExxonMobil (NYSE: XOM) *announced a new oil discovery at its Stabroek Block in offshore Guyana.

_*BP profits up, to resume share buybacks. *_*BP’s (NYSE: BP)* profit more than tripled to $2.6 billion in the first quarter due to higher oil prices. The company said it would buy back $500 million in shares.

_*Oil majors expected to post strong cash. *_The oil majors are expected to post strong first-quarter earnings, but much of the increased cash flow will go to servicing debt.

_*DAPL decision soon.*_ Judge James Boasberg of the U.S. District Court for the District of Columbia on Monday gave the Army Corps of Engineers until May 3 to update him on the status of the Dakota Access Pipeline’s new environmental impact statement. The judge asked the Army Corps one last time to decide whether or not the pipeline should be shut down before he makes a decision himself.

_*Tesla posts record profit. *_*Tesla (NASDAQ: TSLA)* reported a $438 million profit in the first quarter, its highest ever. “We’ve seen a real shift in customer perception of electric vehicles, and our demand is the best we’ve ever seen,” Elon Musk said Monday on an investor call. Vehicle sales doubled from the same quarter a year earlier.

_*Washington State passes cap-and-trade. *_Washington State will become the second state after California to implement a cap-and-trade program, which will go into effect in 2023. Revenue raised will go to renewable energy projects. The state also passed a new clean-fuels standard.

_*California to phase out oil, ban new fracking in 2024.*_ California Governor Gavin Newsom announced last week that the state would phase out oil production by 2045, and would ban new fracking permits beginning in 2024.

_*Libya targets 1.45 mb/d by end of year. *_News that Libya is now targeting 1.45 mb/d of oil output by the end of this year, 1.6 mb/d within two years and 2.1 mb/d within three to four years will compound a negative price sentiment on oil pricing for many traders.

_*Suriname aims to become an oil exporter. *_As Guyana prepares to become a major oil-producing nation, the spotlight is firmly on the Guyana-Suriname Basin and the former British colony’s neighbor Suriname.

_*Pembina “pauses” Jordan Cove LNG. *_Pembina has been beset by permit denials for its proposed Jordan Cove LNG project in Oregon and is now hoping to hit the “pause” button on a legal process over its FERC permit, another negative sign for the project’s viability.

_*Total declares force majeure on Mozambique LNG.*_ *Total (NYSE: TOT)* declared force majeure on its $20 billion LNG project in Mozambique due to an insurgency.

_*Biden explores carbon tariff.*_ The Biden administration is exploring the use of a carbon tariff, a duty on imported goods from countries with weak climate policies. The European Union is a little further along, looking at the policy more deeply.

_*Saudi Arabia to join new climate forum. *_Saudi Arabia will join the United States, Canada, Norway, and Qatar in forming a new platform for oil and gas producers to discuss how they can support the implementation of the Paris Agreement on climate change.

_*Department of Energy aims to cut costs for hydrogen. *_The U.S. Department of Energy said it would seek to cut the costs of hydrogen and batteries.

_*Samsung to develop $673 million solar plant in Texas. *_A unit of Samsung is aiming to build a $673 million solar project in Texas, according to Reuters.

_*Norway’s Hammerfest LNG outage extended.*_ Norway’s Hammerfest LNG could be offline until March 2022 following damage from a September 2020 fire.

Housing data:























Then a summary of ETFs across all sectors:









Commodities are attracting plenty of attention across blogoland for price appreciation. Commodities as a whole are way off their previous highs. They have plenty of room to run.






Pretty much wherever you look, that market is in a bubble. The question is whether the bubble is still inflating with plenty of space available for further air or nearing bursting point? I don't think there is any real way to really tell until after the fact. We know it's a bubble. We know bubbles are dangerous. We hate to miss out (FOMO).

I think for the moment you pinch your nose and just keep going. The reason being (a) The Fed. is still pumping $120B/month into the stock market, that is a lot of buying pressure. And (b) the consequences of that (i) inflation or (ii) deflation are still being argued about, which means there is time to move higher before the answer and consequences come home to roost.

Or, simply move to undervalued areas, which is basically: gold/silver/energy and some of the other commodities. That means foregoing the gains, if in point of fact there are still significant gains to be had in other asset classes (stocks/crypto).


Good news (seasonality) for May:






jog on
duc


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## ducati916 (29 April 2021)

So lots and lots of noise. It's Fed. day and Powell has spoken.






Noise.

Moving on: Energy is having a big bounce today. Whether it continues its trend higher we'll see, but I'm thinking yes.






So this chart (lots of tax charts out there now) posted. The point is: tax rate hikes take place in good, strong economies. Politicians like to keep their jobs and be re-elected, so no-one hikes tax rates in a recession.

Except maybe Biden, as he knows he'll never run for re-election, so what the hell....right?






A survey of professional money managers on what they fear: pretty much what gets the market roiled and is endlessly debated across blogoland....all except deflation. I'm guessing that consensus is: in a deflation, the Fed. just buys all the defaulting shite out there, which is about $14T at last count.






Bubble mania is everywhere as a thing. Rightly so. We have bubbles everywhere. 2 points: recognising that there are bubbles is legitimate. Everyone knew in 1999 that there was a bubble. In 2007 blogoland was aflame with housing bubble discussions. It is the 'timing' of the pop that is hard.

So we know there are bubbles in various levels of size and duration. We are speculating on what trigger will pop them. Does an awareness add to the probability that they pop sooner than later?








The interesting price chart is BTC atm.























I have no BTC or any crypto. My interest is that BTC is the MEME that continues. TSLA is a bust (pretty much) SPACs are a bust. ARK is a bust atm. Only BTC continues the truly wild speculative mood. There are (if you believe blogoland) many small players in this. Some have been turned into paper millionaires. What do they do?

Interesting.

Mr flippe-floppe-flye:










jog on
duc


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## ducati916 (30 April 2021)

Some more chop in the indices.

Bit of a move in the Financials, based largely on the move higher in 10yr yields, which is again higher. My model shows 1.66%. Yields as of yesterday were 1.63% so already moving towards that nominal number.

You would expect Tech. to be a little weak based on that number, but the big Tech. firms have been blowing earnings out of the water. Some of it will be down to which ETFs hold larger positions in them, although MSFT I believe had good earnings and sold off.






Top pay for CEOs:






Still watching BTC.

It is faaaaaar from being out of the woods yet. It looks really vulnerable currently. It is (dare I say it) setting itself up for a short. Now I wouldn't sell it short with real money, too dangerous, but sitting back with no dog in the fight, it looks (almost) like a short. Possibly today or after hours trading might confirm that or of course negate that.






Mr flippe-floppe-flye:






I am in agreement here, Energy (XLE) has some potential to run higher. The second area, related to the first, Materials (XLB). Financials also (XLF) on the back of a steepening curve and I think,  Real Estate (XLRE).

They are all (except XLE) pretty extended. Which of course means a pullback (reversal) could occur almost anytime.

Now that we are almost into May, the 'Sell in May' meme has been appearing everywhere across blogoland. April looks to be closing out a winner across the board, 1 last trading day tomorrow before the w/e and the start of May next week. Would you expect a sell-off into tomorrow's close? Psychological guessing games.


jog on
duc


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## ducati916 (1 May 2021)

So April closes out meh, but it has been an excellent month for the Bulls.









For the month, everything higher.

Historical returns:









So yesterday it registered 66. Today:






Moving into May, seasonality for the 11 sectors:






A mixed bag. We'll see how it plays out.

Mr flippe-floppe-flye:






And BTC:

Taking another run at that 50EMA. I'm guessing another fail, but who knows. Today, it is one of the very few charts that are up, so maybe.






jog on
duc


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## Gunnerguy (1 May 2021)

Great info duc.
Love the charts. Thanks for putting this together for everyone.

Gunnerguy


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