# The New Bull Market



## ducati916

Now that SPY has exceeded its previous high from the crash, we are officially in a new bull market.

The primary issue (risk) bubbling below the surface is:












The real spectre of inflation. It is not a risk for tomorrow. It is a risk that is, if it occurs, still a little way down the road. But it doesn't hurt to prepare for its possible arrival. The question with inflation is whether the Central Banks actually do anything. If they do nothing and/or very little, then Gold/Silver/Property/Stocks will all do well (stocks to a point). If however, the Fed either (a) leans against or (b) allows the long end of the fixed income market free rein, then only stocks will do well (to a point, probably to about 6.5%).

The big macro question is: (a) will inflation take hold, (b) will it (if it does) be controlled, (c) if so how.

Over the w/e I'll be looking at the various charts that will provide us with the early warning and crossover points should this risk eventuate. It still seems most likely that the origin of inflationary pressures, will one again, originate from POO and the issues created by the Arabs in their price war earlier in the year.

jog on
duc


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## ducati916

Oil Patch News:

Oil retreated at the end of the week on more negative news from the U.S. labor market. Oil prices fell back to a familiar trading range in the low-$40s. “With all the bullish headlines that we’ve seen over the last weeks regarding inventories,” the inability to break higher does not bode well, Tariq Zahir, managing member of the global macro program at Tyche Capital Advisors LLC, told Bloomberg. “Crude fails to break to the upside and you’re in a contango market, so risk is to the downside.”

_*Metal markets surge on Chinese stimulus. *_Copper prices surged to a two-year high at over $6,700 per tonne this week. Other metals followed suit. The combination of monetary stimulus, a weaker dollar and China’s fiscal stimulus has led to a surge in metals prices. 

_*OPEC: Inventories falling slower than expected.*_ U.S. oil inventories declined again last week, the fifth time in six weeks. But the process will take a while. OPEC warned that the drawdowns are “slower than anticipated with growing risks of a prolonged wave of COVID-19.” The slow pace underscores the “fragility of the market.”

_*OPEC+ offset could total 2.3 mb/d. *_The group of OPEC+ producers that may need to compensate for past overproduction could cut by as much as 2.31 mb/d for one month, according to OPEC+ calculations seen by Reuters. If spread over more than one month, the figure would be smaller.  

_*Islamists attack Mozambique LNG. *_A major LNG project in Mozambique could face delays as Islamic militants seized a port handling key equipment. The multi-billion-dollar project is backed by *Total (NYSE: TOT)*.

_*Libya’s GNA announces ceasefire.*_ Libya’s internationally-recognized government in Tripoli announced an immediate ceasefire. The head of the Government of National Accord, or GNA, issued instructions to “all military forces to immediately cease fire and all combat operations in all Libyan territories.” The GNA also called for elections in March and an end to the oil embargo. 

_*Natural gas prices surge, but drillers not coming back yet.*_ Natural gas prices have shot up to $2.30/MMBtu, as a heatwave, supply shut-ins, and LNG cancellations have quickly tightened up the market. Hedge funds and other money managers have stepped up bullish bets, betting that prices will continue to rise. But Appalachian gas drillers are not returning to drilling just yet, instead preferring a cautious approach. “If we don’t end up with a cold winter, the bull case for ’21 is pushed into 2022,” *CNX (NYSE: CNX)* Chief Operating Officer Chad Griffith told investors on a call.

_*LNG market tightens.*_ After a substantial glut that saw dozens of U.S. LNG cargoes canceled, the global LNG market appears to be turning a corner. Prices in Asia and Europe have hit multi-month highs. Goldman Sachs said that TTF gas prices (Europe) are on the rise and the rally could be sustained. Goldman said it expected the headwinds that had led to U.S. LNG cancellations “to disappear in 2021 as the global gas market moves to a more balanced setting.” The bank stuck with a Henry Hub forecast of $3.23/MMBtu for 2021. Meanwhile, Bank of America largely agreed and put out a JKM (Asia LNG) forecast price of $6/MMBtu by December 2020. 

_*Aramco suspends investment in Chinese refinery.*_ Saudi Aramco is suspending its investment in a joint venture developing a US$10-billion refinery and petrochemicals complex in China amid CAPEX cuts.

_*Electric trucks could put a dent in emissions.*_ California recently approved regulations to mandate the increased use of electric heavy-duty trucks. “The long-term effect of expanding California’s approach nationally would reduce oil consumption in 2045 by 16 to 17%,” according to a new analysis. 

_*Wall Street wants GM to spin off EVs. *_Deutsche Bank said that if *GM (NYSE: GM)* spun off its EV business, it would immediately be valued at around $15 to $20 billion, and could potentially be worth up to $100 billion. “Spinning it off essentially creates value, it could unlock a massive amount of value, actually,” Deutsche Bank analyst Emmanuel Rosner told CNBC. The less GM retains of the electric vehicle operations, “the better it would be for value creation,” according to Rosner.

_*Offshore rig service company files for bankruptcy.*_ Valaris PLC, a London-based offshore drilling contractor, filed for bankruptcy Wednesday. The company warned of a prolonged contraction in offshore drilling activity.

_*Premier Oil to raise $530 million to cover debt. *_*Premier Oil (LON: PMO)* is seeking to raise $530m from shareholders as part of a $2.9bn refinancing effort. Premier will use $300 million to pay down some of its $2.4 billion debt pile.

_*Two tropical storms heading for the Gulf of Mexico.*_ Twin storms are aimed at the U.S. Gulf Coast, potentially threatening offshore oil platforms and onshore refineries and processing facilities. 

_*Turkey announces Black Sea gas discovery.*_ Turkey announced a significant natural gas discovery in the Black Sea, which could cut the countries energy imports if developed. “There is a natural gas finding in the Tuna 1 well,” a source told Reuters. “The expected reserve is 26 trillion cubic feet or 800 billion cubic meters, and it meets approximately 20 years of Turkey’s needs.” However, the source said it could take years to bring online.


jog on
duc


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## over9k

Even the supermajors are still on a long gradual decline. Total appears to have fared the best so far.


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## ducati916

Looking at the 'inflation' trade.






US Dollar as against Commodities: the source of the inflation trade. Not yet triggered. Either the dollar needs to fall further or commodities need to rise. Currently there has been a significant curtailment in stimulus. Unless this trend reverses for any reason, the dollar may have already found a bottom.











Oil, petrol, gas. All are low and could very easily move higher and if they move higher, could well move in lockstep together, which of course intensifies the risk. Now if we say for the moment that the dollar has stabilised (by no means certain) then a rise in energy prices driven by returning demand and supply destruction, could also (assuming the dollar stays where it is) ignite inflationary pressure. With vaccine news all over the wires, returning demand will be sooner than later.

What has already risen in anticipation of inflation. The problem is this is only a valid trade if real yields remain negative. As soon as real yields turn positive, this trade is over.











Simply to inform us when the trade is on because the trend has ended. Low inflation and low yields have been the trend since August 1982. Is that trade over? Not yet, but it seems to have reached a 'top'. Given the rather extreme circumstances that have prevailed earlier in the year, as we return to more normal times, we will be bumping up against that trend line.










And just a bit of everything:






And the broad market:






No inflation to worry about currently. What if inflation occurs? Then (pretty much) everything that is currently low moves higher and everything that is high, moves lower: if interest rates rise in response to that inflation.

That is the only real question currently. Would the Fed. allow or even actively, move rates higher in response to inflation? How much inflation would be necessary?

The risk that is being bandied about currently is that the US dollar, due to the massive interventions, will fall as against the other fiat currencies, thereby on an exchange basis (even assuming commodity prices don't move much) driving US costs higher. If you have a fall in the dollar and a rise in commodity prices (the double whammy) then inflation ignites to an explosive situation. Now as we have already seen, domestically, the Fed. interventions have slowed. What that chart does not show are the Fed. swap lines with the rest of the world.

In scenario 1 (of course depending on how far how fast the dollar falls) I think the Fed. does little. If we have a scenario 2, I think the Fed. acts and moves rates higher. So the remaining question, scenario 1.5 where the dollar falls and Bonds (are allowed by the Fed at the long end) to move to higher yields. How far would they move? My guess to about 3% as a starting point. After that it would depend on what the dollar did in response. I think though that a move to 3% would halt any weakness in the dollar based on a purely dollar slide, absent any significant move in oil due to supply constraints (which there could well be) and what the Arabs do.

jog on
duc


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## ducati916

Now that the CARES Act has expired and nothing will (can) occur before September leaves the following situation:









Which has analysts calculating the fall off in consumer spending above.

If Fiscal Policy is off the table for the moment at least, then the Fed. can step in (again) with increased Monetary Policy interventions: 

(a) Municipal Lending Facility (MLF) which holds $500B to provide loans. These could be for 50yrs at 0% interest, first payment at 40yrs. Essentially cash; and

(b)Main St Lending Facility (MsLF), which is a fund of $75B for small businesses; and

(c) Buy foreign currency, thereby depreciating the US dollar.

They could of course do all 3. The one that from an inflation point-of-view has the impact is selling the dollar. How much and how long? Given the speed of the decline in the dollar recently (the insiders are possibly telling us something) this either already is happening or could happen very soon.






The fall through the first (top) support/resistance was not really an issue as the COVID spike would always correct at some point. However the continued drop combined with the speed of the drop is more important. We have a trading range that has existed between 2015 - 2018 (less that dip lower in 2018 and move higher for COVID) which we are currently in. We then have an air space to the next trading range 2011 - 2014. A move to that trading range is going to ignite inflation.

Would the Fed sell the dollar hard enough to enter that exchange rate level? I have no idea. If they did, there would be repercussions and many of them would likely be unforeseen. Unforeseen consequences have a nasty habit of really f***ing up your positions.

Now we are left with a real unknown quantity, we need to try and figure out a reasonable plan to manage that possibility, all of which could have adverse consequences on positions going forward. This is actually a situation where a purely mechanical system could be a godsend...no thinking, in or out.

Now if the Fed. were to sell the US dollar, obviously they want it weak = inflationary. Therefore:

(a) they would exert yield curve control at the long end, as the long end will sell-off hard;
(b) inflation without any constraints would send;
(c) commodities higher;
(d) emerging markets higher;
(e) foreign currencies higher;

So all commodities would likely be a good position to hold. Gold/Silver already started their run. Oil still undervalued in this scenario as are agricultural commodities and stocks associated with those commodities.

If the Fed. doesn't control the long end, short Treasuries.

Long Emerging markets (EEM).
Long foreign currencies (FXE) and Swiss Franc.

With regard to the current trend in the markets: the big tech. leaders would be fine, they have foreign earnings (any stock that has foreign earnings should be fine) small caps and some medium (most) would probably tread water or lose, depending on how much inflation was generated.

Financials would not be a great place to be, but I will actually do some research into that. The big money centre banks would probably be fine, they are worldwide and have diversified income streams. It would be more the small regional banks that could/would have issues. I'll look into that.

Any thoughts? Feel free to add.

jog on
duc


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## over9k

The fed has actively stated that they've changed their policy to tolerate higher inflation short term. And there's been a pretty consistent trend even before coronavirus of little guys getting snuffed out and more and more business going to the big players in almost every industry. This is easy to prove looking at things like sp500 vs sp500 equal weight:









Take this and put it on steroids with coronavirus - it's not an accident that across basically all industries, the smaller the company, the faster it fell. I'm not being funny when I say that an effective strategy would be to just find the handful of biggest players in every sector (that hasn't gone to absolute shite), and sit on them.

I'm going to hold the stuff that kept pulling through the lack of more stimulus - several of my positions got hosed when more stimulus didn't happen but several just kept rising (NVDA and PEZ are my golden children at the moment).

The last couple of days have seen big tech rallies/tech driven index gains (so nasdaq obviously the highest). We'll see if that continues (I suspect it will).

Everyone panicked when the jobless claims spiked after the boosted unemployment payments stopped but that lasted literally a day and everything's now just carrying on as if nothing's changed. Consumer staples would obviously bounce again if everyone got the jitters and started panic buying (again).


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## over9k

Also probably not a coincidence that the exchange rate broke trend right when the PUC payments stopped. It's cracked the 71c mark a couple of times since and just been choppy for the last month. If it busts 70c, then it's showtime.


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## qldfrog

ducati916 said:


> Now that the CARES Act has expired and nothing will (can) occur before September leaves the following situation:
> 
> View attachment 108054
> View attachment 108055
> 
> 
> Which has analysts calculating the fall off in consumer spending above.
> 
> If Fiscal Policy is off the table for the moment at least, then the Fed. can step in (again) with increased Monetary Policy interventions:
> 
> (a) Municipal Lending Facility (MLF) which holds $500B to provide loans. These could be for 50yrs at 0% interest, first payment at 40yrs. Essentially cash; and
> 
> (b)Main St Lending Facility (MsLF), which is a fund of $75B for small businesses; and
> 
> (c) Buy foreign currency, thereby depreciating the US dollar.
> 
> They could of course do all 3. The one that from an inflation point-of-view has the impact is selling the dollar. How much and how long? Given the speed of the decline in the dollar recently (the insiders are possibly telling us something) this either already is happening or could happen very soon.
> 
> View attachment 108056
> 
> 
> The fall through the first (top) support/resistance was not really an issue as the COVID spike would always correct at some point. However the continued drop combined with the speed of the drop is more important. We have a trading range that has existed between 2015 - 2018 (less that dip lower in 2018 and move higher for COVID) which we are currently in. We then have an air space to the next trading range 2011 - 2014. A move to that trading range is going to ignite inflation.
> 
> Would the Fed sell the dollar hard enough to enter that exchange rate level? I have no idea. If they did, there would be repercussions and many of them would likely be unforeseen. Unforeseen consequences have a nasty habit of really f***ing up your positions.
> 
> Now we are left with a real unknown quantity, we need to try and figure out a reasonable plan to manage that possibility, all of which could have adverse consequences on positions going forward. This is actually a situation where a purely mechanical system could be a godsend...no thinking, in or out.
> 
> Now if the Fed. were to sell the US dollar, obviously they want it weak = inflationary. Therefore:
> 
> (a) they would exert yield curve control at the long end, as the long end will sell-off hard;
> (b) inflation without any constraints would send;
> (c) commodities higher;
> (d) emerging markets higher;
> (e) foreign currencies higher;
> 
> So all commodities would likely be a good position to hold. Gold/Silver already started their run. Oil still undervalued in this scenario as are agricultural commodities and stocks associated with those commodities.
> 
> If the Fed. doesn't control the long end, short Treasuries.
> 
> Long Emerging markets (EEM).
> Long foreign currencies (FXE) and Swiss Franc.
> 
> With regard to the current trend in the markets: the big tech. leaders would be fine, they have foreign earnings (any stock that has foreign earnings should be fine) small caps and some medium (most) would probably tread water or lose, depending on how much inflation was generated.
> 
> Financials would not be a great place to be, but I will actually do some research into that. The big money centre banks would probably be fine, they are worldwide and have diversified income streams. It would be more the small regional banks that could/would have issues. I'll look into that.
> 
> Any thoughts? Feel free to add.
> 
> jog on
> duc



I think the oilers.major ones, might be in a good position, oil will rise..already has, US dollar fall would reduce production cost world wide as this is the currency used to pay from parts to workers


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## ducati916

The US dollar still holds the primary reserve currency status based on the following factors:

(a) Bretton Woods agreement, which is a series of alliances post WWII; 
(b) Highly developed network of Correspondent banks.

So the risk is that the belligerence of President Trump towards his traditional allies, risks the hegemony of the US dollar as the primary reserve currency, which, has to date, always mitigated dollar weakness. If due to the political turmoil the status quo is altered or damaged permanently, that could impact the status of the dollar, which, due to the unprecedented stimulus to date, has created a potential for inflationary pressures.

Therefore, a Biden victory could see (absent Fed selling of the dollar) a resurgence in the US dollar as Biden and the Democrats mend fences that P. Trump has trampled on.

With regard to the network of correspondent banks, at least 1 competitive system is being attempted to be set up for oil into Europe. Whether it is successful over time we will find out. ATM, there is no viable option, so the Fed. still holds the monopoly on that network, and hence, for the moment #1 reserve status.


jog on
duc


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## ducati916

Returning to the market for the moment: a chart I haven't posted for a while.









So these are the advancing v declining. The top chart demonstrates simply how bifurcated the market has become in that the index SPY, can advance, even while the majority of stocks fall. That is the AAPL effect as AAPL has blown through $2T. market cap.

The other point to note is that we are pretty much at the bounce point for the majority of stocks. I'll compare to other measures that I follow, however, on this chart we are ready to move higher with most sectors/stocks ready to participate to the upside.

Even if we were to have inflation, which currently we don't, stocks would continue to move higher in the shorter term anyway. So the inflation musings are simply preparation for might eventually come down the river based more on political (fiscal) and monetary policies.

jog on
duc


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## Dark1975

Noted on the XAO Chart the 200sma has moved under, looks promising,  forming a consolidating a series of higher lows in to resistance , looking for a possible break out, And of course possibly waiting on support from the dow jones to help push through,


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## over9k

Oh for anyone wondering, KSA is the etf you need to buy in order to buy aramco. You'll notice that it's continued to rise lately, in stark contrast to even the supermajors of oil. 

But the geopolitical environment (aka the saudi's & iranians wanting to wipe each other out and the americans no longer caring if they do) means that it is NOT a long term investment. DYOR.


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## ducati916

Issues in the Treasury market to pay attention to going forward into next year:









Not something that is going to happen today or even tomorrow. Might never happen. However, worth keeping an eye on.

jog on
duc


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## ducati916

Towards the close now:









And we had a broad advance across all sectors of the market (see Sunday's post). So much so that we are now sitting at the top of the range again. I'll update the after market closes charts later.

The Retail sector is (a) driven by AMZN and (b) the state of the remaining sector:








jog on
duc


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## ducati916

Election issues will increasingly start to dominate the news.









I think Trump holds onto the WH. Whether or not those indicated sectors benefit, who knows. The market as a whole, always loves year 1 irrespective of which party holds power in WH.

jog on
duc


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## over9k

over9k said:


> "As an example of the narrowing market breadth, Wilson pointed to Friday, when Apple Inc.’s 5% gain could be framed as accounting for all of the total return of the S&P 500 and Nasdaq 100. For the week, the S&P 500 climbed 0.7% to an all-time high while the equal-weight version of the index fell 1.5%, a sign that the average stock didn’t participate in the advance like megacaps...While the lopsided market is nothing new -- the total value of Apple and the other four largest stocks have surged 49% this year while the rest of the market is down 4% "
> 
> https://www.bloomberg.com/news/arti...KZhuf0pdlJTCYssoKAu2R6tX70av5aU4kjcXTkfsgLXWM




There's your "bull market".


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## ducati916

jog on
duc


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## over9k

So let's compare ALL the megatech vs your BEST  non-tech etf, XLY:










Only in the past 3 months has the difference even so much as reduced, and the megatech is still head & shoulders above. Pool the megatech against a pool of your etf's and it looks even worse.

I didn't buy apple but I didn't buy google or microsoft either, so swings & roundabouts I guess. I'm holding amazon.

Megatech even outperforms the tech ETF (XLK) over both time horizons:










It's not just tech driving the market, it's the megatech.


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## over9k

What we're better off doing is looking at what's changed over the past month as it's been about a month since stimulus ended and that's the only significant factor other than the virus:






The only difference we see is that it's now facebook taking over 2nd place from amazon, which is still higher than even XLY anyway. In short, even without stimulus, megatech is still head & shoulders above the entire rest of the market. 

Meanwhile, PEZ, the etf I mentioned I was buying ages ago that in your other thread you then derided/basically just said was ****, has done this:


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## over9k

Finally, it's worth looking at what was going on before vs after stimulus end.

Before stimulus end, I had a portfolio of what I called stay-at-home tech (ZM & DOCU being just two of them) that was outperforming even apple:





That was then sold off HARD as everyone took profits before earnings season & possible stimulus end and has just gone choppy AF since, whilst apple (and facebook) has gone to the moon:






Stimulus is looking increasingly unlikely, but if we do get more of it, there's a very good chance we see a return to the stay-at-home tech madness vs the megatech madness we've seen without it and thus a rotation will be in order.

That massive chop in ZM & DOCU has occurred each time the stimulus has gotten delayed, then the market's anticipated it coming (remember when the politicians were banging on about trying to get a new package before the august recess?), then lost hope, then gained it again etc etc. Pretty hard to see the several corresponding rallies & then drops as a whole bunch of coincidences.


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## ducati916

Some oil patch news:

 The *United States Oil Fund ETF (NYSEARCA: USO)* reported its largest single-day inflow since April last week, even after the SEC recommended enforcement action against the fund. 

-   *Valero (NYSE: VLO)* said it would shut its Port Arthur refinery ahead of two tropical storms (and potential hurricanes) heading for Texas and Louisiana.

-   The energy sector *(XLE)* led the S&P sector leaderboard on Monday, gaining 2.5 percent. Threats of supply curtailment from the Gulf storms pushed prices up.

*Tuesday, August 25, 2020*

Oil prices rose on Monday as more than 1.5 mb/d of U.S. offshore oil production was temporarily taken offline due to storms in the Gulf of Mexico. On Tuesday, prices inched up a bit further. But the impact cuts both ways – significant outages at Gulf Coast refineries could depress upstream prices in the Permian. However, either way, the effects are likely to be transitory.

_*More than half of Gulf Coast oil and gas production shut in.*_ Ahead of two major storms, hundreds of offshore oil and gas platforms have been idled. As of midday on Monday, 281 platforms, or 43 percent, had suspended work. U.S. government data estimates that 82.4 percent of offshore oil production has been shut-in, and 56 percent of its gas production. Companies that have shut down production include *Chevron (NYSE: CVX)*, *Murphy Oil (NYSE: MUR)*, *BHP (NYSE: BHP)*, *BP (NYSE: BP) *and *Royal Dutch Shell (NYSE: RDS.A)*, among others.

_*More than 118,000 oil, gas and coal jobs lost.*_ Since the start of the pandemic, more than 118,000 jobs in oil, natural gas, and coal production have been eliminated, according to a new report. 

_*Arena Energy files for bankruptcy.*_ Texas-based Arena Energy, which had operations in the Gulf of Mexico, filed for chapter 11 bankruptcy on Thursday, affecting $1 billion in debt. 

_*Exxon limits output in Guyana due to gas issues.*_ *ExxonMobil (NYSE: XOM)* said it is limiting output at its offshore oil project in Guyana to 100,000 bpd because of mechanical issues with gas compressing equipment, which prevents it from reinjecting gas produced. Instead of flaring, Exxon has decided to limit production. 

_*Oil prices face bearish forces.*_ Slow demand and some potential return of global oil supply could weigh on crude prices. The oil market has to reckon with the possibility of more oil returning to the market from Libya, Iran, and the United States. Calendar spreads have fallen into a stronger contango, with Brent five-week spreads falling to the lowest since early June.

_*SEB: Oil market tightening. *_While the market faces potential bearish winds, others see the upside. SEB chief commodities analysts Bjarne Schieldrop sees demand rising, U.S. oil production trending lower and OPEC+ staying the course. Brent has been stuck at $45 per barrel but could soon break free and “we think the direction then is up rather than down,” Schieldrop said. 

_*ExxonMobil knocked out of Dow Jones.*_ *ExxonMobil (NYSE: XOM)* was kicked out of the Dow Jones Industrial Average, making way for Salesforce.com, Amgen Inc. and Honeywell International. As recently as 2011, Exxon was the world’s largest company, but its swift fall is emblematic of the turmoil in the energy industry. “Those changes are a sign of the times - out with energy and in with cloud,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, according to Bloomberg. Exxon was worth $525 billion in 2007, and is now only worth about $180 billion.

_*IHS: Oil demand to plateau below pre-pandemic levels. *_“Global crude demand surged from May to July with the easing of some COVID-19 restrictions and now rests at 89% of prior-year levels--compared to being at 78% in April,” IHS wrote in a report. “IHS Markit expects demand growth to wane and plateau at 92-95 mbd (or roughly 92-95% of prior-year levels) through the first quarter of 2021.” The reason demand does not bounce back to pre-pandemic levels is because of reduced air travel. 

_*More shale job losses.*_ *Pioneer Natural Resources (NYSE: PXD)* and *Parsley Energy (NYSE: PE) *are planning to announce job cuts in the coming days, according to Reuters.

_*Natural gas prices shoot up. *_U.S. natural gas prices have climbed to their highest levels since late 2019, pushed higher by ongoing hot weather and absolute declines in production. The tightness is global – JKM prices for LNG could rise to $6/MMBtu by December, according to a report from Bank of America Merrill Lynch. That opens up exports for U.S. LNG again. “[T]he world will call on all US export capacity this winter, in our view,” the bank said.

_*Petrobras adds 26 oilfields to sale list. *_Brazil’s *Petrobras (NYSE: PBR)* has initiated the sale process for a group of 26 onshore and shallow water oilfields and a small nearby refinery in the northeastern part of the country, according to Reuters. 

_*Peru oil and gas at risk.*_ Indigenous protests have taken over Peru, threatening to undermine the Latin American nation’s burgeoning upstream industry. Peru has become a battlefield between economic interests and social rights.










Breadth is always an issue, but I would challenge this chart. Breadth is actually pretty good on a big picture look. If you look on any particular day, you fall to the fallacy of small numbers.






On the inflation risks: falling agricultural production (if it occurs) is a potential risk to rising agricultural prices.






Big Tech. Big price premium. Not saying it can't run further, just that jumping in now, if you missed the train at the station, is a risky proposition.






New IPOs are less in number but more mature and have (in some cases) actual earnings. These 2 facts (it is argued) differentiates 2020 from 2000.

jog on
duc


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## ducati916

With regard to market breadth:





With regard to advancing/declining: first look at 2017-2018. Contained in a range. Market went straight up. Market breadth and a rising market are fine as long as we sit most of the time in that wide band. Currently we are. Yes we are at the lower border, indicating that we have had a bit of a pullback in the broad market, which is correct. We are also moving back higher, greater (broader) participation.







Then we look at the volatility of the volume. It is declining, which means that the bears are losing strength on pullbacks (in the broader market) and that the market is consolidating in these pullbacks.

Last night's post demonstrated that the rotation has been occurring over the last 3 months +/-. Which is to say, the rotation from very narrow leadership of the mega-caps FAANMA, to a far broader participation is continuing.

One of the major catalysts that will drive that rotation is the upcoming election. The traditional sectors and parties have already been identified: that of course does not mean that that will hold true this time round.

jog on
duc


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## ducati916

Some 'underloved' mid-caps:












As a basket, could have potential. The 'E' is estimated, which means that there has been a positive catalyst identified moving forward. Now of course, whether that estimate plays out is quite another thing altogether.

jog on
duc


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## over9k

I know we think of the fangs when we say megatech, but netflix really shouldn't be in it.






The megatech has pasted etf's over the past 3 months just like it did the previous three.


This idea of a rotation is a bit odd, if anything we've seen an even greater divergence begin over the past fortnight or so:






And that's just the S&P, the nasdaq divergence is even greater, and FAAMG even greater again.

I do hear you about the massive price to book ratio:






But at the same time, in the .com bubble even the little guys (in tech) were soaring. This time around, the little guys are all going bust in basically every sector/industry, and the big players are picking their marketshare(s) and assets up for peanuts. This is, depressingly, the ideal market conditions for big players that can raise the capital necessary to ride the storm out. The bigger the player, the better it's doing.

Even the oil supermajors are getting absolutely hosed - by aramco.

Finally, just in case anyone's in any kind of doubt as to the absolute juggernauts the megatech are, check this out:


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## ducati916

And the gift that just keeps on giving:









So I sold a bunch of CALLS @ strike $2500 (with an IV of 120%) based purely on this upcoming stock split (5 for 1 split) which seems to have ignited a frenzy in the stock. Anyway, as long as TSLA stays below $2500 by Friday, I'm happy.

jog on
duc


----------



## ducati916

Bailout?









19,000 jobs have been mooted as the number. In an election year, that is a pretty compelling threat. Do you buy on the 'hope' that (a) there is a bailout and (b) that if there is a bailout that (c) the airlines actually respond as you want.

Seems a bit of a gamble to me.

Thoughts?

jog on
duc


----------



## over9k

The conspiracy theorist in me says that the democrats have engaged in a gambit - logjam stimulus to torpedo the economy in the hopes that trump gets the flak for it. Now that they've moved all their own money around to where it needs to be and don't need to approve the stimulus to rescue their own portfolio's, the whole thing can go to hell in a handbasket & they won't care. 

I base this on nothing other than pure cynicism of politicians and knowing that nothing is beyond (or beneath) them.


----------



## ducati916

Another view of breadth:






We now have just under 60% of the S&P500 above their 200EMA. Assuming it continues, and it is only at the mean currently, to the 1STD, most sectors will advance.

jog on
duc


----------



## Lucky777




----------



## aus_trader

ducati916 said:


> 19,000 jobs have been mooted as the number. In an election year, that is a pretty compelling threat. Do you buy on the 'hope' that (a) there is a bailout and (b) that if there is a bailout that (c) the airlines actually respond as you want.
> 
> Seems a bit of a gamble to me.
> 
> Thoughts?



Does seem like a gamble at this point in time. I think the best of the Airline companies with good balance sheets may survive and prosper once the pandemic ends but by then the weakest and the most heavily indebted may have gone under by then...

Example 1: Of the two Aussie Airlines, it looks like Qantas (QAN) may be able to survive possibly with capital raisings or Govt assistance but Virgin (was VAH when it traded on the ASX) has gone under.

Example 2: In the case of NZ, I think Air New Zealand (AIZ) will survive and it's actually flying locally within the country and a few selected international routes at the moment, so I think a survival candidate indeed. Besides I really doubt if NZ Govt would deny any assistance if the national airline was struggling and was facing bankruptcy.


----------



## over9k

We're also heading into summer, a traditionally high travel/high activity time of year.


----------



## ducati916

Hodge podge of stuff:






Powell to make the Jackson Hole speech. Nothing dramatic expected.






TSLA adds $100+ in a day. Still below the rate needed to hit $2,500 by Friday, although it could be close.






Some virus news.

jog on
duc


----------



## ducati916

Now something altogether more serious:









Two VIX measures: (a) of SPY and (b) 10yr Note.

You will notice that both have slipped outside of their trend-lines. Not a good development. Yields have been rising recently, not much, basis pts, but rising nonetheless. It could be in anticipation of the Fed. It could be completely something else.

Either way, something is up and it MIGHT spell a bit of a correction in stocks. 

Now this is not (in my opinion) a trend breaking correction, just a correction. For these types of correction (if it comes at all) I typically hedge with Options (which I have just done). So in the sectors that I hold ETFs in, I have hedged with PUTS.

jog on
duc


----------



## ducati916

Mostly Fed. based news today:












And with the fall-off in Bond purchases:












We have an accounting for why Bond prices are falling (yields rising). Now stocks can endure yields circa 5%-6%. However, compared to recent history with yields, that would be perceived (initially) very poorly, remember the Taper Tantrum of 2018-2019.

The other issue for the market is that 'insiders' are significant sellers of stock currently. I always watch this as a bit of a red flag for an individual stock. For the entire market? I'd err to the side of cautious.

Optimism has shifted from doom to euphoria:











We'll see if Financials continue their traditional outperformance into the election and post. With yields rising, that is certainly a tailwind for financials.

And finally TSLA:






So it has to stay under $2,500 by tomorrow for another payday.

jog on
duc


----------



## ducati916

The Fed’s widely expected announcement of a shift to so-called symmetric inflation targeting spurred a selloff in the long end of the Treasury curve, as the 30-year bond jumped 8 basis points to finish above 1.5% for the first time since June, while stocks finished marginally higher to extend the S&P 500’s winning streak to six.  Gold reversed early gains and fell nearly 1% to $1,936 an ounce, while WTI crude remained near $43 a barrel.  The VIX caught a bid for a second straight day, closing at a one-month high near 25.5. 

Another week of consolidation as Reserve Bank credit (the sum total of interest bearing assets at the Fed) registered at $6.97 trillion, marking the ninth straight reading just below the $7 trillion mark.  That brings the three-month annualized growth rate to 5.5%, and 83% on a year-over-year basis.  

Risk appetite continues to percolate across credit markets, as the triple-C-rated cohort of the Bloomberg Barclays High Yield Index saw its option-adjusted spread narrow back inside 1,000 basis points yesterday, roughly half the pickup on offer in March. 

That price improvement comes despite an historic proliferation of bankruptcies. Citing data from New Generation Research’s BankruptcyData.com unit, the _Financial Times _notes that through Aug. 11, a record 45 U.S. companies with assets of at least $1 billion have filed for Chapter 11, well above the 38 $1 billion-plus bankruptcies logged by this time in 2009 and a record figure for a full year. 

“_We are in the first innings of this bankruptcy cycle,” commented Ben Schlafman, chief operating officer at New Generation Research. “It will spread far across industries as we get deeper into the crisis. It’s going to be a bumpy ride._” 

More broadly, a report yesterday from Moody’s projected the trailing 12-month speculative-grade default rate will reach a range of 10.9% and 14.5% by February of next year, challenging the post-1983 record of 13.3% set in September 2009.  The rating agency’s B3 Negative and Lower list (equivalent to single-B-minus) stands at 26.9% of the speculative-grade population, down from a record 27.5% in May but still above the 2009-era peak of 26.1%.  That growth is notable as the financially stretched companies within the B3N cohort traditionally default at more than three times the long-term average rate for junk bonds. 

The spate of restructurings and distressed situations, in tandem with the broad erosion of debt covenants, has yielded an increase in acrimony among various creditor contingents as they fight for claims on finite corporate assets. 

On June 8, mattress maker Serta Simmons Bedding, LLC announced a debt exchange with a lender group including asset managers Eaton Vance and Invesco, elevating the cohort to senior status over another group of lenders including private equity giants Apollo and Angelo Gordon in return for $200 million in fresh capital.  On June 20 the New York State Supreme Court threw out a challenge from the suddenly-subordinated p.e. lenders, completing a role reversal as the Apollo and Angelo Gordon pair were outmaneuvered by the asset managers. 

The thwarted private equity contingent had their own plans, which included shifting Serta Simmons’ intellectual property into a new subsidiary and out of reach of the rival creditor group.  “They were threatening to absolutely screw us,” Eaton Vance portfolio manager Craig Russ told _The Wall Street Journal _on June 26.

Bankrupt Ascena Retail Group, Inc., which owns the Ann Taylor and Lane Bryant apparel brands, is another contentious dispute, this time pitting creditors against the company. Bloomberg reported on August 14 that a trio of investment funds have hired law firm King & Spalding to challenge the terms of a debtor-in-possession (DIP) loan which gives exclusive participation rights to lenders who approved the company’s new financing, leaving those who resisted the terms of the DIP out in the cold. 

The saga of cosmetics concern Revlon stands as perhaps the most striking example, setting a creditor cohort against Citigroup, the bank acting as administrative agent.  Earlier in August, Citi mistakenly wired some $900 million to a cadre of Revlon creditors, including hedge funds Brigade Capital, Symphony Asset Management and HPS Capital Partners. 

While Citi claimed the incident was a simple administrative error, the trio refused to return the funds, accusing Citi of helping Revlon to use “manipulat[ive]” tactics to shift valuable collateral out of the creditors’ reach.  The hedge funds allege that, lacking sufficient support for its plan from lenders, Revlon (with Citi’s help) borrowed additional funds via a revolving credit facility.  In pursuing that transaction, the company brought investment bank Jefferies into the fold as a temporary creditor, tipping the voting scales in favour of the debt exchange and subordinating the hedge funds in the capital structure food chain. 

Of course, the peculiar combination of economic distress and monetary abundance looms large in these disputes. An anonymity-seeking financing lawyer tells the_ FT_ today that the situation is unlikely to change anytime soon, “given what looks like a perpetuity of zero interest rates and infinite liquidity.”

jog on
duc


----------



## ducati916

So just ahead of the w/e:






Ominous looking candle.






VIX moving higher.






The inflation metric (particularly after the Fed) not yet signalling, but, getting very warm.






Confirming:






And Bond market volatility also moving higher.

The duc is ready having shorted Treasuries and hedged via Puts, any downdraft in the over-all market. Irrespective of whether the market sells off or not, I like the short Treasury position as I think (a) the Fed. does not go NIRP and (b) clearly no curve control currently, so (c) Treasuries could well decline ending one of the great bull markets of all time having stretched from August 1982.

For more income based investors, assuming that ZIRP is here for a while, using the Corporate Bond yield to identify safe stocks where the dividend yield should be safe:






jog on
duc


----------



## ducati916

Pretty quiet day heading into the w/e.









So VIX started to fall again. I took off my Put hedges, but my short Treasury trade remains.






TSLA pays me.









Yields on 20yr paper have moved 32 basis points since the most recent low. The inflation trade still has no signal, but it is hovering in that area. A break of the trend-line might not be enough: a break of support would also be required.






Bridgewater struggling: https://www.institutionalinvestor.c...-Having-a-Bad-Year-David-McCormick-Has-a-Plan

No summer blockbusters out of Hollywood. I lined up to watch both of these in the US (San Francisco).









jog on
duc


----------



## ducati916

Seasonality:









So the QQQ a little more volatile in Sept. than SPY, which usually waits until Oct.






Lots of complacency in the market currently.






And six lottery tickets that I am simply going to paper trade (except OCGN) and see how my initial scan code works out.

jog on
duc


----------



## aus_trader

ducati916 said:


> Seasonality:
> 
> View attachment 108421
> View attachment 108422
> 
> 
> So the QQQ a little more volatile in Sept. than SPY, which usually waits until Oct.
> 
> View attachment 108420
> 
> 
> Lots of complacency in the market currently.
> 
> View attachment 108419
> 
> 
> And six lottery tickets that I am simply going to paper trade (except OCGN) and see how my initial scan code works out.
> 
> jog on
> duc



duc, what was the reason for leaving out OCGN. I just like to understand how you think in terms of picking stock candidates.


----------



## ducati916

aus_trader said:


> duc, what was the reason for leaving out OCGN. I just like to understand how you think in terms of picking stock candidates.





Possibly I didn't express that very clearly. I liked OCGN so much, I have placed an order to buy. It is a biotech, which means that it could move 100% in either direction.






The other 5 are just a bit of an experiment (somewhat inspired by the 'Festering' thread') and I'll see how they pan out. 

Here are the other 5:






AMBO 'should' also do well (at least if the above chart has any value). In fact, looking at it again, I'll add an order for it as well.

jog on
duc


----------



## over9k

Another festering one is GTX. Currently under investigation from a law firm. https://finance.yahoo.com/news/law-offices-frank-r-cruz-213200428.html

Trading at 1/6th its peak though. Risky, but lots of upside potential. Dropped 40% one day, 12% the next, spiked 6% on the 3rd before then closing flat.


----------



## aus_trader

ducati916 said:


> Possibly I didn't express that very clearly. I liked OCGN so much, I have placed an order to buy. It is a biotech, which means that it could move 100% in either direction.
> 
> View attachment 108426
> 
> 
> The other 5 are just a bit of an experiment (somewhat inspired by the 'Festering' thread') and I'll see how they pan out.
> 
> Here are the other 5:
> 
> View attachment 108427
> 
> 
> AMBO 'should' also do well (at least if the above chart has any value). In fact, looking at it again, I'll add an order for it as well.
> 
> jog on
> duc



Cheers duc, that clarifies it.


----------



## ducati916

Some economic based charts:

The first one (below) is actually quite useful for gauging inflationary pressures, which lead to reductions in profitability of businesses (stock market) as commodity prices (PPI) increase relative to Industrial production.







Industrial production is correlated to the market. Therefore keeping track of this economic indicator is a worthwhile undertaking.







Housing is (obviously) a huge part of the US economy. Always worth tracking.









Money expansion. Need I even say anything.






And lastly the correlation with CPI, which is itself driven by the expansion of M1/M2.






Which is nothing more than an inflationary increase in corporate profits and a steady default on debts.

jog on
duc


----------



## ducati916

So today I put the hedges back on:


















Markets when they top, usually (not always) take a bit of time. None of the above charts currently fill me with much conviction that we are not going to have a slightly deeper correction than just a minor pull-back. Given that it is also September, well I'll play it a little safe.

jog on
duc


----------



## over9k

The question is where the correction can/will be found.

So far, megatech and mega-growth (tesla, nvidia, zoom etc) has been virtually invulnerable. And we're heading into winter, which means more time spent indoors even just seasonally. And buying online for xmas.


----------



## over9k

Apple certainly aren't anticipating any lack of demand: 

https://www.bloomberg.com/news/arti...YyJBNj-i5ruC-7WDVcXxn85BcSusQ45cADjbjHPgH-nFk


----------



## over9k

Lol.


----------



## ducati916

So the 'Bloomberg Challenge' is off.

https://news.broker/2020/08/31/bloomberg-challenge-cancelled-again/



Is he correct? Does access to a Bloomberg terminal actually provide an advantage?

Thoughts?

jog on
duc


----------



## over9k

Of course it does. The question is how much. That's individual.

FWIW Alex (the bloomberg AU rep that'll call you when you enquire about one) was fantastic when I had him on the phone.


----------



## aus_trader

ducati916 said:


> Given that it is also September, well I'll play it a little safe.



I wander the old adage "Sell in May and go Away" still applies to stock (US/asx) markets ?

I just looked at the last decade and there seems to be some years that it's worked for a short term correction on the ASX:

May 2010
May 2011
May 2012
May 2013
May 2015
But the last two years would have been a dreadful decision to sell in May and hide in a hole. Thankfully I learnt from you ASF guys to get back into the market since I was so slow to catch the 2019 rally. 

So in 2020 I started buying back stocks when the ASF market analysts  started posting things like turning their Index filters back ON and so forth with all the technical jargon thrown in to make my head spin . Anyway, started buying stocks back and slowly populated *Speculative Stock Portfolio *with the best of my researched stocks. Thank goodness, the subsequent COVID recovery that followed was even steeper than the 2019 rally and the "Open Portfolio" and "Recently Closed Positions" look pretty good at the moment.


----------



## ducati916

aus_trader said:


> I wander the old adage "Sell in May and go Away" still applies to stock (US/asx) markets ?
> 
> I just looked at the last decade and there seems to be some years that it's worked for a short term correction on the ASX:
> 
> May 2010
> May 2011
> May 2012
> May 2013
> May 2015
> But the last two years would have been a dreadful decision to sell in May and hide in a hole. Thankfully I learnt from you ASF guys to get back into the market since I was so slow to catch the 2019 rally.
> 
> So in 2020 I started buying back stocks when the ASF market analysts  started posting things like turning their Index filters back ON and so forth with all the technical jargon thrown in to make my head spin . Anyway, started buying stocks back and slowly populated *Speculative Stock Portfolio *with the best of my researched stocks. Thank goodness, the subsequent COVID recovery that followed was even steeper than the 2019 rally and the "Open Portfolio" and "Recently Closed Positions" look pretty good at the moment.





For the SPY no. For the QQQ, arguable. But not this year at least. All that remains to be seen is whether the Sept/Oct seasonality trend remains intact.









jog on
duc


----------



## ducati916

over9k said:


> 1. Of course it does.
> 2.The question is how much.
> 3.That's individual.
> 
> FWIW Alex (the bloomberg AU rep that'll call you when you enquire about one) was fantastic when I had him on the phone.




1. Well that was going to be the purpose of the test/experiment. So while it is asserted, it is far from proven.

2. Of course. What return would justify it. The experiment was going to demonstrate 100%+ in 1 month. Now if that can be achieved, that is impressive and would make it worthwhile, more than worthwhile. Count me sceptical.

3. So not the machine. The individual. See the contradictions?

jog on
duc


----------



## aus_trader

ducati916 said:


> For the SPY no. For the QQQ, arguable. But not this year at least. All that remains to be seen is whether the Sept/Oct seasonality trend remains intact.
> 
> View attachment 108543
> View attachment 108544
> 
> 
> jog on
> duc



These have a recentcy-bias since the last 5 years (except for the Covid flash crash) has been a raging bull market with over 300% returns. No wander there is so much bullishness especially in the US markets !

I've seen some youngsters do some stunts and pull it off while rubbing it into me with salt for cautioning them to exercise caution on their Robinhood accounts going heavy on Hertz that was near bankruptcy and trending down at around 90c. Couldn't believe it when it hit $5+ in a matter of days !

So this is a generational recency-bias we are experiencing I think with what they've seen in their lifetime:

If you are a US youngster: Stock market always makes new highs including when it flash crashes during a pandemic.
If you are a Aussie/NZ youngster: House prices will never go down, Period. I mean it never did in their parent's lifetime let alone in their life.
My brain refuses to agree with above points. Which drug do I take to make my brain all brand new and think like a 20-year old ?


----------



## ducati916

Oil Patch News:


*Market Movers*

-   *Total’s (NYSE: TOT) *Port Arthur refinery is awaiting the restoration of electricity in order to restart operations following Hurricane Laura. Citgo and *Phillips 66 (NYSE: PXD) *said that assessments of damage at their facilities in Lake Charles could take days.

-   *Chesapeake Energy (NYSE: CHK)* hoped to cancel a $300 million contract with *Energy Transfer (NYSE: ET)*, but a court ruled in Energy Transfer’s favor.

-   *Enbridge (NYSE: ENB)* said that an offshore natural gas pipeline that services four offshore platforms in the Gulf of Mexico remained out of commission due to the hurricane.

*Tuesday, September 1, 2020*

Oil prices rose on Tuesday on new manufacturing data from both the U.S. and China, which surprised on the upside. The dollar also weakened, adding some support to crude. Nevertheless, crude is showing few signs of being able to break out from its current range. 

_*Distressed shale assets from the last boom. *_Many of the M&A deals in U.S. shale following the 2014-2016 oil market downturn are now “unworkable,” according to Reuters. Of the 50 largest acreage purchases between 2016 and 2019, 31 of them only add value if Brent trades above $50 per barrel. For instance,* Diamondback Energy (NASDAQ: FANG)* paid roughly $54,977 per acre when it purchased Energen in 2018, a deal that would now breakeven if Brent averaged $77 per barrel.

_*Gulf of Mexico output remains down. *_As of Monday, about 53 percent of oil production in the Gulf of Mexico was still shut-in, following the devastation from Hurricane Laura. About 41 percent of natural gas production is shut-in. Personnel remain evacuated from 117 production platforms or 18 percent of the total. 

_*EVs still costly to produce.*_ EVs will remain more costly to manufacture than traditional gasoline and diesel-fueled vehicles for the rest of the decade, according to new research. EV manufacturing costs could average 16,000 euros by 2030, or 9 percent higher than conventional cars.

_*Goldman: Oil prices to jump to $65.*_ Goldman Sachs expects Brent crude to reach $65 a barrel in the third quarter of 2021, although it could end the year lower, at $58 a barrel, according to Goldman Sachs analysts. “There is a growing likelihood that vaccines will become widely available starting next spring, helping support global growth and oil demand, especially jet,” the Goldman analysts said.

_*U.S. seizes websites involved in illegal oil trade. *_The United States announced today that it has seized three websites used by sanctions-violators to trade in crude oil, according to an official press release. The websites were, according to the U.S. government, used by Iran to trade oil with Venezuela—two sanctioned countries that are not allowed to trade oil at all, let alone with each other.

_*Natural gas prices sink on cooler weather.*_ Natural gas prices sank early on Monday on expectations of lower demand due to cooler weather and lower liquefied natural gas (LNG) feed in the aftermath of Hurricane Laura passing through the U.S. Gulf Coast.

_*Biden: "I am not banning fracking": *_In a speech on Monday in Pittsburgh, Biden dismissed accusations that he would target oil and gas drillers. “I am not banning fracking. Let me say that again. I am not banning fracking. No matter how many times Donald Trump lies about me,” Biden said.

_*UAE overproduces in August. *_The UAE breached its OPEC+ quota in August, pumping 2.693 million b/d, according to S&P Global Platts.

_*U.S. SPR damaged from the hurricane. *_The U.S. Energy Department said on Monday that the West Hackberry site of the Strategic Petroleum Reserve “sustained considerable damage” from Hurricane Laura.

_*Shipping companies profit amid downturn. *_Cost-cutting and removing excess capacity have kept shipping margins in positive territory this year. 

_*Trump Administration Proposes Easing Oil and Gas Permitting in National Forests. *_The Trump administration on Aug. 31 issued a proposal that would make it easier to permit oil and gas drilling operations in national forests, aligning permitting processes between the Forest Service and the Bureau of Land Management. Environmental groups say the move will sidestep environmental reviews. 

_*U.S. gasoline demand fizzling. *_U.S. demand for gasoline surged after bottoming out in April, but has flattened out in the past two months below pre-pandemic levels. Stagnating demand raises concerns about the health of the economic recovery. “The easy work has been done,” Noah Barrett, an energy analyst for Janus Henderson Investors, told the WSJ. “That last 10% to 15% of lost demand is going to be really hard to get back.” 

_*Trump admin prepares more sanctions on Venezuela. *_“We think our sanctions have been extremely effective in reducing income to the regime but we think we can make them more effective. So we are going to be doing some things to tighten up in the near future,” Elliott Abrams, U.S. Special Representative for Venezuela said in a Reuters interview. He did not specify but hinted that the new sanctions would include eliminating exemptions offered to third parties buying Venezuelan oil. 

_*Tesla to sell $5 billion in shares. *_*Tesla (NASDAQ: TSLA) *said it would sell as much as $5 billion in shares “from time to time” in order to fund growth. The company has plans to build new factories in Germany and in Austin, Texas, following the recent completion of a plant in Shanghai. 

_*Exxon considers job cuts.*_ According to a memo sent to employees Monday and obtained by Business Insider, *ExxonMobil (NYSE: XOM)* is considering job cuts. The company is looking at its upstream unit for “organizational efficiencies and lower activity levels,” according to the memo, including job cuts.

_*Total and Macquarie pursue 2 GW offshore wind in South Korea. *_*Total (NYSE: TOT) *will partner with Macquarie Group’s green bank to develop more than 2 gigawatts of floating wind farms off South Korea, the latest push by the French oil and gas giant to diversify into clean energy.

jog on
duc


----------



## ducati916

Pretty good breadth:






Move in the Materials:






jog on
duc


----------



## over9k

ducati916 said:


> 3. So not the machine. The individual. See the contradictions?




I was referring to the service you get. Like going to a nice restaurant or something, you don't *just* buy the physical product. 

You at least bought a fang etf yet?


----------



## over9k

BP's also sold their London HQ just FYI


----------



## ducati916

over9k said:


> I was referring to the service you get. Like going to a nice restaurant or something, you don't *just* buy the physical product.
> 
> You at least bought a fang etf yet?





And apart from teaching you how to get the most from your purchase, that helps you how?

It would seem that almost by definition, simply owning/renting a Bloomberg can confer no longer term advantage simply because if it did, all would rent one, thereby negating the advantage.

Possibly for daytrading the pre-market to the open, there may be some advantage, that is really what I was waiting to see from the experiment, because (in the US) you are competing against the MMs. and HFT chaps.

Thoughts?

jog on
duc


----------



## qldfrog

ducati916 said:


> And apart from teaching you how to get the most from your purchase, that helps you how?
> 
> It would seem that almost by definition, simply owning/renting a Bloomberg can confer no longer term advantage simply because if it did, all would rent one, thereby negating the advantage.
> 
> Possibly for daytrading the pre-market to the open, there may be some advantage, that is really what I was waiting to see from the experiment, because (in the US) you are competing against the MMs. and HFT chaps.
> 
> Thoughts?
> 
> jog on
> duc



Sorry duc for absence of response, really a foreign domain for me..
Anyone else actually using it ?


----------



## over9k

ducati916 said:


> And apart from teaching you how to get the most from your purchase, that helps you how?
> 
> *It would seem that almost by definition, simply owning/renting a Bloomberg can confer no longer term advantage simply because if it did, all would rent one, thereby negating the advantage.*
> 
> Possibly for daytrading the pre-market to the open, there may be some advantage, that is really what I was waiting to see from the experiment, because (in the US) you are competing against the MMs. and HFT chaps.
> 
> Thoughts?
> 
> jog on
> duc




Not necessarily. The terminal might make you X% more per year. That X% mightn't be the ~30k AUD that it costs. It would obviously depend on a balance of your utilisation of it and how much money you're playing with. 

This dude seemed bloody ambitious at it enabling a doubling of your money per MONTH. That would make it worth millions and millions just in year 1. It doesn't take long doubling a 30k figure before it hits the billions. 

Dude actually struck me as a complete loon tbh.


----------



## ducati916

over9k said:


> 1. Not necessarily. The terminal might make you X% more per year. That X% mightn't be the ~30k AUD that it costs. It would obviously depend on a balance of your utilisation of it and how much money you're playing with.




Well the $25k is just for your basic model. You want added functionality, that costs more again. 

If we looked at the natural users: Hedge Funds, looking to maximise returns and thereby attracting additional AUM and greater fees for themselves: how have their returns been? Not all that. Pretty average. Therefore, I would say, for your average retail trader, a total waste of money.







jog on
duc


----------



## ducati916

Little warning signs creeping into the market:









Market continues to rise, but no longer convincing.






This type of offering, also not a good sign for the market.






Lots of talk about Robinhood et al. Same in the late '90's and top in 2000, day-traders were everywhere. Tony Oz was one of the more visible ones who had a couple of books etc.

With increasing uncertainty around the election, toppy markets can correct very quickly. The issue (as always) is how long do you stick around to find out? Markets often continue higher, making those that sell out fearing whatever, look stupid. Whatever your strategy, now is not a bad time to at least think about it.

Looking at QQQ






That divergence is heading to a dangerous area. Falling below that support line could trigger a fall in the index as a whole. Of course it may bounce off of it and move higher. The thing with a bounce, is that the market has already had a correction, which is what creates the bounce. When you have a divergence, the bounce becomes a lower probability.

jog on
duc


----------



## over9k

Everyone are getting the jitters about the election. 






All the news are banging on about biden very possibly losing, the polls show a convergence to 50/50, and the odds on the betting sites have shifted _significantly:




_

Even the democrats have changed their tune and are making videos of the riots etc and superimposing "trump's america" over them:






The whole thing just smacks of utter desperation.

I mean wow, you mean all those riots that torched entire car dealerships, multi-generation family owned businesses etc etc that democrat mayors and governors _allowed_ to happen aren't reflecting well on the democrat party?

I am shocked I tell you.


----------



## ducati916

So Bank of America analyst raised TSLA guidance to $500/share. Arguing, the higher the price, the more productive capacity can be built, the higher the price. A perpetual motion machine.






jog on
duc


----------



## over9k

Did they happen to mention what their own holdings/positions are?


----------



## aus_trader

ASX not getting a good overnight lead for Friday's trading...





Not even Gold and Silver has been spared...


----------



## ducati916

Pretty much red across the board.

VIX signalled its warning a couple of days back, giving you time to hedge or sell out. I 'think' this correction will continue into the w/e, I can't see it bouncing on a Friday under the current situation, but I'll have a look later once all the data is in for today.






Run to safety, in the long end of the curve.















There are some issues re. inflation bubbling in the background:









The final word to Mr Flippe-floppe-flye:






jog on
duc


----------



## ducati916

So we will be able to judge reasonably accurately when it is safe to jump back long.






So the VIX is still rising. It may stall at the resistance point, it may not. I 'think' we may well move back to the second resistance point before things calm.






So this is the SPY. As it rose less, so it (currently) is falling less.






And the QQQ. Shallow or deeper? Whichever way, we'll catch pretty much the bottom, as we caught the top.

jog on
duc


----------



## over9k

Interestingly, I've noticed that nearly all of the current pre-market prices (that I follow) are almost the same % drop as the open from yesterday:






I.e we're looking at a repeat of the same open drop. This might suggest a repeat of the same close drop too. I've got a few lowball buys in that'll fill if we get the same thing again. 

Let's see if tesla does another 9% tonight. That'd put it near the $360 mark, or an almost 30% drop since its tuesday high:






Remember when it was gaining at a similar rate?


----------



## ducati916

So I'm keeping an eye on these two. I'll only buy 1 once the correction is over, so I'm anticipating next week at some point.






Holdings:













Holdings:






I'm leaning towards China due to the fact that I recognise at least some of the stocks. It also seems to have a slightly better mix of industries, but I could be wrong on that.

Any thoughts?

jog on
duc


----------



## over9k

Well south korea is massively exposed to export markets, and there's a mountain of tech names I see there. If I was going to go that way, I'd probably go for a semiconductor ETF and remove the export market risk: 






I've been eyeballing SOXL for a while, also anticipating a trigger pull sometime next week as well. 


Your chinese etf seems to have a lot of banks/finance in it and we all know just how bloody dodgy they are, but ignoring that, I'm not sure what your time horizon is but china's demographics are a total flash in the pan reference consumption-led growth: 






Which makes them heavily reliant on exports as well. The difference is, south korea isn't on trump's **** list. 

But even if biden wins, the democrats are still pretty hawkish on china, just not as much as trump. You'd get a bounce if biden wins but it wouldn't be a long lasting one. I suspect you'd have another big slump if trump does. Seems like a small but short upside with a biden win vs a big and sustained drop with a trump win. With the betting odds now at 50:50, I just can't see china being a positive risk vs reward. You'd be better off just putting a bet on biden to win the presidency, at least then the upside potential is the same as the downside.

Might be worth taking a look at which competitors to china benefit the most from trump winning, even if just as a bit of a hedge?


----------



## ducati916

over9k said:


> Well south korea is massively exposed to export markets, and there's a mountain of tech names I see there. If I was going to go that way, I'd probably go for a semiconductor ETF and remove the export market risk:
> 
> View attachment 108667
> 
> 
> I've been eyeballing SOXL for a while, also anticipating a trigger pull sometime next week as well.
> 
> 
> Your chinese etf seems to have a lot of banks/finance in it and we all know just how bloody dodgy they are, but ignoring that, I'm not sure what your time horizon is but china's demographics are a total flash in the pan reference consumption-led growth:
> 
> View attachment 108668
> 
> 
> Which makes them heavily reliant on exports as well. The difference is, south korea isn't on trump's **** list.
> 
> But even if biden wins, the democrats are still pretty hawkish on china, just not as much as trump. You'd get a bounce if biden wins but it wouldn't be a long lasting one. I suspect you'd have another big slump if trump does. Seems like a small but short upside with a biden win vs a big and sustained drop with a trump win. With the betting odds now at 50:50, I just can't see china being a positive risk vs reward. You'd be better off just putting a bet on biden to win the presidency, at least then the upside potential is the same as the downside.
> 
> Might be worth taking a look at which competitors to china benefit the most from trump winning, even if just as a bit of a hedge?





I like financials and I like Alibaba/Tencent as they are AMZN like, so I like YINN on that basis. S.Korea I prefer for the reasons you outlined (political). It will probably come down to which chart I prefer over the next couple of days. There are pros/cons and no perfect answer.

I have held SOXL since late 2010, so I'm not worried re. Tech etc. My holding period is decades, although I will trade them around a core position, which is why I prefer x3 leverage, I trade volatility.

jog on
duc


----------



## over9k

If you want a *bit* of asia exposure as well as leverage, check out FNGU 

I'm anticipating a drop just as big tonight so I have an order in at 161. We'll see if it gets filled.


----------



## Beaches

ducati916 said:


> Pretty much red across the board.
> 
> VIX signalled its warning a couple of days back, giving you time to hedge or sell out. I 'think' this correction will continue into the w/e, I can't see it bouncing on a Friday under the current situation, but I'll have a look later once all the data is in for today.
> jog on
> duc





Another great thread and great insights into trading the market. Thank you Duc for all your efforts to educate.


----------



## Beaches

ducati916 said:


> I like financials and I like Alibaba/Tencent as they are AMZN like, so I like YINN on that basis. S.Korea I prefer for the reasons you outlined (political). It will probably come down to which chart I prefer over the next couple of days. There are pros/cons and no perfect answer.
> 
> I have held SOXL since late 2010, so I'm not worried re. Tech etc. My holding period is decades, although I will trade them around a core position, which is why I prefer x3 leverage, I trade volatility.
> 
> jog on
> duc




I traded YINN and YANG alternatively from May through to July. Wasn't really able to get the timing as right as I would have liked and only finished slightly positive. Going forward I will probably just trade this in a long direction.

As for which to pick, I like both YINN and KORU for different reasons on a country basis. So why choose? just take a position in both. I also like the Vietnam story going into next year but could not find any leveraged ETF's for Vietnam, only VNM with no leverage.


----------



## over9k

Hah. So the august jobs numbers were waaaay above expected, and everything's flipped into the green. Let's see how it runs into the close.


----------



## over9k

Good grief. Nasdaq opened POSITIVE, climbed for a moment, and then proceeded to fall off a cliff and crack -5% as if the jobs report was never even released. Seems to have now bottomed out and on a small recovery. 

Unbelievable.


----------



## aus_trader

Not a good way to finish the week. I don't see anything sinister in the news, so this volatility and sell off must be due to uncertainty of election outcome... ?


----------



## over9k

That and no trading on monday (public holiday over there). 

None of the talking heads on the news have a clue. Nobody's got anything other than "well a pullback was due sometime". 

But the way things are going, as of 12.40 EST, things are recovering so fast that we might have a close in the green.


----------



## ducati916

An update:






VIX is coming off. Near, but not touching resistance. Now of course it could always bounce back up over the long w/e and we are in Sept/Oct and an election year.

However I bought YINN






Not a huge fan of China, but I need some diversification exposure in this area, so YINN is it. As I want volatility, so a Trump victory (increasingly probable) could actually work for me.

This morning's strong jobs report saw a bigger than expected jump in nonfarm payrolls during August and a bigger than expected drop in the unemployment report to 8.4%. That strong combination helped contribute to today's rebound in bond yields. Chart shows the _10-Year Treasury yield_ rising 9 basis points today to 0.71%. The 30-year Treasury yield in up an even stronger 12 bps. That means that Treasury bond prices are dropping. That's unusual on a day when stocks are having another weak day. But not all stocks are being sold equally. The biggest losers are in technology, communications, and consumer discretionary which have been the most over-extended on the upside. Some stocks in the value category are holding up a bit better. That's especially true of financials which usually benefit from higher bond yields and a steeper yield curve.






And of course higher yields favour financials, which have held up pretty well the last couple of days.






jog on
duc


----------



## qldfrog

ducati916 said:


> An update:
> 
> View attachment 108696
> 
> 
> VIX is coming off. Near, but not touching resistance. Now of course it could always bounce back up over the long w/e and we are in Sept/Oct and an election year.
> 
> However I bought YINN
> 
> View attachment 108697
> 
> 
> Not a huge fan of China, but I need some diversification exposure in this area, so YINN is it. As I want volatility, so a Trump victory (increasingly probable) could actually work for me.
> 
> This morning's strong jobs report saw a bigger than expected jump in nonfarm payrolls during August and a bigger than expected drop in the unemployment report to 8.4%. That strong combination helped contribute to today's rebound in bond yields. Chart shows the _10-Year Treasury yield_ rising 9 basis points today to 0.71%. The 30-year Treasury yield in up an even stronger 12 bps. That means that Treasury bond prices are dropping. That's unusual on a day when stocks are having another weak day. But not all stocks are being sold equally. The biggest losers are in technology, communications, and consumer discretionary which have been the most over-extended on the upside. Some stocks in the value category are holding up a bit better. That's especially true of financials which usually benefit from higher bond yields and a steeper yield curve.
> 
> View attachment 108698
> 
> 
> And of course higher yields favour financials, which have held up pretty well the last couple of days.
> 
> View attachment 108699
> 
> 
> jog on
> duc



While yesterday session saw a 1.5% loss on my US oortfolio, i was surprised to sée that last night actually recovered my losses and i end today at +1.5% again.even on the last two sessions.
Mostly due to finance up as Dic mentioned,but also no big loss in oil or lmt and hydrogen etf
I am definitively a contrarian


----------



## ducati916

aus_trader said:


> Not a good way to finish the week. I don't see anything sinister in the news, so this volatility and sell off must be due to uncertainty of election outcome... ?
> 
> View attachment 108694





Trading the news is an activity fraught with complications as in Keynes' example of the beauty contest: you are not trying to pick the winner, you are trying to pick who the other judges think is the winner. That is the game you play in the market trading on the news.

It is far more profitable to ignore the news altogether.

One of the technical reasons for the fall was this:







Now when you have MMs selling a CALL, they will hedge and buy the stock. Assuming for ease of calculation that the delta of the CALL is 0.50: then to hedge that position the MM buys 100 shares for every 2 contracts sold as stock is delta 1.0. There is a wrinkle: gamma. Gamma changes the delta calculation. Suffice to say, you have to increase the amount of stock purchased as a hedge.

Now look at the P/C ratio:






Now you would have to do a bit of digging, but you could actually find that the FAANG (whatever) stocks accounted for a significant portion of that volume. Now, extrapolating out a little, we know that there has been a significant increase in small retail traders via Robinhood et al. These stocks, TSLA, AMZN, MSFT, AAPL, are (were) high value stocks. Far cheaper (and tons more leverage) to trade the Options. Which clearly they did. From the chart, we can see that those positions have been closed.

Now I wouldn't say that this is the causation: but it is part of the underlying issue, because as you close those CALLS, you also close the underlying stock position.

jog on
duc


----------



## over9k

You don't watch the news for 99% of what they say. 99% of it is just "no **** sherlock" type of analysis. You watch it for the 1% of the time where something is brought up or mentioned or explained that you didn't already know.

It is possible for someone on this planet to know something that someone else doesn't. Remarkable concept I know.


Back on topic:

The drop & then recovery yesterday was absolutely ridiculous. Futures are back in the red but with the election etc heating up, I suspect it's going to get REALLY choppy for the next couple of months.

There are, however, a lot of earnings to be reported between now & then (and economic data for that matter).

Some I've compiled on account of me holding or at least watching them (please note that some are assumptions based on last year's reporting date but not actually confirmed for this year yet):

2 sep – crowdstrike
3 sep – docusign
9 sep - zscaler
15 sep – fedex
19 oct – Logitech
22 oct – intel
27 oct – ups
28 oct – ebay, paypal, microsoft, tesla
29 oct – wayfair
3 nov – amd
5 nov – Zillow

Trump has also now cracked the 50/50 mark:


----------



## So_Cynical

I feel that the new bull market isn't new at all, it's the old bull market carrying on regardless of the fundamentals - as late bulls always do.

Assuming it really is just the old bull then the real correction is still to come.


----------



## over9k

Depends what you think is already priced in. 

Take the megatech out and it's not a bull market. The dow's still in the toilet for example.


----------



## ducati916

The question is: is the pullback over or just getting started? It also becomes necessary to differentiate between SPY and QQQ.






SPY has clearly held up on a broad basis reasonably well.







Whereas the QQQ breached that initial support. The question is will the second line of support hold?











Support is close and should hold (SPY) evidenced on both charts.







QQQs are also close to support and could well bounce on the same indicator.









Bond yields surging are actually a good sign for the market, as falling yields indicate a run to safety. Surging yields mean that money has come out of the Bond market and either (a) gone into someone's pocket or (b) flowed into stocks. I opt for (b).  Which rather creates a bit of a double whammy, in that financials benefit from surging yields.






And the full holdings of XLF (FAS):









So on balance, that pullback, pretty much looks like its all over.

All that remains is for the fat lady to sing: in that case, we may get an early move lower at the open, just to catch the unwary and then the market starts moving higher again.

Remember: this is a BULL market. This is not the start of a BEAR market, until proven otherwise. We are still in an elevated Vol environment, which means that jumps in Vol seem, or actually are, much more violent, but do not carry increased SIGNAL. It carries the same weight of signal, just a more violent one.

jog on
duc


----------



## over9k

Yeah the NDX futures are all deep in the red (over 2% at the time of this post) so tuesday (which is admittedly a long way away) looks like opening down again.

It's worth noting just how much the market recovered from its session lows on friday. Thursday opened low and just kept running. Friday opened POSITIVE (jobs data threw everyone for six, including me), fell off a cliff until mid morning, and then spent the whole day recovering. Several of my positions even temporarily cracked positive again.

In other words, admittedly it's only been a day, but the market did nothing but recover since the session lows of friday, and all the earnings reports and economic data have been better than expected. Did the market perhaps price in things to be *far* greater than expected?

Everything bounced a couple of days before zoom's blowout report (which EVERYONE were focusing on) and then went absolutely mental the day after. Had several other 4x estimates earnings been priced in and the market tanked once it realised zoom was the outlier?


Here's a thought: Duc, you focus on the technicals, and I'll focus on the interventions/artificial market movers.

E.g:






Compared to the multi-trillion-dollar first stimulus package, this isn't much, but it's roughly the equivalent of 1.4x KRUDD's $1000 cheques (it's USD remember, and that 1.4 is ignoring purchasing power parity difference, which ballparking it puts it at about 2x the equivalent in AUD) that we all got in the GFC, so it certainly isn't insignificant either.


----------



## Miner

So_Cynical said:


> I feel that the new bull market isn't new at all, it's the old bull market carrying on regardless of the fundamentals - as late bulls always do.
> 
> Assuming it really is just the old bull then the real correction is still to come.



I dare add that the  correction within Asx and probably gold and coal commodities  has arrived on last Friday 4th Sept.
Massive PE with some of the BNPL stocks will just ready to be brought to natural levels. Not pessimistic - purely looking into fundamentals and geopolitical assessment. 
DYOR


----------



## ducati916

This is an area that I normally don't stray into overmuch, IPOs. One that is upcoming: https://www.palantir.com/media/

Now I've been trying to figure out exactly what they do. One of their contracts, with the US Army (as I'm interested in defence stocks DFEN): and I follow court cases.






So one for the Tecchies: when it comes to the IPO: worth it?

I'll also download/upload the CA case.

jog on
duc


----------



## ducati916

So further factors in the sell-off:

_Financial press confirms a report yesterday from Zero Hedge that SoftBank Group Corp. has been the options market “whale” devouring call options in an array of tech-related stocks, a move perhaps directly contributing to the Nasdaq’s dizzying ascent this summer.  The call buying spree, which The Wall Street Journal pegs at $4 billion, follows SoftBank’s reported $10 billion worth of tech-stock common equity purchases earlier this summer. _

_Masa Son and co. have company. While the role of retail investors in the recent gangbusters rally has been well-ventilated, new data highlight the intense speculative flows coming from smaller players.  Citing data from the Options Clearing Corporation, Bianco Research notes that, as net bullish options activity surged in August: “small traders are dominating the options market and 75% of the volume is in contracts that expire in under two weeks.”_

_As one whale and many minnows ride the magic wave, the captains of some larger vessels look to bail.  The Financial Times reports that corporate executives unloaded $6.7 billion worth of their company shares in August, the busiest single month for insider selling since November 2015. _

_Insiders at high-flying tech companies have been particularly eager to cash in, as firm StoneX (nèe INTL FCStone) reports that insider sales among Nasdaq 100 companies jumped to $10.4 billion in the second quarter, up 171% from a year ago._

_StoneX macro strategist Vincent Deluard sums it up to the FT: “Insiders at Nasdaq 100 index companies are harvesting a once-in-a-millennium bonanza.”_

jog on
duc


----------



## ducati916

And Oil news:

*Friday, September 4th, 2020*

Oil prices hit a rough patch this week, falling back in concert with broader financial markets. The dollar gained strength, which also pushed down crude. The demand rebound is also sputtering. WTI was driven below $40 for the first time since June. 

_*Iraq seeks OPEC+ exemption.*_ Iraq is looking for an exemption from the OPEC+ deal for the first quarter of 2021, raising fears that the group’s compliance may start to slip. A separate report says that Iraq wants a two-month extension on the extra production cuts that it agreed to implement in August and September.

_*Kuwait’s oil economy running on fumes.*_ Kuwait’s budget deficit is expected to reach $46 billion this year. But oil revenues collapsed after the 2014-2016 downturn and neve recovered. Now the country is grappling with tapping its sovereign wealth fund as the days of huge oil revenues appears to be over. 

_*EU warns of running low on critical metals. *_A new report from the European Commission warns that the shortage of critical materials could threaten the EU’s push to become climate neutral by 2050. The EU estimates that it will need up to 18 times more lithium and five times more cobalt in 2030, a figure that rises to 60 times more lithium and 15 times more cobalt by 2050.

_*U.S. LNG faces blowback in Europe. *_The Trump administration’s aggressive use of sanctions related to Nord Stream 2 risks blowback from angry European policymakers. “This is not a way you treat allies and friends. Now, the European Union should show unequivocally that it will not be blackmailed,” said Klaus Ernst, chairman of the German parliament's energy and economic affairs committee. “If diplomacy fails, we'll need penalty tariffs on fracking gas or even an import ban as a painful countersanction, since the U.S. gas industry seems to be a major driver of the sanctions policy.”

_*Merkel under pressure on Nord Stream 2 after Navalny poisoning.*_ The poisoning of Russian opposition leader Alexei Navalny is ratcheting up the pressure on Germany to cancel the Nord Stream 2 project as retaliation against Russia. 

_*Schlumberger exits fracking.*_ *Schlumberger (NYSE: SLB)* agreed to sell its North American fracking business to *Liberty Oilfield Services (NYSE: LBRT)*, marking something of an exit from shale for the oilfield services giant.

_*Only 14% of utilities prioritize renewables.*_ A new University of Oxford study found that worldwide only about 14 percent of utilities prioritize renewables over gas or coal. “This research highlights a worrying gap between what is needed to stop global warming and what actions are being taken by the utility sector,” the author said.

_*Refinery glut continues.*_ Overcapacity in the downstream sector is a global problem, and some aging European refineries face the prospect of closure. Energy Aspects estimates that the refining sector needs to cut capacity by 10 percent. *Total (NYSE: TOT)* and* Eni (NYSE: E) *have already converted three refineries into handling biodiesel, and more are likely to follow.

_*Imperial cuts oil sands after pipeline leak.*_ *Imperial Oil (TSE: IMO)* shut down its production at the 220,000-bpd Kearl oil sands site after the Polaris pipeline leaked diluent. The pipeline delivers diluent for blending but spilled 566 barrels near Fort McMurray. The outage is likely to remove 240,000 to 270,000 bpd from the market for at least a few weeks, according to Reuters. 

_*Australian gas losing out to batteries. *_Batteries are becoming more attractive than gas-fired electric capacity in Australia. *AGL Energy (ASX: AGL) *new COO Markus Brokhof recently said that “there is a clear business case for big batteries.” New electric capacity is increasingly coming from renewables plus batteries, and as natural gas prices rise worldwide from recent lows, that dynamic should continue.

_*Fossil fuels are here to stay. *_The future looks bright, emission-free, and electric. But a recent IEA report offers a reality check. The world is still very much dependent on oil and gas—and even coal—for its continued energy supply. The 100-percent renewable energy world is still decades away, and more than a couple.

_*U.S. jet fuel demand rebounding.*_ Jet fuel demand in the U.S. is recovering faster than it is in Europe or the rest of the Americas. 

_*Saudi Aramco slows diversification plans.*_ *Saudi Aramco (TADAWUL: 2222) *is tapping the breaks on major investment plans in Texas, China, India, and Pakistan, according to the Wall Street Journal. It is also delaying plans to increase domestic crude production capacity. 

_*California oil and gas permitting up 190%.*_ California has issued 190 percent more oil and gas drilling permits in the first six months of 2020 compared to a year earlier. 

_*Bill Gates-backed battery company to go public. *_QuantumScape, a 10-year old battery company backed by Volkswagen Group, is looking to go public through a reverse-merger with SPAC Kensington Capital Corp.

_*Plastics growth not assured.*_ A new report from Carbon Tracker finds that while the oil and petrochemical industries are betting their future growth on demand for plastics, demand is likely to peak as the world starts to transition from a linear plastic system to a circular one. The report warns that disappointing demand growth will lead to $400 billion in stranded petrochemical assets.

jog on
duc


----------



## Miner

ducati916 said:


> And Oil news:
> 
> *Friday, September 4th, 2020*
> 
> Oil prices hit a rough patch this week, falling back in concert with broader financial markets. The dollar gained strength, which also pushed down crude. The demand rebound is also sputtering. WTI was driven below $40 for the first time since June.
> 
> _*Iraq seeks OPEC+ exemption.*_ Iraq is looking for an exemption from the OPEC+ deal for the first quarter of 2021, raising fears that the group’s compliance may start to slip. A separate report says that Iraq wants a two-month extension on the extra production cuts that it agreed to implement in August and September.
> 
> _*Kuwait’s oil economy running on fumes.*_ Kuwait’s budget deficit is expected to reach $46 billion this year. But oil revenues collapsed after the 2014-2016 downturn and neve recovered. Now the country is grappling with tapping its sovereign wealth fund as the days of huge oil revenues appears to be over.
> 
> _*EU warns of running low on critical metals. *_A new report from the European Commission warns that the shortage of critical materials could threaten the EU’s push to become climate neutral by 2050. The EU estimates that it will need up to 18 times more lithium and five times more cobalt in 2030, a figure that rises to 60 times more lithium and 15 times more cobalt by 2050.
> 
> _*U.S. LNG faces blowback in Europe. *_The Trump administration’s aggressive use of sanctions related to Nord Stream 2 risks blowback from angry European policymakers. “This is not a way you treat allies and friends. Now, the European Union should show unequivocally that it will not be blackmailed,” said Klaus Ernst, chairman of the German parliament's energy and economic affairs committee. “If diplomacy fails, we'll need penalty tariffs on fracking gas or even an import ban as a painful countersanction, since the U.S. gas industry seems to be a major driver of the sanctions policy.”
> 
> _*Merkel under pressure on Nord Stream 2 after Navalny poisoning.*_ The poisoning of Russian opposition leader Alexei Navalny is ratcheting up the pressure on Germany to cancel the Nord Stream 2 project as retaliation against Russia.
> 
> _*Schlumberger exits fracking.*_ *Schlumberger (NYSE: SLB)* agreed to sell its North American fracking business to *Liberty Oilfield Services (NYSE: LBRT)*, marking something of an exit from shale for the oilfield services giant.
> 
> _*Only 14% of utilities prioritize renewables.*_ A new University of Oxford study found that worldwide only about 14 percent of utilities prioritize renewables over gas or coal. “This research highlights a worrying gap between what is needed to stop global warming and what actions are being taken by the utility sector,” the author said.
> 
> _*Refinery glut continues.*_ Overcapacity in the downstream sector is a global problem, and some aging European refineries face the prospect of closure. Energy Aspects estimates that the refining sector needs to cut capacity by 10 percent. *Total (NYSE: TOT)* and* Eni (NYSE: E) *have already converted three refineries into handling biodiesel, and more are likely to follow.
> 
> _*Imperial cuts oil sands after pipeline leak.*_ *Imperial Oil (TSE: IMO)* shut down its production at the 220,000-bpd Kearl oil sands site after the Polaris pipeline leaked diluent. The pipeline delivers diluent for blending but spilled 566 barrels near Fort McMurray. The outage is likely to remove 240,000 to 270,000 bpd from the market for at least a few weeks, according to Reuters.
> 
> _*Australian gas losing out to batteries. *_Batteries are becoming more attractive than gas-fired electric capacity in Australia. *AGL Energy (ASX: AGL) *new COO Markus Brokhof recently said that “there is a clear business case for big batteries.” New electric capacity is increasingly coming from renewables plus batteries, and as natural gas prices rise worldwide from recent lows, that dynamic should continue.
> 
> _*Fossil fuels are here to stay. *_The future looks bright, emission-free, and electric. But a recent IEA report offers a reality check. The world is still very much dependent on oil and gas—and even coal—for its continued energy supply. The 100-percent renewable energy world is still decades away, and more than a couple.
> 
> _*U.S. jet fuel demand rebounding.*_ Jet fuel demand in the U.S. is recovering faster than it is in Europe or the rest of the Americas.
> 
> _*Saudi Aramco slows diversification plans.*_ *Saudi Aramco (TADAWUL: 2222) *is tapping the breaks on major investment plans in Texas, China, India, and Pakistan, according to the Wall Street Journal. It is also delaying plans to increase domestic crude production capacity.
> 
> _*California oil and gas permitting up 190%.*_ California has issued 190 percent more oil and gas drilling permits in the first six months of 2020 compared to a year earlier.
> 
> _*Bill Gates-backed battery company to go public. *_QuantumScape, a 10-year old battery company backed by Volkswagen Group, is looking to go public through a reverse-merger with SPAC Kensington Capital Corp.
> 
> _*Plastics growth not assured.*_ A new report from Carbon Tracker finds that while the oil and petrochemical industries are betting their future growth on demand for plastics, demand is likely to peak as the world starts to transition from a linear plastic system to a circular one. The report warns that disappointing demand growth will lead to $400 billion in stranded petrochemical assets.
> 
> jog on
> duc



Gees.
Enough smokes from my oil stocks burning to pour water unless by Monday market opening fire engulfs them with no remainder.
Really scary. In addition our son is a drilling engineer in a large oiler. I could see with depressed market he could come to dole queue.
Any better news


----------



## over9k

No. Oil is absolutely done for. You even have seasonality to consider now, meaning northern hemisphere gets cold = people do less stuff = oil consumption drops even more. Things are so bad that leftover jet fuel is being mixed into regular car fuel and sold at the pump. The only thing you'll see a bounce in is heating oil.

Then factor in the increased spread & lethality of the virus in cold weather, and you have the perfect storm. 


The smaller the company the faster it is falling in every industry/sector (that's been hit) and oil is no exception. You'll be able to prove this to yourself with a quick look - the bigger the company, the better it is (relatively) doing.

So take that logic and look for the biggest (oil) company of them all - aramco. It's the only one that hasn't been absolutely obliterated. If you want to buy it, the ETF ticker is KSA.


----------



## over9k

As if things couldn't get any worse for oil. 

The saudi's couldn't have dreamed of a better predatory price environment.


----------



## aus_trader

ducati916 said:


> Not a huge fan of China, but I need some diversification exposure in this area, so YINN is it.




Looks like it doesn't pay a dividend. Am I mistaken ?


----------



## aus_trader

over9k said:


> No. Oil is absolutely done for. You even have seasonality to consider now, meaning northern hemisphere gets cold = people do less stuff = oil consumption drops even more. Things are so bad that leftover jet fuel is being mixed into regular car fuel and sold at the pump. The only thing you'll see a bounce in is heating oil.
> 
> Then factor in the increased spread & lethality of the virus in cold weather, and you have the perfect storm.
> 
> 
> The smaller the company the faster it is falling in every industry/sector (that's been hit) and oil is no exception. You'll be able to prove this to yourself with a quick look - the bigger the company, the better it is (relatively) doing.
> 
> So take that logic and look for the biggest (oil) company of them all - aramco. It's the only one that hasn't been absolutely obliterated. If you want to buy it, the ETF ticker is KSA.




You are probably right with your argument, from a global point of view. Just for interest I just looked at the biggest one on the Aussie market, that's the one on most balanced super funds and on most investors blue chip list which is "woody woodpecker" Woodside Petroleum Limited (WPL). It is trading at prices not seen in the last 5 years...


----------



## aus_trader

over9k said:


> View attachment 108791
> 
> 
> As if things couldn't get any worse for oil.
> 
> The saudi's couldn't have dreamed of a better predatory price environment.



Yeah, they'll send the US shale Oil and Canadian Tar sand oil stocks (both have massive production costs) packing into history books...


----------



## ducati916

aus_trader said:


> Looks like it doesn't pay a dividend. Am I mistaken ?
> View attachment 108796





Depends on where you look, seems to be lots of variations.









I'll let you know (if) when I get paid a dividend.

jog on
duc


----------



## ducati916

over9k said:


> No. Oil is absolutely done for. You even have seasonality to consider now, meaning northern hemisphere gets cold = people do less stuff = oil consumption drops even more. Things are so bad that leftover jet fuel is being mixed into regular car fuel and sold at the pump. The only thing you'll see a bounce in is heating oil.
> 
> Then factor in the increased spread & lethality of the virus in cold weather, and you have the perfect storm.
> 
> 
> The smaller the company the faster it is falling in every industry/sector (that's been hit) and oil is no exception. You'll be able to prove this to yourself with a quick look - the bigger the company, the better it is (relatively) doing.
> 
> So take that logic and look for the biggest (oil) company of them all - aramco. It's the only one that hasn't been absolutely obliterated. If you want to buy it, the ETF ticker is KSA.





I would disagree for the following reasons:

(a) Oil is for the moment (at least) still indispensable to the world economy. Just prior to COVID, growth in demand was robust and growing. As economies emerge from COVID, that demand will re-assert itself; and

(b) The growth in supply, which exceeded the growth in demand, has been ended by the Arab price war; and

(c) The US via the Fed. is actively trying to create inflation: this will likely include a weaker dollar. A weaker dollar is a higher price for oil.

Where I agree is that smaller, highly leveraged producers/services/etc are going to struggle to survive and many (already) will have gone under. In the US Chap.11 bankruptcies however preserve the assets (and often the Company) in a way that can (and probably will) in the right circumstances, bring back that supply more quickly than you might imagine.

jog on
duc


----------



## Smurf1976

ducati916 said:


> Where I agree is that smaller, highly leveraged producers/services/etc are going to struggle to survive and many (already) will have gone under. In the US Chap.11 bankruptcies however preserve the assets (and often the Company) in a way that can (and probably will) in the right circumstances, bring back that supply more quickly than you



Something to note is that whilst the total cost of finding, developing and operating oil production in the US is relatively high, the cost of simply continuing to operate an already developed well for the remainder of its life is drastically lower.

A lot of upstream energy production has that same basic attribute. Solar, hydro and nuclear power and upstream oil (except tar sands) and gas certainly have that aspect in terms of low costs once it’s built.

Some coal mines too but that’s very site specific. Wind energy also “it depends” since ongoing maintenance is significant but potentially cheap at the margin if it’s a major operation and the staff are employed anyway etc.

It creates a situation where even if the overall operation is unprofitable, continuing to operate is the option which produces the smallest loss. A fortune may have been lost on the original investment but the assets are cash flow positive as such.

Total cost versus the marginal cost to operate what’s already developed can be drastically different.


----------



## over9k

ducati916 said:


> I would disagree for the following reasons:
> 
> (a) Oil is for the moment (at least) still indispensable to the world economy. Just prior to COVID, growth in demand was robust and growing. As economies emerge from COVID, that demand will re-assert itself; and
> 
> (b) The growth in supply, which exceeded the growth in demand, has been ended by the Arab price war; and
> 
> (c) The US via the Fed. is actively trying to create inflation: this will likely include a weaker dollar. A weaker dollar is a higher price for oil.
> 
> Where I agree is that smaller, highly leveraged producers/services/etc are going to struggle to survive and many (already) will have gone under. In the US Chap.11 bankruptcies however preserve the assets (and often the Company) in a way that can (and probably will) in the right circumstances, bring back that supply more quickly than you might imagine.
> 
> jog on
> duc



Sorry I should have been more specific: I meant oil producers.

The oil price itself I can't see picking up for a long time either though. The saudi's are capable of pumping a LOT of oil between now & economic pickup, and that's before we start on all the storage tanks, flotillas of tankers all being brimmed & waiting etc etc. Did you see my screencap of the news about the saudi's dropping their prices again? WTI is now below $40 as a result. IIRC, 40 is about the breakeven price for most shale wells. 




aus_trader said:


> You are probably right with your argument, from a global point of view. Just for interest I just looked at the biggest one on the Aussie market, that's the one on most balanced super funds and on most investors blue chip list which is "woody woodpecker" Woodside Petroleum Limited (WPL). It is trading at prices not seen in the last 5 years...
> View attachment 108797




Yeah it's followed a pretty similar path to the supermajors.

Not going to pick up any time soon. Might be worth a buy later on


----------



## ducati916

Rotation:







jog on
duc


----------



## over9k

I wonder what their reasoning is. I posted before about the long trend from small producers into large ones and from bricks & mortar into tech basically just going on steroids over the past 6 months or so. It's not like they wouldn't be aware of it.

Or maybe they'd chosen specific companies in healthcare or whatever?


edit: you see this?

https://www.bloomberg.com/news/arti...-on-report-u-s-mulling-blacklisting-chipmaker

You exposed?


----------



## over9k

Now at -20% for the day. Ouch.


----------



## ducati916

over9k said:


> I wonder what their reasoning is. I posted before about the long trend from small producers into large ones and from bricks & mortar into tech basically just going on steroids over the past 6 months or so. It's not like they wouldn't be aware of it.
> 
> Or maybe they'd chosen specific companies in healthcare or whatever?
> 
> 
> edit: you see this?
> 
> https://www.bloomberg.com/news/arti...-on-report-u-s-mulling-blacklisting-chipmaker
> 
> You exposed?




If it is a holding (entirely possible) then it's not particularly significant.






jog on
duc


----------



## over9k

Might be emblematic of more things to come though.


----------



## frugal.rock

over9k said:


> Might be emblematic of more things to come though.



Ooh, there's a thought.


----------



## over9k

Well he's already nuked tiktok and now microsoft are looking at buying it. Is intel or AMD going to buy this?

Much harder to take a manufacturing plant & move it though.

I wonder how much the U.S based semiconductor manufacturers are going to bounce tomorrow. I don't know who SMIC actually supply but it's probably worth looking into, as they're probably going to need a new supplier pretty shortly...

Of the big ones, only intel have U.S based manufacturing plants and their products aren't competitive. A lot of companies use TSMC, and taiwan is basically the opposite of trump's sh!tlist, but massively on china's.

Peter zeihan reckons it's the next one in the crosshairs after they're done with hong kong just FYI. It might be time for me to open my wallet for him again so he can tell me just what's likely to go down there. Not keen on buying a company that's going to have its supply lines annihilated by the chinese government in response to trump's actions.


----------



## over9k

For those who don't follow semiconductors:

TSMC is taiwan semiconductor manufacturing corporation. It manufactures most of the world's biggest suppliers of microchips for them. It's actually a world leader trading blows with samsung and until recently, intel. If the chinese really get stuck into taiwan, a very significant portion of the world's microchip supply (ALL of amd's chips and most of nvidia's for example) goes offline.

Off the top of my head, samsung, intel, and skyworks all have either korean or U.S based manufacturing plants (i.e do things in house) and would obviously benefit massively. However, in intel's case, they're severely behind TSMC's actual capabilities (technology) and so TSMC, at this time, produces a superior product.

Point is that we here in the west are massively exposed to the supply of TSMC chips. If the chinese do another hong kong on taiwan, several companies (amd and nvidia off the top of my head but there are plenty others) lose their only manufacturer.

With the U.S based plants at intel being either unavailable to competitors like AMD, or just plain uncompetitive anyway, this leaves samsung as the only viable alternative to TSMC, and Nvidia has already pivoted over to samsung as its new supplier: https://gadgets.ndtv.com/games/news...n-for-geforce-rtx-3xxx-series-of-gpus-2289062

Whether this is for the reasons I've outlined above I do not know. What I do know is that whilst nvidia and AMD's share prices are stratospheric at the moment, and AMD is completely (and nvidia is partly) exposed to TSMC supply having bought up ALL of its remaining manufacturing capacity: https://wccftech.com/nvidia-amd-ramped-orders-tsmc-2020/#:~:text=Hardware ⋮ Report-,NVIDIA And AMD Just Bought Up All Excess Capacity At,Next Generation GPUs And CPUs&text=While the Coronavirus has the,next-generation GPUs and CPUs.

TSMC is also by no means the only company there that a lot of U.S companies rely on. With taiwan already being on china's sh!tlist irrespective of anything else and what's happened with hong kong being a very simple proof that china's words are no idle threat, trump might have just set something very ugly in motion.


----------



## frugal.rock

train loaded with mil equip was seen heading honkers way a few weeks ago, plenty of surface 2 airs onboard...


----------



## over9k

Yeah, which makes me think they've got to finish mopping up HK before they can set their sights on taiwan. 

How long that'll take is anyone's guess but something tells me that plans are probably already being drafted.


----------



## over9k

NY crude down 5% today. Big tech still falling off a cliff. All futures in the toilet. Armageddon with tesla after its drop precluded it from joining the S&P:






And then this happened:






We'll see how tesla's price responds (probably tank even further). Tell you what, those mum & dad investors that bought tesla at 500 must be absolutely bricking it right now.

I'm going to buy some NIO. Looks like a run on megatech & mega-growth has begun.


----------



## aus_trader

over9k said:


> NY crude down 5% today. Big tech still falling off a cliff. All futures in the toilet. Armageddon with tesla after its drop precluded it from joining the S&P:
> 
> View attachment 108908
> 
> 
> And then this happened:
> 
> View attachment 108909
> 
> 
> We'll see how tesla's price responds (probably tank even further). Tell you what, those mum & dad investors that bought tesla at 500 must be absolutely bricking it right now.
> 
> I'm going to buy some NIO. Looks like a run on megatech & mega-growth has begun.




Thanks for giving us the low down on what's up, err down. Could be another volatile week once the US opens tonight...


----------



## over9k

Yeah, tesla premarket has dropped even further on the news, and we all know what mum & dad investors do when drops like this occur.

We're also heading into winter now, meaning less economic activity, more time indoors around other people, and more cold/lethality of environment, and thus the daily caseload reduction is juuust starting to flatten out:






If this thing isn't sorted by winter (which it won't be), things are going to get bloody ugly again.


Edit: tesla premarket now down 15% and counting. ouch.


----------



## Dark1975

Nasdaq futures look grim , if following off from friday could be a lot of panic selling pre open and differently pull the dow jones with it, 
On a another note congress back on the 9th sept from recess, another round of stimulas maybe? I have a feeling the Democrats wont play ball tho? Seems like there trying to railroad trump on coming election


----------



## Spaniel14

The tech correction has begun.... been hugely over inflated for a while now, this should bring it back to where it should be.

AAPL potentially have a product announcement today, could have them buck the trend if it’s good


----------



## over9k

Dark1975 said:


> Nasdaq futures look grim , if following off from friday could be a lot of panic selling pre open and differently pull the dow jones with it,
> On a another note congress back on the 9th sept from recess, another round of stimulas maybe? I have a feeling the Democrats wont play ball tho? Seems like there trying to railroad trump on coming election



Friday kept running after the open though. And thursday for that matter. Both closed significantly lower than pre-market numbers.

I have no confidence in stimulus at all. Torpedoing the economy and getting it stuck to trump is the only chance the democrats have now. Even the bookies are now putting trump at more likely than biden, and last election they had him 6:1 against hillary after the access hollywood tapes came out.

The question is whether tech simply corrects or the mum & dad retail investor panics and a run on it starts. There's still no talk of actual fundamentals with tech but they and logic went out the window months ago.

Premarket numbers keep dropping the closer we get to the open, so even the institutions aren't hanging around to find out.

Now, do I have the stones to buy a couple of inverse etf's... hmm.


----------



## over9k

HI EVERYONE HOW'S IT GOING?


----------



## cutz

over9k said:


> View attachment 108914
> 
> 
> HI EVERYONE HOW'S IT GOING?




You sound way excited mate !! Got your shorts on ??


----------



## over9k

Nooooooope. 

Got a few low (LOW) ball buy orders in though.


----------



## ducati916

That is pretty much the bottom of the pullback:







Things will (IMO) settle from here.

And oil news:

_*Saudi Arabia cuts oil prices. *_Saudi Arabia cut the price for its oil that it ships to Asia, a closely-watched price marker that often sets the tone for the global market. Saudi Aramco cut the price for its Arab Light for October delivery by $1.40 per barrel. The price cut suggests demand is weak. A Bloomberg survey found that only 4 in 10 refiners in Asia said they were interested in buying more Saudi crude.

_*IEA: Oil demand has stalled. *_The IEA joined the growing chorus of voices who see the oil demand recovery stalling out. “It doesn’t seem like a massive stock draw seems to be happening yet,” Keisuke Sadamori, Director of Energy Markets and Security at the IEA, told Reuters. “We are not seeing a robust pickup in refining activity, and jet fuel is the big problem.”

_*Hedge funds turn bearish on oil. *_Hedge funds and other money managers recently swung in a bearish direction. For the week ending on September 1, investors sold the equivalent of 40 million barrels in the six most important petroleum futures and options contracts, according to Reuters. 

_*ExxonMobil’s financial pressure mounts.*_ *ExxonMobil (NYSE: XOM)* faces a cash shortfall of about $48 billion through 2021, according to a Reuters analysis. The widening cash flow gap may require deep spending cuts, asset sales, and/or more debt. Exxon has already added $23 billion in debt this year. Analysts are even beginning to see the sacrosanct dividend as no longer untouchable. 

_*Tesla’s shares plunge after missing S&P 500.*_ *Tesla’s (NASDAQ: TSLA) *shares plunged by nearly 20 percent during midday trading on Tuesday after missing out on being included in the S&P 500. It was the largest single-day loss since February. As of last week, Tesla’s shares likely priced in the inclusion in the S&P, according to Bloomberg. 

_*ESG scrutiny heightens on metal miners.*_ The ESG (environmental, social, and governance) investment trend is gaining popularity, but with that comes more scrutiny. Bank of America estimates that $600 billion in market value was erased from companies after “ESG controversies,” such as revelations on poor labor or environmental practices. Reuters reports that investment banks and analysts are increasing their scrutiny on cobalt miners in the Democratic Republic of Congo. 

_*China to fast-track hydrogen cars.*_ China is rolling out a package of policies aimed at boosting sales of hydrogen fuel cell technologies and developing the supply chain. The strategy is focused on long-haul trucks. 

_*Shale producers race for permits ahead of elections. *_U.S. shale companies are racing to scoop up drilling permits on federal land ahead of the presidential election. Democratic Presidential candidate Joe Biden has said he would put a halt to new drilling on public lands. Permitting on federal land has jumped by 80 percent in the Permian in the last three months. Through August 24, drillers have secured 974 permits on federal land in the Permian this year, compared to 1,068 permits for all of last year. 

_*LNG investment dries up.*_ No new LNG export projects could be approved this year for the first time in two decades, according to Reuters. Some analysts say it is possible that one or two projects go forward, while others say none will receive FID. Before the pandemic, analysts expected as much as 70 million tonnes per year of new capacity to receive the go-ahead.

_*China looks to build an espionage hub in Iran.*_ A 25-year deal between China and Iran will include a large-scale roll-out of electronic espionage and warfare capabilities focused around the port of Chabahar. Iran is increasingly becoming a client state of China. 

_*Colombia’s oil industry shows signs of recovery.*_ Colombia’s oil industry appears to be recovering, posting the third consecutive month of rig count increases, according to Baker Hughes. 

_*Germany threatens to pull the plug on Nord Stream 2. *_Germany’s foreign minister declined to rule out sanctions on the Nord Stream 2 pipeline if Moscow did not provide more answers on the poisoning of Russian opposition leader Alexi Navalny. “I hope…that the Russians do not force us to change our position on Nord Stream,” Heiko Maas said.


jog on
duc


----------



## over9k

Jeez I dunno duc, there's still plenty well into the red in after hours trading...


----------



## gartley

Headed lower. Next projection for spx 3200


----------



## ducati916

These charts are all for the S&P500
























We are sitting on a powerful support level.

We can see that the volatility is dropping away. If you read Friday's post, it was suggested that today's open would be volatile, (falling to scare out weak hands and concurrently create new short volume which will then be subjected to a reversal) gradually resolving into the close. 

Most importantly, there has been no run to safety in the Bond market today. The Bond market, today, exhibited falling volatility that surpassed the falling volatility in the equity markets.

The biggest decliners, were the mega-caps FAANGs which will exhibit the same characteristics on the way down as they did on the way up in the indices.






 The sectors:





While falling, were not as volatile.

Now I don't know what the futures looked like earlier, I've just got in from work, but currently they are pretty quiet. I would expect to see a slight drop on the open (if it comes at all) and then a move higher, squeezing any new short positions.

jog on
duc


----------



## over9k

All futures are up, nasdaq up the most. Question is whether there's another big selloff on friday as the past few days will have well & truly given the market the jitters.

I'm pretty sure I saw that 10 year bonds bounced.

My gut says a bounce tomorrow & thurs, selloff on fri again, then rebound and back to a much slower normal on monday.


----------



## cutz

over9k said:


> My gut says a bounce tomorrow & thurs, selloff on fri again, then rebound and back to a much slower normal on monday.




It all depends on how much call open interest needs to be unwound, the put/call imbalance is still looking peachy..


----------



## ducati916

Look at the PUT volume from Friday and the re-establishment of CALL volume today.






The MMs are going to squeeze those shorts hard!

jog on
duc


----------



## over9k

Inb4 softbank reference


----------



## over9k

over9k said:


> All futures are up, nasdaq up the most. Question is whether there's another big selloff on friday as the past few days will have well & truly given the market the jitters.
> 
> I'm pretty sure I saw that 10 year bonds bounced.
> 
> My gut says a bounce tomorrow & thurs, selloff on fri again, then rebound and back to a much slower normal on monday.



Lol. 45 mins after I post this, futures dip into the red (dow is worst, then sp500) and nasdaq is barely breakeven.

At least that indicates tech might be ok today.


----------



## basilio

I keep wondering when the penny will drop that almost all around the world economic activity is falling rapidly with the impact of COVID and associated shutdowns of whole sections of the  world economy.

In that context  the most significant support for stock markets is helicopter money from Central Banks. What happens when the punch bowl runs dry and it isn't refilled ?


----------



## over9k

Depends on the central bank, but they're all on record as stating that they'll tolerate higher inflation and print the **** out of their currencies if that's what it takes to keep the numerical value high and credit flowing.

The U.S is in the unique position of having the world's reserve currency and so can abuse it 10x as much as anyone else can abuse theirs.


----------



## ducati916

Was hoping for a bit more of a pullback:









jog on
duc


----------



## sptrawler

basilio said:


> I keep wondering when the penny will drop that almost all around the world economic activity is falling rapidly with the impact of COVID and associated shutdowns of whole sections of the  world economy.
> 
> In that context  the most significant support for stock markets is helicopter money from Central Banks. What happens when the punch bowl runs dry and it isn't refilled ?



It is stripping a bit of fat out of the economy, floating hotels full of cashed up pensioners has stopped, I guess when you have people that well off they are looking for something to demonstrate about it says something.
I think the next stage will be a lot worse than this stage, the Governments are pumping money to soften the impact, once that tap is turned off, I guess it goes to a whole new level.


----------



## cutz

ducati916 said:


> Look at the PUT volume from Friday and the re-establishment of CALL volume today.
> 
> View attachment 108954
> 
> 
> The MMs are going to squeeze those shorts hard!
> 
> jog on
> duc




Hi

The breakdown is here https://markets.cboe.com/us/options/market_statistics/daily/?mkt=cone&dt=2020-09-08 , it shows *index* put option trading volume outstripping calls, *equities *on the other hand, call trading volume outstripping puts, total across the board at 0.88.

I also noticed the call open interest on the big tech stocks much higher then put open interest but coming down, my thoughts are heavy closing out activity on the call side ITM's and subsequent MM hedging activities pushing the Nasdaq down, this is being reflected in the equity put/call ratio ranging between around 0.4 - 0.6 over the past week.

Just some personal thoughts, it's all speculation


----------



## over9k

There's also the curveball of election season to think about. That's not to be underestimated.


----------



## over9k

Yep, strong open (dow 0.9, sp500 1.3, ndq 1.7) but nothing like the dropping days. As I suspected, the rapid drops will have spooked traders away from any of the rapid rise madness we saw through august and it's going to be a much longer/slower run from here. Classic taking the stairs up & then the lift down.

Now we'll see if my improvements wed-thurs and selloff fri prediction rings true. Longer term, I can't see the madness of the past couple of months repeating. Everyone are way too spooked to do that again.



over9k said:


> There's also the curveball of election season to think about. That's not to be underestimated.




Just in response to this: I know that I and several other people mentioned that this kind of drop might be the catalyst necessary to finally spook the politicians into more stimulus action, and wouldn't you know it, there's now a vote on this:






500 billion is now considered "skinny". But apparently, even this has SFA chance of passing. The democrats want 2 trillion.


----------



## over9k

Quick breakdown of sectors. Despite the massive rout of big tech, tech hasn't just rubber-banded back up. The nasdaq is still a bit above the dow, but not by the huge margins we've been used to seeing lately (1.5 vs 1.8):






There was a talking head last week carrying on about us maybe seeing a rotation going into q4 etc etc but that doesn't seem likely to me. What I suspect has happened is that the big tech crash of the past three days has spooked the markets into actually diversifying again.

Strange concept these days.



Microsoft has also just announced a new xbox that'll be out just after the election (and so will undoubtedly fly off the shelves both immediately and for xmas) and run massively on the news. With microsoft being as big as it is, just like with all the other megatech, a move in MS shares alone is enough to move the indexes.


----------



## Smurf1976

over9k said:


> There's also the curveball of election season to think about. That's not to be underestimated.



Given the apparent extent of central bank intervention and the overall societal and economic backdrop, I suspect this could turn out to be a very major factor. At the very least it's one to be aware of I think.


----------



## over9k

And on a funnier note: 




ducati916 said:


> Look at the PUT volume from Friday and the re-establishment of CALL volume today.
> 
> View attachment 108954
> 
> 
> The MMs are going to squeeze those shorts hard!
> 
> jog on
> duc




Nah duc, nah, they wouldn't do that...  

would they? 






Not even an hour after the open and they're already at it. The shamelessness is amazing.


----------



## over9k

Smurf1976 said:


> Given the apparent extent of central bank intervention and the overall societal and economic backdrop, I suspect this could turn out to be a very major factor. At the very least it's one to be aware of I think.



TBH I can't see trump losing this time at all. Last time the only time I thought he was in trouble was when the access hollywood tapes came out, and even that wasn't enough. Combine that with the blowback onto the democrats from all the riots etc this time and I can't even think of any october surprise or whatever that'd be good enough to turn the public against him enough. History also shows us that unless they totally bottle it, politicians are almost always reelected during times of crisis as the public want at least some degree of stability/certainty. 

Yes, I have some money on trump to win.


----------



## over9k

Finally, completely unrelated to today:

There's been a lot of talk about "dumbbell spreads" lately, i.e being heavy microcaps and heavy megacaps, and having nothing in anything in between.

Here's a quick comparo of the fang index & Renaissance International IPO ETF against just the sp500:







As we can see, both are outperforming the broader market significantly, so the data's actually supporting the rhetoric.


----------



## Dark1975

Got to love the volitality in the market, easy flip in morning trade tomorrow , bought in the xao bank shares in today's selloff for pay day tomorrow , I expect more volitality at the close of this week, rinse repeat monday


----------



## Smurf1976

over9k said:


> TBH I can't see trump losing this time at all.



I don't intend my comment as a political one, just an observation that in terms of wider things outside the market which could trigger something, it's on the list of possibilities.


----------



## over9k

Dark1975 said:


> Got to love the volitality in the market, easy flip in morning trade tomorrow , bought in the xao bank shares in today's selloff for pay day tomorrow , I expect more volitality at the close of this week, rinse repeat monday



Yeah, anyone that bought near close yesterday has done very nicely. I didn't have the stones to (I was thinking today would open in the red yet again) so I put orders in for today's open in the expectation that we'd open red and then slowly climb today. Instead, we opened high and have continued to increase so I missed the ~1.5% that the nasdaq opened at. Still, we're at 3% for the day and running so I'm still doing ok.

I'm expecting something similar tomorrow - it's friday that has me jittery. I might trim a few positions at tomorrow's close.


----------



## ducati916

All's well that ends well.









jog on
duc


----------



## ducati916

Just for comparison:









The QQQ v SPY. The QQQ was deeper, but right on support.

The same below:









So should be no major issues to close out the week.

We might get a small pullback as the various indices hit now resistance points, but nothing major. When I say pullback, what I mean is that the rise higher will just pause.

jog on
duc


----------



## ducati916

Some interesting dynamics in the market as evidenced by news and commentary.






Now we never know who actually makes up the cohort of these studies, but they are (almost invariably) wrong. They respond to prices in a positive feedback loop. Prices are high...sentiment is high. News stories, by and large, follow this pattern.









It does not matter who wins the election. The results for the market are essentially the same over time. What we will get is a pick-up in volatility.






Mr flippe-floppe-flye.






That was significant intervention into the junk bond market. Which means that those credits are still alive and waiting for the next crisis.












While the big Tech. trade may still have some legs...always hard to time a mania, its days may be numbered. The 2 most unloved sectors: Energy and Financials.









Just the MMs messing with your mind.

jog on
duc


----------



## over9k

I can't see energy demand increasing until we're well into next year on account of, you know, winter. And then there's the saudi's and their ongoing price/trade war. 






In fact I can only see things being bloody choppy from here on out. For anyone else reading, if you think that big tech's had its day etc etc and want to bank on it, it's ridiculously easy to bet against the market with inverse ETF's. There's even leveraged ones. You'll see that ETFDB has a ton of them listed


----------



## over9k

One thing I forgot to post yesterday was the comparison to the SMA: 






Interestingly, the hit of support has coincided with a return (back) to the 50 day SMA. Question is whether we now see a divergence back to the previous track above it, or a matched trajectory from here on out. 

I.e this: 






Or this: 






Considering the lack of stimulus, seasonality of going into winter, and the almighty reality check the past few days has given the market, my money is on the latter.


----------



## ducati916

As we reach the end of a shortened week:


















Pretty much a technical correction. The market may remain a bit blah into the close, simply because it's a Friday. However, if not into the close, next week we'll be moving higher again, but this time more broadly and with better balance across the sectors.

While the indices are slightly lower, individual sectors are green. Mega-caps in Tech are still weighing the indices lower (as they boosted them higher).

jog on
duc


----------



## over9k

Yeah big selloff in the latter half of the day. The morning was actually pretty green for a bit. 

Not surprising in the slightest.


----------



## ducati916

So market closed in the green.






Rebalancing across the sectors, which will make for a far more sustainable move higher going forward.

Oil news:

*Friday, September 11th, 2020*

Oil prices edged up just a bit during midday trading on Friday, with Brent climbing back above $40 per barrel. Sentiment remains more pessimistic than in previous weeks. 

_*OPEC+ in a bind as demand softens. *_Low prices are hitting OPEC+ members, just as they began ramping up production. Should OPEC stay on course with the cuts, hoping that demand recovery picks up next year, enduring low-for-longer oil prices that crush OPEC budgets? Should they cut deeper? 

_*ExxonMobil puts Guyana FPSO on hold. *_*ExxonMobil (NYSE: XOM) *suspended work on a third floating production, storage and offloading vessel in Guyana. The company awaits approval from the government of Guyana for its Payara project. 

_*U.S. CFTC: Climate change presents dangers to financial system. *_A report from the U.S. Commodity Futures Trading Commission concluded that climate change poses risks to the stability of financial markets. “A world wracked by frequent and devastating shocks from climate change cannot sustain the fundamental conditions supporting our financial system,” the report said. While not new, the conclusion carries weight coming from the top commodities regulator. 

_*Trump to ban offshore drilling in Florida, Georgia and South Carolina.*_ The Trump administration said it would block offshore oil drilling in Florida, Georgia and South Carolina. While the Atlantic seaboard remained a speculative and arguably uncompetitive region for drillers, the Eastern Gulf of Mexico has long been prized (and off limits) to the industry. Up until now, the administration has supported opening up that section for drilling, but with the key battleground state of Florida up for grabs, Trump reversed course. 

_*Uber commits to 100 percent EVs by 2040. *_*Uber (NYSE: UBER)* committed to making its fleet 100 percent electric by 2040, and it also said it would spend $800 million on transitioning drivers to EVs through 2025. *Lyft (NASDAQ: LYFT) *previously said it would meet the target by 2035, although without financial support for drivers.

_*Investors sue over potential Anadarko fraud. *_A searing Bloomberg report details the alleged fraud committed by top management at Anadarko Petroleum. A former engineer alleges the company defrauded investors by overstating the size of an offshore oil field. Former CEO Al Walker walked away with $100 million when the company was sold.

_*Enbridge to resume Line 5.*_ Enbridge (NYSE: ENB) will restart the eastern segment of the Line 5 pipeline in Michigan.

_*Enterprise cancels Permian pipeline.*_ *Enterprise Products Partners (NYSE: EPD)* scrapped the proposed Midland-to-Echo 4 oil pipeline project, a 450,000-bpd pipeline that would carry Permian oil to the Gulf Coast. The decline of production and the weak market led to the decision.  

_*Floating storage on the rise again.*_ Oil is filling up in vessels at sea again as the contango deepens. “The market is soft and bearish and floating storage is returning again,” a market source told Reuters.

_*Oil market turns pessimistic again. *_The EIA reported a surprise jump in crude stocks and weaker gasoline demand, adding to bearish sentiment. Covid-19 cases are rising in Europe and India, and India’s oil demand is expected to contract this year for the first time in over four decades. “It will take three years for global oil demand to recover from Covid to its new normal, assuming we have a vaccine or a cure,” analysts at Bank of America wrote in a report this week.

_*BP spends $1.1 billion on offshore wind. *_*BP (NYSE: BP)* purchased a 50 percent stake U.S. offshore wind assets from *Equinor (NYSE: EQNR) *for $1.1 billion.

_*Elliot hopes to derail Chevron takeover of Noble.*_ Hedge fund *Elliott Management Corp.*, which holds a large stake in *Noble Energy (NYSE: NBL)* is pushing the company to abandon its plans to sell itself to *Chevron (NYSE: CVX)*, arguing that the proposed deal undervalues Noble.

_*UBS advises clients to pick sustainable investments. *_Swiss Bank UBS Group said that it is telling its clients to invest in sustainable investments, the first major financial institution to do so. The bank handles $2.6 trillion in assets.

_*Options market says Exxon’s dividend in danger. *_The options market is increasingly skeptical of *ExxonMobil’s (NYSE: XOM) *ability to maintain its dividend. “Right now, the options market is forecasting an implied dividend range of somewhere between about 30 and 50 cents over the next dividend period, declining to somewhere between 20 and 30 cents this time next year. That would be a significant cut from the 87 cents [Exxon is] currently paying,” Michael Khouw, chief investment officer at Optimize Advisors, said Tuesday on CNBC’s “Fast Money.”

_*Lawsuits against Big Oil.*_ New lawsuits for climate change damages against the oil majors were filed this week by several governments, including Charleston, South Carolina, the city of Hoboken, New Jersey, and the state of Delaware.

_*Copper demand to surge on clean transition. *_The global need for copper could increase by an estimated 350% by 2050, with current reserves depleting sometime between 2035 and 2045, according to a new report. Copper prices continue to rise, topping $6,800 per ton this week.

_*Natural gas prices on the rise as supply stagnates.*_ Contracts for natural gas delivery at Algonquin city-gates, Transco Zone 6 New York and Tennessee Zone 6 for December, January and February have moved up to $6.63/MMBtu, $6.03/MMBtu, and $6.61/MMBtu, respectively. Natural gas supply hit a relative peak (temporarily perhaps) late last year, falling as drillers cutback amid low pricing. Lower supply is tightening up the market heading into winter. 

_*Colorado drillers sink on new setback proposal.*_ The Colorado Oil and Gas Conservation Commission voiced support for 2,000-foot setbacks, significantly larger than current rules. The commission won’t vote until October, but the share prices of Colorado-focused drillers sank on the news.

_*Appalachian drillers “red ink” in Q2.*_ An analysis of nine Appalachian-focused shale gas drillers found that the group collectively posted $134 million in negative free cash flow for the second quarter. 

_*Seeds of commodity “super cycle” being planted. *_While it could be years before prices shoot up again, the deep cuts in investment in new oil capacity could sow the seeds of the next boom. India, China and other fast-growing nations could shorten the downtime before the next boom begins.  

_*Hurricane Energy slashes reserves.*_ UK-based *Hurricane Energy (LON: HUR)* slashed its reserves in the West of Shetland area. Its Lancaster field now holds an estimated 58 million barrels, down from 486 million barrels. The company’s stock price plunged by more than 50 percent.

jog on
duc


----------



## frugal.rock

My takeaway.


ducati916 said:


> Rebalancing across the sectors, which will make for a far more sustainable move higher going forward.



Thanks for your time @ducati916
Was thinking the other day I would be lost without you and @bigdog who I also thank, in more ways than one.


----------



## ducati916

The Options frenzy:















The Tech. rally has had little to do with the fundamentals of these businesses. It has had little to nothing to do with COVID issues transitioning the fundamentals. It has had everything to do with unbridled speculation. It is good to know that some things remain the same.

So in keeping with the spirit, next week I'll be looking to sell some AMZN PUTS.






I'll make the decision next week. The IV isn't what was available in TSLA, but it is (should) be fine.

jog on
duc


----------



## ducati916

Oil:













Realistically, oil (dependance) will be with us for a while.

jog on
duc


----------



## ducati916

IPOs:


















So picking the winner or some winners from Tech. is not as easy as you might think from Day 1.

The rest:






Not a sector that I invest in or particularly like. However the odds of success in this sector seem far better.











With Energy, beating the established companies is a tough ask.










I don't play the IPO game, simply I wait for the successful ones to be picked up by an ETF. But if you do, interesting numbers.

jog on
duc


----------



## Smurf1976

ducati916 said:


> Realistically, oil (dependance) will be with us for a while.



I'll add to your comment that energy forms are interchangeable only in some contexts but not all.

Lots of ways to generate electricity. If it gets hot or moves then it's possible - anything that burns, nuclear, hydro, wind, sun etc all works. Oil held a 22% market share globally back in the early 1970's but in most countries today it's barely above zero and small enough to be a rounding error.

Lots of ways to produce large amounts of heat eg steam for a factory or heating in buildings. Anything that burns or could use electricity produced by whatever means. Oil still has some market there but it's drastically lower than it was at its peak in the 1970's.

Now try getting a plane off the ground and your options are far more limited. Oil won't be disappearing from that market anytime soon that's a given.

The few places which have a high % of non-fossil energy also have the distinct feature of having a high % of electricity as the form of energy at the point of use.

Here in Australia, only 19% of end use energy is in the form of electricity and it's in the 15% to 23% range for every state except Tasmania (39%) . So even if we take electricity generation to 100% non-fossil fuel (and it already is 98% non-oil generated in Australia), then that leaves the other 81% of energy consumption still supplied by fuel combustion which in practice is mostly oil and gas with a bit of coal and wood. It's much the same in most countries - they have huge use of non-electrical energy at the point of use.

There's a huge amount of detail often missed on that subject. To avoid hijacking the thread - if anyone wants to know the fine detail then perhaps discuss it in the energy thread. In short though - wind farms and solar mostly aren't replacing oil, they're replacing coal and to limited extent gas, that's the crux of the point here. The move away from oil won't b a quick one, indeed consumption was still trending up until the pandemic.


----------



## ducati916

Air travel, gradually picking up.

Relevant for: (a) oil price, (b) economies re-opening.






jog on
duc


----------



## ducati916

So breaking news....






Futures already trading up.

But they would have traded higher anyway, it's a Bull market. This just gives them an excuse to trade higher.

IPOs this week:






jog on
duc


----------



## over9k

This lot are all weak. If you really want to swing for the fences, FNGU is where it's at.


----------



## ducati916

Variables driving the Bull market:













Always worth keeping an eye on this metric. It is not a 'day trade' type of metric, but when you see it in the news, you know that it has built to egregious levels and there could be trouble ahead.

*Much more balanced advance today:






jog on
duc


----------



## ducati916

Missed out on the AMZN Options.
Added a position in GE.






This is a stock that has been hammered (probably for good reason, woeful fundamentals over last few years) and might now be poised for a bit of a turnaround. I'll work through the fundamentals bit-by-bit (slow process) and see how it looks going forward.

Feel free to jump in with what is horrible about the stock. Rather than start a 'fundies' thread, this can just jog along side the ETFs and general market commentary.

jog on
duc


----------



## over9k

GE has an absolute mountain of debt. I was looking at this back in may when I bought boeing. It's going to have a long, hard slog to get back to where it used to be and with aviation and therefore jet engines, its golden goose, being in the gurgler and never going to recover, it's really up against things. I bailed on both when boeing was $190 and I haven't rebought.

IIRC it bottomed out at $5.50. I think I'd want it to be somewhere down near that again before I pulled the trigger.

The seasonality of winter is only going to pinch it even harder IMO. I think your previous post about air travel etc is jumping the gun a bit. Aside from some xmas stuff, air travel's not going to really pick up for bloody ages.

Industrials are just going to be in the tank for the foreseeable future. Most of it (like new cars) are premium goods (in the economics jargon sense of the word) - not stuff bought when money is tight.

Adding more weight to this thesis, I saw on the news a few days ago that there's actually been a record number of SECOND HAND cars changing hands this year, which is exactly what you'd expect when belts have to be tightened.

If you want to go this way, I'd be taking a look at what bounces when infrastructure is built. Governments have, since time began, always, always, ALWAYS gone on big infrastructure spends whenever times have gotten tough. Caterpillar comes to mind and I know that bounced when trump announced his big infrastructure bill. There's undoubtedly going to be more.


----------



## ducati916

over9k said:


> GE has an absolute mountain of debt. I was looking at this back in may when I bought boeing. It's going to have a long, hard slog to get back to where it used to be and with aviation and therefore jet engines, its golden goose, being in the gurgler and never going to recover, it's really up against things. I bailed on both when boeing was $190 and I haven't rebought.
> 
> IIRC it bottomed out at $5.50. I think I'd want it to be somewhere down near that again before I pulled the trigger.
> 
> The seasonality of winter is only going to pinch it even harder IMO. I think your previous post about air travel etc is jumping the gun a bit. Aside from some xmas stuff, air travel's not going to really pick up for bloody ages.
> 
> Industrials are just going to be in the tank for the foreseeable future. Most of it (like new cars) are premium goods (in the economics jargon sense of the word) - not stuff bought when money is tight.




This story initially caught my interest.









Which got me interested. I'll run the financials gradually over time and see how it looks. I'm assuming (always dangerous) that if someone invests a significant amount of money, they have done some homework and see value somewhere. We'll see.

Technically, it looks as if it is ready to move higher anyway.

jog on
duc


----------



## over9k

Two days in a row overwhelmingly into the green you say?






And because of robinhood, it's not QQQ everyone are going for, oh no:


----------



## ducati916

So the updated VIX chart:






Extended the original and added the new branch. We are approaching that support area and have had a real fall off in Vol. That opens the question (a) Vol falls through support or (b) we get a bounce at support.

And M1






See the little blue circle top right? 

The answer will lie (with a best guess estimate) with an analysis of other market internals which update at market close.


Oil Patch News:

Oil prices jumped on Tuesday morning as Hurricane Sally forced outages in the Gulf Coast, but the overall market sentiment remains bearish compared to prior months. Both the IEA and OPEC released their monthly reports, and both struck a more pessimistic tone, downgrading oil demand.

*I*_*EA: Sentiment is weakening.*_ In its latest Oil Market Report, the IEA struck a bearish tone, saying its outlook is more “fragile” than last month. The agency noted that the pandemic is showing no signs of abating, falling in some places but rising in others. Notably, demand in India fell month-on-month. The agency cut its demand forecast by 300,000 bpd for this year and by 0.6 mb/d for 2021. The IEA sees inventories drawing at a rate of 3.4 mb/d for the second half of 2020, a substantial draw but 1 mb/d narrower than previously estimated.

_*BP warns of peak demand. *_*BP (NYSE: BP)* became the first oil major to declare that the world has past peak oil demand. The company’s most bullish scenario has demand “broadly flat” for the next two decades. In more bearish scenarios, BP sees demand collapsing by 50 percent or 80 percent by 2050.

_*Citi: $60 oil in 2021.*_ Oil prices are set to rise to $60 a barrel by the end of next year as the oversupply will have been drawn down by then, according to Citigroup, which is bullish on oil.

_*Analysis: No shale growth until end-2021.*_ U.S. shale may not grow until the end of 2021, according to a prediction from Trafigura, one of the world’s largest oil traders. “It's not dead – it’s just on an enforced sabbatical,” Ben Luckock, Trafigura’s co-head of oil trading, said at an industry conference.

_*OPEC cuts demand forecast.*_ In its latest monthly report, OPEC cut its demand forecast for 2020 by 400,000 bpd and by 770,000 bpd for 2021. The group also sees non-OPEC supply growing by more than previously expected. “Further downside risk and higher uncertainty in the economic outlook exist for the near term, as India's economy may not be through the worst of the situation yet,” OPEC said. “With this in mind, it is likely that fiscal stimulus will require a large boost.”

_*Louisiana refineries, platforms, and ports shut for hurricane. *_Hurricane Sally is set to make landfall along the Gulf Coast, forcing the energy industry to evacuate staff and shutter facilities. According to U.S. government data, as of Monday afternoon, 147 offshore production platforms were evacuated, or 22 percent of the total.

_*Trump admin favors ethanol, considers aid for refiners. *_President Trump vowed over the weekend to allow higher concentration ethanol (E15) to be sold with existing refueling infrastructure. That comes shortly after he instructed EPA to deny waivers to small refiners seeking exemptions from biofuels blending requirements. At the same time, Bloomberg reports that EPA is considering a plan to give cash aid to refiners affected by the decision.

_*U.S. shale production continues to decline. *_Crude oil production in the U.S. shale patch is set to decline by 68,000 bpd next month, with every play registering declines in output except the Permian, the Energy Information Administration said in its latest Drilling Productivity Report.

_*Secret recording shows oil executives concerned about flaring. *_The New York Times reported that a secret recording of a 2019 meeting of oil and gas industry executives revealed that while they were publicly saying that methane emissions were not a problem and therefore did not need to be regulated, privately they were concerned that rampant flaring was threatening their industry.   

_*WoodMac: Half of oil industry cash flow negative.*_ At $40 per barrel, the global oil industry, including both international and national oil companies, are struggling. “Around half of the 50 companies we cover are cash flow negative in 2020 and 2021 at today’s oil price,” Wood Mackenzie wrote in a note. The firm estimates that upstream spending will come in at about $310 billion this year, down by 30 percent from 2019 and down by 60 percent from the 2014 peak at $730 billion.

_*Mariner East 2 pipeline ordered new route.*_ Pennsylvania officials have ordered *Energy Transfer (NYSE: ET) *to reroute a section of its $3 billion Mariner East 2 pipeline after an August spill outside of Philadelphia.

_*Libya’s Haftar commits to ending blockade.*_ The Libyan National Army’s Khalifa Haftar has committed to ending a blockade of oil export terminals in the country. The potential return of over 1 mb/d of supply would weigh on crude prices.

_*Connecticut sues ExxonMobil.*_ Connecticut filed a lawsuit on Monday against *ExxonMobil (NYSE: XOM) *for misleading the public over the impacts of climate change, the latest in a string of legal cases against the oil major.

_*Petrobras cuts CAPEX, focuses on pre-salt. *_*Petrobras (NYSE: PBR) *lowered its CAPEX guidance for the next four years to $40-$50 billion, down from $64 billion previously. More than 70 percent will go into pre-salt.

_*Renewable energy eats away at fossil fuels.*_ Renewables have been the fastest-growing energy source in recent years and are expected to continue to be such in the coming decades. Last year, renewables accounted for 41 percent of the rise in energy demand, the largest of any energy source, BP Statistical Review of World Energy 2020 showed.

jog on
duc


----------



## over9k

I reckon we'll see the classic friday selloffs for a while now. 

Reference oil: I'm trying to time a bet against it. Currently hold QCLN and no intention of getting rid of it, now just need to time a bet against oil. Starting to think the last month means I've missed the boat.


----------



## over9k

Stay-at-home plays continue to outperform:

Adobe & fedex both just reported earnings significantly above estimates, both have bounced 4% in after-hours trading. This should surprise absolutely nobody.


----------



## ducati916

So atm, the VIX has jumped 20%






Not sure atm what is driving this, I've only just got back in from work. On a macro basis everything looks calm. Obviously something is up. There is nothing in the news that would seem to potentially account for the jump. We have the Fed. meeting, but that has been pretty much settled for some time.

jog on
duc


----------



## over9k

Snowflake IPO I suspect. 

I'll be buying.


----------



## peter2

The jump in the VIX (FinViz charts) is due to contract rollover. There are similar jumps about the same time in the prior months. 

Perhaps some people think there may be a selloff late Sept/Oct. It's happened around this time of the year in the past.


----------



## ducati916

Snowflake etc:





Again, similar to the 1999 dotcom offerings.









Probably (interpreted as) a positive for most.

Market also waiting to hear from the Fed. The policy has been telegraphed ahead by the Fed. so I would not anticipate anything significantly different from that. Market should be ho-hum.






A little rotation. This will continue for some time yet. It is a quiet sort of process that just ticks along quietly largely unnoticed.

jog on
duc


----------



## qldfrog

Vix spike over it seems and should finish the session flat or down.Bull rolling on.


----------



## over9k

Everything previously well into the green fell off a cliff after powell's conference. Most sectors well into the green, powell gets up and says "interest rates staying at zero for years, we really need more stimulus from the government, we don't want to print any more cash" and everything just plummets. It closed at session lows.

But as if the fed isn't going to flush the system if things hit the proverbial again. We all know this is his attempt to put a rocket up congress. After-hours are already in the green.

Here's the whole thing in case anyone's bored enough to watch it: 

But like I said, he just basically just said they're keeping interest rates at nothing and really want congress to act before they do again.

Edit: Here, timed almost to the minute:






Conference starts at 2.30, he opens with the good news so we get a little bounce, and then it's just a bloodbath from there.

You'll also note that, as I mentioned previously, after-hours are already positive. Today was nothing but a storm in a teacup over powell's comments. Ridiculous.


----------



## ducati916

over9k said:


> Everything previously well into the green fell off a cliff after powell's conference. Most sectors well into the green, powell gets up and says "interest rates staying at zero for years, we really need more stimulus from the government, we don't want to print any more cash" and everything just plummets. It closed at session lows.
> 
> But as if the fed isn't going to flush the system if things hit the proverbial again. We all know this is his attempt to put a rocket up congress. After-hours are already in the green.
> 
> Here's the whole thing in case anyone's bored enough to watch it:
> 
> But like I said, he just basically just said they're keeping interest rates at nothing and really want congress to act before they do again.
> 
> Edit: Here, timed almost to the minute:
> 
> View attachment 109243
> 
> 
> Conference starts at 2.30, he opens with the good news so we get a little bounce, and then it's just a bloodbath from there.
> 
> You'll also note that, as I mentioned previously, after-hours are already positive. Today was nothing but a storm in a teacup over powell's comments. Ridiculous.






Well not everything was down:







Energy, Financials and Industrials all had a good day. Which is just to say: rotation.

jog on
duc


----------



## over9k

One day does not a trend make. Like I said, things were looking very different until powell's comments.


----------



## Dark1975

Nasdaq futures look grim, possible continuation from last week, I noted the nasdaq last night started in the red, tho the new IPO snowflake helped pull the market out of the redzone, if we see a blood bath on the dow tonight pulled down by the nasdaq ,tomorrow on the xao looks like a possible downturn  as a classic friday sellout, i will look to buy personally tomorrow afternoon as a great opportunity for a good flip for mon/ tuesday


----------



## Chronos-Plutus

Jolly Jay reckons rates will remain near zero for at least 3 years: " *Gold* inched higher after the Fed signalled rates would remain near zero for at least three years." (https://www.linkedin.com/pulse/gold...-UHP-Ew&fromEmail=fromEmail&ut=0pS_mi11H8-po1)

I say rates will remain near zero for at least 3 decades.


----------



## over9k

I was just coming to post something very similar: It's been a massacre since powell's conference and friday will selloff more no doubt. 

I'm trimming a couple of positions at open today, plan on buying some snow & frog tomorrow.


----------



## ducati916

Rotation continues:






jog on
duc


----------



## ducati916

And GE:







My initial delve into the fundamentals:

Receivables:....................................Payables.....................Inventories
2015: 144 days and 39%................42 days.......................27 days and 7.5%
2016: 129 days and 35%................43 days.......................26 days & 7.3%
2017: 125 day and 34%..................46 days.......................27 days & 7.4%
2018: 109 days and 29%................51 days.......................21 days & 5.8%
2019: 103 days and 28%................61 days.......................20 days & 5.5%
2020 Q1: 204 days and 225%........65 days.......................26 days & 29%
2020 Q2: 211 days and 230%........69 days........................31 days & 34%

The trends in Receivables, Payables and Inventories were all improving from 2015. This is probably a significant deterioration from the days of Jack Welch. Clearly in 2020, to date, everything blew out again.

The blowout in 2020 should not be unexpected. In fact it would have been highly suspicious and a red flag if it had not.

Takeaway: given the horrible numbers in 2020, it might be safe to bet that as conditions improve in the economies world wide, so GE will continue its gradual trend of improvement and that this current price (period) is the low, assuming (always dangerous) that the metrics across the financial statements are consistent with the above numbers.

And the US economy is picking up:






jog on
duc


----------



## ducati916

Having a look at the VIX:






So we open lower, trade a little lower and look for support and a bounce from mid-morning into the close. That scenario plays out if the resistance line on the VIX holds. If it fails, then obviously the sell-off will continue into the close.

My 'feeling' is that it holds and we trade higher into the close.









Both of these charts reflect the breadth of the market and indicate strength in a broad market bounce.

Which is supported via:






Which can be compared to the situation earlier in the day.


jog on
duc


----------



## ducati916

So the VIX broke through that 1'st resistance point:






I haven't extended the line, but it will (with a higher probability) turn back down at contact. This (could mean) a late(r) day rally, although for the day we will be negative.

And the updated bigger picture:






jog on
duc


----------



## ducati916

Rotation continues:











Oil News:

*Friday, September 18th, 2020*

Oil rebounded above $40 at the end of the week after EIA data showed a drawdown in oil storage and Hurricane Sally forced offshore platforms offline. 

_*Oil up on OPEC+ meeting. *_Oil gained more ground after the Saudi oil minister warned speculators gambling in the market. To short-sellers betting on a slide in prices, he said: “Make my day.” He added that OPEC+ will actively and pre-emptively manage the market. The group also pressured laggards to increase their compliance. 

_*Goldman: $49 by year-end.*_ Goldman Sachs sees Brent rising to $49 per barrel before the end of the year. “We estimate that the oil market remains in deficit with speculative positioning now at too low levels,” Goldman Sachs said.

_*Biden: “Fracking has to continue.” *_Democratic Presidential candidate Joe Biden once again reiterated support for fracking in a CNN town hall event in Pennsylvania on Thursday. “Fracking has to continue because we need a transition,” Biden said. “We're going to get to net-zero emissions by 2050, and we'll get to net-zero power emissions by 2035. But there's no rationale to eliminate, right now, fracking.”

_*Haftar to lift blockade.*_ The head of the Libyan National Army, General Khalifa Haftar, said he would lift the blockade on Libyan oil exports after reaching an agreement with the country’s deputy prime minister. The impact is unclear, however, as the National Oil Co. previously denounced the negotiations. 

_*Pemex expects a drastic drop in oil exports. *_Pemex expects oil exports to fall sharply over the next three years due to declining production and the need to supply a new $8 billion refinery. Heavy Maya crude exports could fall by as much as 70 percent between 2021 and 2023. 

_*Magnolia LNG asks for five more years to build. *_Magnolia LNG, a proposed gas export terminal in Louisiana, asked FERC for five more years to build its project, citing poor market conditions. Its original permit expires in 2021. 

_*Pipeline operators hurting on low demand. *_The shale production crash has spilled over to the midstream sector, which was caught between falling oil production and pipeline utilization from the upstream and crumbling demand for fuels in the downstream.

_*Trump admin considers $300 million for refiners. *_The Trump administration is looking at dishing out $300 million in aid to refiners who were denied an exemption on ethanol blending requirements.

_*EQT bids $750 million for Chevron’s Appalachian assets. *_*EQT (NYSE: EQT) *has bid $750 million for *Chevron’s (NYSE: CVX)* Appalachian assets, part of an acquisition that Chevron originally spent $4.3 billion to obtain. EQT, already the nation’s largest natural gas producer, would significantly expand its presence if the deal is successful.

_*Diesel stockpiles cap oil prices.*_ Even as crude stocks decline, diesel inventories continue to increase, rising to a record high for this time of year. Diesel cracks fell to their lowest level since 2010. The weakening margin is the “worst possible scenario for refiners,” Bob Yawger, director of the futures division at Mizuho Securities USA, wrote in a note.

_*U.S. business group backs carbon pricing. *_The Business Roundtable, a grouping of CEOs from some of the biggest U.S. companies, announced support for “market-based emissions reduction policy.” The announcement is notable because the group has actively opposed such a policy track for years.

_*China considers clean energy acceleration.*_ China is considering stepping up its clean energy deployment as part of its next five-year plan that begins in 2021. One option includes bringing forward its 20 percent renewable energy target from 2030 to potentially 2025.

_*Shell files offshore drilling plans in Alaska.*_ *Shell Offshore Inc.* has submitted plans to plans to drill for oil in the waters along the National Petroleum Reserve-Alaska in the coming years.

_*Pennsylvania moves to join RGGI.*_ The Pennsylvania Environmental Quality Board (EQB) voted 13-6 to launch a formal rulemaking process to join the Regional Greenhouse Gas Initiative (RGGI), a carbon cap-and-trade program among 10 Northeast and Mid-Atlantic states.

_*Ventura Co. curbs drilling with greater setbacks. *_Ventura County, California voted to increase drilling setbacks to 2,500 feet for new oil wells near schools. It also triples the setback distances from homes to 1,500 feet. The vote also curtailed flaring. Ventura county is home to some of the largest sources of oil production in California. 

_*Dakota Access safe through 2020. *_After initially ordered to shut down, the Dakota Access Pipeline will likely remain online at least through the end of the year under a new court schedule. 

_*Shell shuts Gulf of Mexico platform. *_Hurricane Sally passed through the Gulf, but another storm looms. *Royal Dutch Shell (NYSE: RDS.A)* said it shut down production at some of its facilities with more tropical storms heading towards the Gulf of Mexico. 

_*FERC opens door for more renewables. *_The Federal Energy Regulatory Commission voted 2-1 to remove market barriers for rooftop solar and other distributed energy resources. The order allows distributed energy resources to participate in regional wholesale energy markets.

_*Natural gas prices plunge.*_ Natural gas prices plunged this week, including a 10 percent one-day sell-off. Goldman Sachs pointed to congestion in storage as we near the end of injection season. But the crash could be brief. “Ultimately, however, we believe the high inventories to end this injection season are still not sufficient to derail next year’s bullish gas fundamentals,” Goldman Sachs said in a note.


jog on
duc


----------



## ducati916

The resistance line on the VIX seems (now) to have held:






Which just goes to show why intra-day trading can be tough.

Overall market:






The resilience of the Financials is an important signal for the market going forward. Increased confidence in the financials is increased confidence in the economy going forward.

The bigger investment banks are looking at a new revenue stream also:






The current IPO craze is driving this. If it takes off (which it will) IPOs will become highly risky as far higher numbers of insiders looking to flip early shares will be involved. It will be interesting to see how this works out for the IPO space. As for JPM, they will charge (I'm sure) grossly inflated fees.

jog on
duc


----------



## over9k

Energy is the only sector that ended the week in the green.


Running it out to a month looks very different:





With materials & industrials being the only sectors of any significant positivity.

The inflection/resistance point was obviously on the 8th, and that's where they both bounced from vs everything else continuing trend (unless you count energy in the last week).

Meanwhile, zoom continues to be my wonderchild. So have fedex & UPS. I opened a position in john deere today, have an order in for snowflake at $220. We'll see if it hits it monday. 


The democrats have come down to 2.2 trillion stimulus package. Still hasn't broken the logjam though.


----------



## ducati916

A technical study of GE:












Some more fundamentals later.

jog on
duc


----------



## over9k

RBG has died. Conservative lockdown of the supreme court for decades now.


----------



## Garpal Gumnut

over9k said:


> RBG has died. Conservative lockdown of the supreme court for decades now.




Sure has.

gg


----------



## ducati916

Continuing the analysis of GE. First and foremost we would want to confirm that GE is not manipulating their Financial Statements. It is never 100% certain, but generally you can get a good idea (quickly) by employing a financial (calculator) model and run all the numbers through it.












So while GE doesn't pass with resounding confidence, nevertheless, it does pass.

The next quantitative screen that we can use, can test for the likelihood of bankruptcy.






Not a good outcome. So this is a single year: 2019. We now look at an earlier year: is 2019 an improvement or a decline?

In 2018:






We are improving.

Now looking forward, using Quarterly numbers:






So we are still in dangerous territory. I'll run the numbers again at the next quarterly reporting season.

Technically:






So fundamentally very weak, but, essentially a turnaround story (if it survives/works) with upside potential. The key now is to identify the catalyst for this potential turnaround. I'm assuming there is one as a fund just dumped several hundred million dollars into it. Now I just need to have a dig around in the financials to identify it.

Some positives: in this environment of low interest rates, GE will (if needed) be able to re-finance debt going forward. Bad loans in its finance division, can be bailed out. The aerospace division will pick-up as the economy re-opens. In short, it has probably made it through the worst period and the operating environment should improve moving forward. We'll see.












jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Continuing the analysis of GE. First and foremost we would want to confirm that GE is not manipulating their Financial Statements. It is never 100% certain, but generally you can get a good idea (quickly) by employing a financial (calculator) model and run all the numbers through it.
> 
> View attachment 112013
> View attachment 112014
> View attachment 112015
> 
> 
> So while GE doesn't pass with resounding confidence, nevertheless, it does pass.
> 
> The next quantitative screen that we can use, can test for the likelihood of bankruptcy.
> 
> View attachment 112016
> 
> 
> Not a good outcome. So this is a single year: 2019. We now look at an earlier year: is 2019 an improvement or a decline?
> 
> In 2018:
> 
> View attachment 112017
> 
> 
> We are improving.
> 
> Now looking forward, using Quarterly numbers:
> 
> View attachment 112018
> 
> 
> So we are still in dangerous territory. I'll run the numbers again at the next quarterly reporting season.
> 
> Technically:
> 
> View attachment 112019
> 
> 
> So fundamentally very weak, but, essentially a turnaround story (if it survives/works) with upside potential. The key now is to identify the catalyst for this potential turnaround. I'm assuming there is one as a fund just dumped several hundred million dollars into it. Now I just need to have a dig around in the financials to identify it.
> 
> Some positives: in this environment of low interest rates, GE will (if needed) be able to re-finance debt going forward. Bad loans in its finance division, can be bailed out. The aerospace division will pick-up as the economy re-opens. In short, it has probably made it through the worst period and the operating environment should improve moving forward. We'll see.
> 
> View attachment 112020
> 
> 
> 
> View attachment 112021
> 
> 
> jog on
> duc




After Jack Welch left; GE never really was the same. Just goes to show that one man can make all the difference.


----------



## Chronos-Plutus

ducati916 said:


> So the VIX broke through that 1'st resistance point:
> 
> View attachment 111931
> 
> 
> I haven't extended the line, but it will (with a higher probability) turn back down at contact. This (could mean) a late(r) day rally, although for the day we will be negative.
> 
> And the updated bigger picture:
> 
> View attachment 111932
> 
> 
> jog on
> duc





A mild negative correlation exists between the DJIA and VIX looking at the weekly close over 5 years:


----------



## over9k

I suspect a fund is going to be privy to information that retail traders are not.

It's reliant on selling jet engines, and aviation is toast. Turning the screws on that further, rolls royce looks like it's going to raise enough capital to well & truly ride this thing out: https://www.bloomberg.com/news/arti...ks-with-sovereign-wealth-funds-for-bgp2-5b-ft 

Which means it can't even benefit from its competition going bust like the big oil companies have managed to do.


----------



## over9k




----------



## ducati916

over9k said:


> 1. I suspect a fund is going to be privy to information that retail traders are not.
> 
> 2. It's reliant on selling jet engines, and aviation is toast. Turning the screws on that further, rolls royce looks like it's going to raise enough capital to well & truly ride this thing out: https://www.bloomberg.com/news/arti...ks-with-sovereign-wealth-funds-for-bgp2-5b-ft
> 
> 3. Which means it can't even benefit from its competition going bust like the big oil companies have managed to do.





1. I would agree with that, but hardly news to the majority that trade here.

2. Here I disagree. Why would that business simply go to zero on a transitory event such as COVID?

3. It doesn't require them to go bust, although that would have been potentially increased business for them. Secondly, this statement isn't even consistent with your statement in [2]. If aviation is 'toast', it is irrelevant whether RR go bust or not.

jog on
duc


----------



## over9k

Ok, it wasn't literal. I'll be more specific: 

Aviation is never going to return to its previous levels on account of the rise of the ability to do everything by distance now, and even once coronavirus is over, will remain far below what it ever was. In the meantime, it will remain a shadow of its former levels, meaning that GE won't even have a monopoly or stranglehold on the little that remains, it'll be fighting RR for scraps. 

Long story short, it's not even going to have most of a little, it's going to have to fight for its marketshare of even that.


----------



## Chronos-Plutus

RR are holding more in cash at the moment than their current market cap. Also RR aren't just in the civil aviation game; they're in defence, power-systems, nuclear, data labs and analytics, and artificial intelligence.


----------



## ducati916

over9k said:


> Ok, it wasn't literal. I'll be more specific:
> 
> 1. Aviation is never going to return to its previous levels on account of the rise of the ability to do everything by distance now, and even once coronavirus is over, will remain far below what it ever was.
> 
> 2. In the meantime, it will remain a shadow of its former levels, meaning that GE won't even have a monopoly or stranglehold on the little that remains,
> 
> 2(a) it'll be fighting RR for scraps.
> 
> 3. Long story short, it's not even going to have most of a little, it's going to have to fight for its marketshare of even that.




1. If you follow the media, which clearly you do, you'll already know that 'distance' is pretty unpopular. What started as a novelty, has already worn off. Therefore I suspect your assertion (above) will prove to be incorrect. Second, there are many things that cannot be done by 'distance': sporting events, holidays, deliveries, etc.

2. At the moment, yes, levels are far lower. The whole point of investing is to consider the probabilities going forward. Is the current depressed price likely to (a) remain and if so why, or (b) is there a possibility of improvement and if so, by how much? If you wait for the improvement or a guaranteed outcome, then the price you pay has already moved.

2(a). Really? How do you know? One might sell t'other and consolidate.

3. Maybe yes, maybe no. That competition has been there for some time. Nothing new there. What at the current valuation are you paying for this business? Is that over/under priced? What are you paying for the rest of GE's businesses at the current price?

jog on
duc


----------



## over9k

1. I'll bet you a very pretty penny that we don't see the same numbers return to the offices. Many, many companies have decided that this "forced trial" that we're currently in has proven to be very very successful  

2. They'll remain so. Do you follow airlines? I was actually briefly a pilot years ago (long story) and I can tell you that business travel is VERY profitable, and it's business travel that's going to remain in the doldrums most of all. 

2a. No way the powers that be would ever allow a merger of any kind. Forget it. 

3. I think the current price is still overvalued. I presume you took a look at GE's statements and saw what is (was) the most profitable? Jet engines are their golden goose, and that goose is currently moribund. Combine that with its mountain of debt and I can only assume that the wealth fund you referenced knows something that the rest of us don't because aviation profitability is going to remain absolutely f**ked for a long, LONG time yet.


----------



## ducati916

over9k said:


> 1. I'll bet you a very pretty penny that we don't see the same numbers return to the offices. Many, many companies have decided that this "forced trial" that we're currently in has proven to be very very successful
> 
> 2. They'll remain so. Do you follow airlines? I was actually briefly a pilot years ago (long story) and I can tell you that business travel is VERY profitable, and it's business travel that's going to remain in the doldrums most of all.
> 
> 2a. No way the powers that be would ever allow a merger of any kind. Forget it.
> 
> 3. I think the current price is still overvalued. I presume you took a look at GE's statements and saw what is (was) the most profitable? Jet engines are their golden goose, and that goose is currently moribund.
> 
> 3(a) Combine that with its mountain of debt and I can only assume that the wealth fund you referenced knows something that the rest of us don't because aviation profitability is going to remain absolutely f**ked for a long, LONG time yet.





1. And that number could be any number > 1 and < infinity. Which says absolutely nothing.

2. What, if any, correlation is there between [1] above and business travel?

2(a) Never say never in this environment, where unemployment etc is a political issue.

3. Which implies that you have valued it. What then are your valuations?

3(a) I'm sure they do. You keep repeating the above assertion. Simply repeating it without any evidence does not make it more true, it simply underscores how subjective your analysis is.

jog on
duc


----------



## over9k

Of course it's subjective. For example, nobody can know how much business travel is going to be reduced and for how long. Anyone who wants to claim they can estimate that I will laugh at. The only thing that can be said with any certainty is if things will be more or less than they were before and fact is that many, MANY companies are flatly on record as stating that they're NEVER going to return to their previous levels of in-office staff or business travel, and with business travel being as profitable as it is, there goes a massive chunk of airline profits just right there.

All these estimates are based on an assumption that things will (eventually) return to their previous levels and it's just a matter of pricing the time in. I'm saying that's incorrect - they're not going to return to their previous levels and whatever they do get to is certainly not going to come about as quickly as people think either.

I think the market is pricing in waaay too optimistic future earnings etc etc. Let's take a look at GE in isolation over the past 6 months:







There's not even a trend to follow. It's not like AU's travel/aviation stocks that have slowly crept up as coronavirus cases have reduced for example. Instead, it's just an absolute sh!tshow. If anything, there's just been a long slow melt since that peak after the pullback on what looks like the 16th of june:







$6 looks like the support level and it's either busted that or knocked on the door of it 4x in the last 6 months and actually cracked the $5.50 mark at one point. $7 looks like the top too and with dow futures in the red, we're likely looking at another significant drop tonight.

Then there's seasonality to consider. Europe's already looking at increased lockdowns being imposed within a few days and winter's going to make things so, so much worse up there - from both an aviation and a simple economic perspective. There's also the curveball of the 737 max being grounded until god knows when - which is a massive contract that's literally non-existent until they get recertified and the fixes installed in all the existing planes as well which is going to take months at absolute best. With jet engines, like buying a car, the profit is not in the sales margin but rather, the maintenance of the product, which is all negotiated and sold as a combined servicing and engine package with the jet engines (the airlines often get the engines at cost price if GE gets the servicing contracts), meaning that even if boeing keep making the jets and just park them outside everett and have stacks of them in stock, if they aren't flying then there's no maintenance to be done on the engines. No maintenance = no profits for GE.

I wouldn't even think about a buy order at anything more than $6 and if my suspicions about seasonality are correct, we're going to see the $5.50 mark cracked again. Maybe even $5.


----------



## Chronos-Plutus

Jolly Jay is on show a great deal this week. A super dovish tone may just pump more optimism and inflation into financial assets this week.

https://www.federalreserve.gov/newsevents/calendar.htm

Maybe gold above USD$2000 an ounce this week.

Come on Jay; the market needs to hear the words: *"whatever it takes"*

Just like Draghi:


----------



## Chronos-Plutus

Then Ms Lagarde is due to speak soon also.













						Weekly schedule
					

Find the ECB's weekly schedule of public speaking engagements and other activities by the ECB Board Members.




					www.ecb.europa.eu
				




Dump usually then the pump after the meetings/ briefs/speeches:





We will see.


----------



## Smurf1976

over9k said:


> It's reliant on selling jet engines, and aviation is toast.



I'll just add that there's also a market for jet engines in other applications.

Power generation primarily with either aero-derivative or industrial gas turbines used for peaking and backup power stations or, in conjunction with a steam turbine, as combined cycle plant (which is considerably more fuel efficient but far less flexible in operation).

GE and RR are both heavily involved as suppliers to this application.

Needless to say though, the market for those will also be taking a hit at the global level due to the economic situation though not likely to the same extent as aviation.


----------



## over9k

Well that would be energy more broadly, and I posted the ETF for that a few posts ago - that's dropped the most of all over the last month.


----------



## Dark1975

The futures looking brutal, a deeper correction taking place or now starting the dot.com of the Nasdaq? 
I guess all the fund managers will be running to gold this week , maybe will see gold push through $2k ? 
Uncertain times and with tic tock- times differently ticking , sorry bad pun,


----------



## Chronos-Plutus

Dark1975 said:


> The futures looking brutal, a deeper correction taking place or now starting the dot.com of the Nasdaq?
> I guess all the fund managers will be running to gold this week , maybe will see gold push through $2k ?
> Uncertain times and with tic tock- times differently ticking , sorry bad pun,




The markets are forcing Powell and Lagarde to capitulate into a perpetual super dovish stance; unlimited QE and asset purchases.

It is going to be an interesting week. I like Mario Draghi's line: *"whatever it takes"*

We will see how the global markets end the week after Powell and Lagarde finish their briefings/meetings/speeches/announcements.


----------



## ducati916

A number of charts:






The VIX jumped higher (I have removed the intra-day resistance that occurred on Friday) and has moved through the first resistance point. Now it may hold and stocks bottom here, but, it may not hold. The question is: will it move through the second? I'll check the after market charts later.

Some charts now for the mechanical traders. Could you design a system around this (absolutely you could):












Energy + Financials as against Tech.






For momentum traders, buy Tech. For value chaps, Energy and Financials are more attractive. Tech. is a volatile ride higher over time. Energy + Financials are a return to the mean type of trade. The thing with Tech. is that you have to change horses more frequently. There are obviously a number of exceptions, but they are not so easy to pick at inception. 

And just updating: Tech. outperforming the other sectors:








jog on
duc


----------



## ducati916

And in a news story:






I guess the drug dealers never got the email. 

Unfortunately, this is the sort of dumb stuff bankers do.

jog on
duc


----------



## over9k

I think it's RBG's death that's triggered it all. 

Industrials have been massacred. GE's down 8% on the day. Zoom has rallied AGAIN.


----------



## Chronos-Plutus

*"Morgan Stanley Turns Bearish, Sees Tech Plunge Accelerating As Investors Dump Most QQQs In 20 Years"*





__





						Morgan Stanley Turns Bearish, Sees Tech Plunge Accelerating As Investors Dump Most QQQs In 20 Years | ZeroHedge
					

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero




					www.zerohedge.com


----------



## over9k

Yep, dow down 1.84%, nasdaq down 0.13% at close. Zoom rallied almost 7%, with GE down 7%.

Not being prickly here duc: You sure about that bull market/rotation you were talking about earlier?


Edit: Amy Coney Barrett being tapped for supreme court.


----------



## Chronos-Plutus

You guys can stay with tech if you like; looks like momentum is moving out of tech.

I am basically sitting on the sidelines until the election is over anyway.

" Finally, none of this appears to be news to investors, because one week after a massive inflow into tech funds (as discussed last week), this morning Bloomberg notes that investors are dumping the largest tech ETF at the fastest pace in 20 years. Specifically, the $122 billion Invesco QQQ ETF suffered its biggest daily outflow since October 2000, losing almost $3.5 billion on Friday. " (https://www.zerohedge.com/markets/nasdaq-plunge-dead-ahead-investors-dump-most-qqqs-20-years)


----------



## ducati916

ducati916 said:


> And in a news story:
> 
> View attachment 112083
> 
> 
> I guess the drug dealers never got the email.
> 
> Unfortunately, this is the sort of dumb stuff bankers do.
> 
> jog on
> duc





So this will turn into a total storm in a tea-cup by the time it all works out:









jog on
duc


----------



## over9k

This is what I was talking about when I said that a legal reopening is not a return to normal.






And this is what I was talking about reference things never returning to the way they were. There's just endless examples of words to this effect from that many companies... 

I also think that there's going to come a time when one of the big tech/money makes a play for zoom. It might be oracle's next target, who knows.


----------



## Chronos-Plutus

*This whole RBG hype by some Wall Street analysts is completely overblown:*

1. A justice position has become vacant under a Republican administration.

2. It is within the President's powers to nominate the next Justice.

3. The Judiciary Committee is chaired and essentially controlled by the Republicans.

4. The Senate is controlled by the Republicans.

5. The November 3 election is 6 weeks away, more than enough time to appoint a new Justice.

*Really it is the 2nd COVID wave and subsequent lockdowns, lack of corporate profits and GDP growth, lack of effective fiscal support, and lack of effective monetary support that I think is more concerning.*


----------



## ducati916

We are definitely not out of the woods yet!















However, on a positive note, the macro-picture remains unchanged. Therefore, a correction, but not a re-visit to the March lows.

jog on
duc


----------



## ducati916

over9k said:


> View attachment 112098
> 
> 
> This is what I was talking about when I said that a legal reopening is not a return to normal.
> 
> View attachment 112099
> 
> 
> And this is what I was talking about reference things never returning to the way they were. There's just endless examples of words to this effect from that many companies...
> 
> I also think that there's going to come a time when one of the big tech/money makes a play for zoom. It might be oracle's next target, who knows.





Corrections Officers
Police Officers
Firebrigade
Aircrew
Nurses
Doctors
Construction workers
Electricians
Plumbers
Carpenters
Road workers
Drivers
Chefs
Military
Etc, etc, etc.

None of these can work remotely. So while you can find the odd Tech. Co. that can work remotely, the majority of the population cannot.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> We are definitely not out of the woods yet!
> 
> View attachment 112109
> View attachment 112110
> View attachment 112111
> View attachment 112112
> 
> 
> However, on a positive note, the macro-picture remains unchanged. Therefore, a correction, but not a re-visit to the March lows.
> 
> jog on
> duc




I think much pivots on Jay's words and actions this week; otherwise the trajectory might be a gradual drift to March lows over the next 6 weeks leading up to the US election.

I am ~56% cash, ~22% equities and ~22% physical precious metals at the moment and won't make any portfolio changes until the election; unless I see a worthy risk to take on a particular stock.


----------



## ducati916

Chronos-Plutus said:


> I think much pivots on Jay's words and actions this week; otherwise the trajectory might be a gradual drift to March lows over the next 6 weeks leading up to the US election.
> 
> I am crystalizing my portfolio as ~56% cash, ~22% equities and ~22% physical precious metals until the election; unless a I see a worthy risk to take on a particular stock.





While I avoid saying 'never', I would be pretty surprised if we return to March lows (Indices).

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> While I avoid saying 'never', I would be pretty surprised if we return to March lows (Indices).
> 
> jog on
> duc




Although I think Trump will win the next election; the market doesn't seem convinced. Then we have Jay who now looks like will just sit on his hands until the US election is over.

So I see the market drifting lower at least until the US election is over. Of course I could be wrong but this is how I am going to play it.

After the US election; more certainty and opportunity with less risk, more positive fiscal policy rhetoric, and more positive monetary policy rhetoric.

I have learnt to trade/invest on what I think the rest of the market will think; not what I just think. In saying this, I could be way off base on this call; maybe not March lows, but the trajectory will be clear in my opinion.


----------



## over9k

ducati916 said:


> Corrections Officers
> Police Officers
> Firebrigade
> Aircrew
> Nurses
> Doctors
> Construction workers
> Electricians
> Plumbers
> Carpenters
> Road workers
> Drivers
> Chefs
> Military
> Etc, etc, etc.
> 
> None of these can work remotely. So while you can find the odd Tech. Co. that can work remotely, the majority of the population cannot.
> 
> jog on
> duc



I never said that it was the majority of the population...

You seem to have lost confidence in your bull market thesis?


----------



## ducati916

over9k said:


> 1. I never said that it was the majority of the population...
> 
> 2. You seem to have lost confidence in your bull market thesis?





The problem that I have with your posts is that they are poorly articulated, contradictory and usually in hindsight. You also try when you can, to hedge your opinion, to later claim a 'victory'. Then, when the issues are highlighted, there is some excuse as to that's not what you were saying etc. None of which I find particularly useful.

The latest example of this:

1. Majority of the population:







Which is simply a continuation of other posts on the subject. The inference being that 'remote' working is here to stay and that the US economy is fundamentally changing: ergo, Tech. companies remain attractive investments because of that.

Tech. has always been a good investment. The difficulty is separating the wheat from the chaff early enough in their genesis to profit. How to pick the MSFT, GOOG, AMZN from the myriad numbers that crash and burn. Hence, hold ETFs that hold Tech.

The US is now predominantly a service economy. A service economy cannot as a whole move to remote working. There are a number of Tech. companies with employees who could if they chose to. I (my opinion) doubt they will. When you read the quote from AAPL CEO, he does not actually state categorically anything. It is a prediction. The statement is heavily hedged.

You like ZM. For ZM to justify its lofty valuation a certain % will need to embrace remote working going forward into the recovery Does this happen?. Maybe yes, maybe no. ZM is a one trick pony. It is a trick that I believe has a limited shelf life. Which is not to say it cannot be traded profitably. Clearly it can. Clearly to date it would have been very profitable to do so. That doesn't (in my book) transform it from a POS into a stock that I would (or could) hold for a long period of time. 


2. Re. Bull Market







There would seem to be no ambiguity in those statements.

jog on
duc


----------



## ducati916

So the intra-day VIX






Would suggest we are finding a bottom.

jog on
duc


----------



## ducati916

Fallout from the negative oil price:









						The Mysterious London Traders Accused of Manipulating Oil Markets — and the Anonymous Hedge Fund, Rare-Coin Expert, and Day Traders Who Are Fighting Back
					

Tracking the culprits behind April 20.




					www.institutionalinvestor.com
				




Too long an article to C&P. But well worth the read. Interactive Brokers implicated in the fiasco. Well worth reading if you are an IB client.

Oil Patch News:

*Market Movers*

-    *GE (NYSE: GE) *announced that it was exiting the coal business. A day later, GE said its wind turbines would be used in the world’s largest offshore wind project. 

-    *Oasis Petroleum (NASDAQ: OAS) *missed a debt payment and has entered a 30-day grace period. The company said it would continue talks with lenders. 

-    *Sempra Energy’s (NYSE: SRE)* Cameron LNG project could remain offline through October, due to challenges in restoring power after Hurricane Laura hit the Gulf Coast. 

_*Tuesday, September 22, 2020*_

Oil prices fell on Monday on renewed concerns of coronavirus-related lockdowns. Oil edged up slightly on Tuesday. “As any new restrictions will likely be more localized, the oil demand recovery should still continue, although at a slower pace with the easiest demand gains behind us,” UBS oil analyst Giovanni Staunovo told Reuters.

_*Vitol sees tough 2H2020 on weak demand and low volatility. *_Oil trading firm Vitol sees tepid demand growth and low trading activity in the short run, making the second half of 2020 rather bleak for traders. “Obviously, with crude trading, it’s difficult to maintain business volumes because there is less crude to market and trade; there’s less being produced,” Vitol CEO Russell Hardy told Reuters.

_*Oil-producing countries squeezed by prices.*_ Middle Eastern oil producers are increasingly relying on debt markets to bridge the gap in government finances. Abu Dhabi just completed a $5 billion, 50-year bond. For now, Gulf States are still in good standing with debt markets, but with oil prices showing no signs of returning to pre-pandemic levels, how long can it last? 

_*Libya restarts oil production. *_Libya’s National Oil Corporation will restart production from certain fields and some exports of crude oil, the company said. The force majeure will be lifted from fields and ports that are free of the presence of paramilitary groups and mercenaries, but remain in effect for those where there are still such groups, which hamper the work of NOC. Libya’s National Oil Corporation (NOC) sees oil production rising to around 260,000 barrels per day (bpd) next week, up from some 100,000 bpd before the blockade.

_*Shell preparing major cost-cutting. *_*Royal Dutch Shell (NYSE: RDS.A)* is preparing a plan to cut 40 percent from the cost of producing oil. As Shell undergoes its clean energy overhaul, it will focus its oil and gas operations on a few core areas: Gulf of Mexico, Nigeria and the North Sea. Shell will make deep cuts to its retail fuel division, its LNG division, according to Reuters. The overhaul will be Shell’s most extensive in modern history and is expected to be completed by the end of the year.

_*Commodities and currencies hurt if dollar strengthens. *_The dollar has strengthened a bit over the past month, putting pressure on a variety of commodities and currencies. A new study says that the dollar is still undervalued.

_*Permian has too many pipelines. *_It wasn’t long ago that oil in Midland traded at a steep discount due to pipeline bottlenecks and surging production. Now, the Permian is producing 4 mb/d, but has 3 mb/d of excess pipeline capacity, according to the Wall Street Journal. Overcapacity was a brewing problem even before the pandemic, but with production flat-lining, the gap is growing even larger. 

_*EV tipping point by 2024.*_ Analysts have estimated that battery pack prices should drop to US$100/kWh so that electric vehicles have a chance to compete with cost with the internal combustion engine. Automakers and industry experts believe that the US$100/kWh milestone could be reached as early as in 2024. Others say that threshold will arrive much sooner.

_*Tesla’s “Battery Day.” *_*Tesla (NASDAQ: TSLA)* is holding its Battery Day on Tuesday, and Elon Musk has hinted that he would announce major advancements in battery technology. The event starts at 4:30 p.m. ET. 

_*East Med states establish gas forum.*_ Egypt, Israel, Greece, Cyprus, Italy and Jordan established the East Mediterranean Gas Forum (EMGF) as an intergovernmental organization headquartered in Cairo. The forum will present a united front to gas development at a time when Turkey has disputed development near its borders.

_*Brazil’s offshore oil boom still alive. *_The COVID-19 pandemic and March 2020 oil price collapse did little to slow the oil boom underway in Latin America’s largest economy. Petrobras’s second-quarter 2020 commercial oil output grew 4.1% year over year to almost 2.5 million barrels daily.

_*Stranded asset risk at $40 oil. *_High-cost oil projects are unprofitable at $40 per barrel, and if oil remains stuck at that price level, reserves will be left as “stranded assets.” If the world manages to comply with climate targets limiting warming to 1.5C, more than 80 percent of oil, gas, and coal assets would be worthless.

_*Mayors of 12 major cities to divest from fossil fuels. *_12 cities representing over 36 million residents pledged to divest from fossil fuels. The cities include: Berlin, Bristol, Cape Town, Durban, London, Los Angeles, Milan, New Orleans, New York City, Oslo, Pittsburgh and Vancouver. 

_*China plans new storage. *_China is planning new storage hubs in Zhejiang province for energy and agricultural products. 

_*Refining margins remain weak.*_ Refiners are trimming their production as margins remain low amid weak demand for fuels. China’s refineries are expected to cut processing in September, Reuters reports.  

_*China aims for net-zero by 2060.*_ China will aim to reach a peak in emissions by 2030 before winding down emissions to reach carbon neutrality by 2060, President Xi Jinping said on Tuesday.

jog on
duc


----------



## over9k

ducati916 said:


> The problem that I have with your posts is that they are poorly articulated, contradictory and usually in hindsight. You also try when you can, to hedge your opinion, to later claim a 'victory'. Then, when the issues are highlighted, there is some excuse as to that's not what you were saying etc. None of which I find particularly useful.
> 
> The latest example of this:
> 
> 1. Majority of the population:
> 
> View attachment 112135



Absolute bullsh!t. Not once have I ever even INFERRED that we're talking about the majority of the population.

The charitable way to say that what goes on is that you constantly misinterpret what I'm saying, strawman it, defeat the strawman, start masturbating over your own "intellect", and then crack the sh!ts when I point out how wrong you were claiming that it wasn't your inability to understand the most basic of statements, oh no, it was my articulation.

The less charitable way to interpret things is that you deliberately misrepresent and misconstrue what I say to give yourself something to "defeat" and therefore humiliate me (or so you think) in revenge because I've embarrassed you a few times now and your ego's been bruised, which it CLEARLY has. Your posts absolutely drip with conceit constantly.



I'll pay $1000 to any charity you care to mention if you can find anywhere where I even inferred that there's some kind of fundamental shift going on in the entire economy/the majority of the population are going to be working from home after the pandemic.

You are so unbelievably full of ****.


> Which is simply a continuation of other posts on the subject. The inference being that 'remote' working is here to stay and that the US economy is fundamentally changing: ergo, Tech. companies remain attractive investments because of that.




No, the inference is that SOME remote working is here to stay. Stop putting words in my mouth.



Zoom's last earnings report was 400% of estimates. You love your technical data but can't see the forest for the trees. You want me to get ultra-technical and ultra-complicated about things which just aren't.

I originally bought zoom at $198 and it's now knocking on the door of 500. How do your returns compare?

The fact that you won't even mention your own returns should really tell everyone just how much of a fraud you really are.


----------



## ducati916

over9k said:


> Absolute bullsh!t. Not once have I ever even INFERRED that we're talking about the majority of the population.
> 
> I'll pay $1000 to any charity you care to mention if you can find anywhere where I even inferred that there's some kind of fundamental shift going on in the entire economy/the majority of the population are going to be working from home after the pandemic.
> 
> You are so unbelievably full of ****.
> 
> 
> No, the inference is that SOME remote working is here to stay. Stop putting words in my mouth.




So below is the evidence from just the last couple of days. I could probably go back further in time and find additional evidence, but really who cares.





















So what say ye?


jog on
duc


----------



## over9k

Sorry, is there a part there where I say that this encompasses the majority of the population? And/or that the entire economy is fundamentally changing for good? Because I can't see it.

I have said that after coronavirus is done, we won't return to the way things were. And I'll say it again:

A significant amount of work will continue to be done remotely. There is no way to put an exact figure on this, though some companies have flatly stated that they expect to keep X% remaining in a remote-working arrangement. That's the closest you'll ever get to a numerical figure, and it'll only ever be for one company each time you get a number. Those companies will also obviously be reviewing these arrangements constantly.

If you think you can fool me into trying to put an exact figure on something that you know there cannot be an exact figure for, you are mistaken. This is not my first rodeo 


The fact that you completely ignore every single time I ask you what your returns have been is telling.


----------



## over9k

Honestly man, I don't want to argue with you. I hate arguing. I'd much rather actually talk to each other, discuss things, and have you recognise what I can: That everyone in the world knows something that you (or, I) don't.

But you seem determined to be as prickly and belligerent and argumentative as possible every single time I even so much as post something you aren't aware of (let alone contradict you) so what other option is there?

I'd much rather we just talked about stuff and learned from each other, but your ego doesn't seem to be able to handle this.


Here, I'll state something:

There are some things that you can/have determined or figured out that I haven't.



Are you capable of admitting the same about me?


----------



## ducati916

over9k said:


> Sorry, *is there a part there where I say that this encompasses the majority of the population?* And/or that the entire economy is fundamentally changing for good? Because I can't see it.
> 
> I have said that after coronavirus is done, we won't return to the way things were. And I'll say it again:
> 
> A *significant amount of work will continue to be done remotely.* There is no way to put an exact figure on this, though some companies have flatly stated that they expect to keep X% remaining in a remote-working arrangement. That's the closest you'll ever get to a numerical figure, and it'll only ever be for one company each time you get a number. Those companies will also obviously be reviewing these arrangements constantly.









Given that the US is predominantly a service based economy, a *significant* amount of work cannot be completed 'remotely'.

Your previous reference:






You can pay the $1000 to the SPCA.

jog on
duc


----------



## over9k

There is no part of any of that where significant is stated to be synonymous with majority. 

Are you being stupid on purpose?


----------



## qldfrog

@over9k, get some sleep and have a walk.This is not discussion anymore


----------



## over9k

No kidding. I'm done with him.


----------



## ducati916

Just an update:

In summary: the breadth is narrow, suggesting that there could still be some downside. We are in the process of finding a bottom however.















We are 'near' support levels, but not on them and far from having them confirmed. The next couple of days will be probably unpleasant if you are long.

The macro fundamentals are however unaltered, which means that this is simply a correction, not a return to the lows.

jog on
duc


----------



## Smurf1976

over9k said:


> A significant amount of work will continue to be done remotely. There is no way to put an exact figure on this, though some companies have flatly stated that they expect to keep X% remaining in a remote-working arrangement.



It works for some as a full time thing, it works for others as a part time thing, then there's others for whom it doesn't work at all.

Impossible to put a figure on it as you say but it's a safe assumption that the answer isn't zero. There's both money and time to be saved by business and employees alike so at least some will stick with remote working.


----------



## ducati916

Updated VIX






Says it all really.

I'll update the market close charts later. For the moment, not really a good day for any sector.






The master chart: one VIX to rule them






If (whatever) has rattled the Bond market settles, then the Stock market will settle. From the above, it looks as if tomorrow will either (a) calm the farm or (b) really let the chickens loose.

An update of market close charts will help make a probabilistic best guess.

Although, if flippe-floppe-flye is short:






jog on
duc


----------



## qldfrog

Smurf1976 said:


> It works for some as a full time thing, it works for others as a part time thing, then there's others for whom it doesn't work at all.
> 
> Impossible to put a figure on it as you say but it's a safe assumption that the answer isn't zero. There's both money and time to be saved by business and employees alike so at least some will stick with remote working.



As long as everyone remember that if you can do your job remotely,any Indian Vietnamese or African can do it for much cheaper...
This is a move to the last stage of globalism.. everyone paid $2 an hour.
Where do you actually stand in that context?
What is so unique in your job that no team can do it from overseas?
And what about your customer's job, if they are paid $2, how much will you charge them?
And going back from there to economy
 if this is the trend, think about outsourcing software: we have been having call centers for decades,can you name a call center software company which could have made a westerner rich?
If people are paid $2 an hour, the tools they use are free..aka pirated or priced accordingly so do not expect a bonanza of zoom profits...
My opinion only but one of my first job after moving here was developing call center software outsourced from the US in the 1990s.
The IT was then outsourced to India until the US owners gave up....no profit for the West


----------



## cutz

qldfrog said:


> As long as everyone remember that if you can do your job remotely,any Indian Vietnamese or African can do it for much cheaper...
> This is a move to the last stage of globalism.. everyone paid $2 an hour.
> Where do you actually stand in that context?
> What is so unique in your job that no team can do it from overseas?
> And what about your customer's job, if they are paid $2, how much will you charge them?
> And going back from there to economy
> if this is the trend, think about outsourcing software: we have been having call centers for decades,can you name a call center software company which could have made a westerner rich?
> If people are paid $2 an hour, the tools they use are free..aka pirated or priced accordingly so do not expect a bonanza of zoom profits...
> My opinion only but one of my first job after moving here was developing call center software outsourced from the US in the 1990s.
> The IT was then outsourced to India until the US owners gave up....no profit for the West




Yep so much for globalization, even legal/accounting/admin/medical/journalism/ect/ect aren't safe from offshoring, GDP growth coming from immigration which has now been shelved, too much short termism from  our governments.

Good thing is trades have become highly valued these days, although level of skill required downgraded.

Also the resurgence in the fixing/ upcycling is good to see, demand has been building at auction houses and second hand stores. Handy folk are realizing it makes much more sense buying quality second hand and fixing rather than buying new junk that's sold at the big hardware stores.


----------



## qldfrog

the issue I see is that does not produce much growth even mid term into our economies
US will do OK unless democrats win, and US is the focus of this thread, but I find it hard to extrapolate to our own situation.
Few onsite miners and farmers are needed...The rest can/is already done remotely.A whole mine processing center was shipped in with filipinos workers/ engineering next to us in New Caledonia, we are seeing the same with chinese workers flying in for some mining works.
What's is left, and how much can you sell a coffee, or pay for a haircut if the only money stream in Oz is corruption prone royalties..
Tradies are uber expensive here and only because people can afford/absence of competition..yet the last influx of migrants might change that quickly, even if COVID (political reaction) has been a saviour in that regard.
Anyway, let's not sidetrack the US focus of this thread.My apologies @ducati916


----------



## ducati916

Things still looking ugly:

The stock VIX is in new territory and of no use currently. The Bond VIX (which is actually more important) still has not hit the falling resistance line. That could happen tomorrow, we'll see.

Meanwhile:









Looking ugly.






We have hit support here. This is a major, multi-year support level. I would expect this to hold.






Not much help.

The next 2 are 'sentiment' based on a long running newsletter. I include them just out of interest.









Confirm (if nothing else) that we are at an extreme reading. Extremes (usually) mean revert.


jog on
duc


----------



## ducati916

This is where the trouble started...and will finish:







There is a run to Treasury paper and out of Corporates.

On a shorter timescale:






Quite what has the Bond market spooked isn't really clear. Too low inflation has been mooted, but that really makes no sense at all if you are a Bond holder, so I think we can discount that one. 

Breaking down further:






August 5 could be a starting point for identifying causation. From Mr Bigdog:









Nothing particularly shocking there.

If we move to the Fed.: https://www.federalreserve.gov/publications/files/balance_sheet_developments_report_202008.pdf.pdf

We find this:






Now the drop-off in Fed. purchases of Corporates could well have pushed the Corporates out, precipitating, the current situation, as finding the marginal buyer for probably record level issuance. Here then is the answer to causation:












The fall-off in Fed. purchases, starting August, ran into increased debt issuance in September and the Bond market is having indigestion. Add into the mix a pretty active IPO issuance calendar and you can start to see the problem.

jog on
duc


----------



## Smurf1976

qldfrog said:


> As long as everyone remember that if you can do your job remotely,any Indian Vietnamese or African can do it for much cheaper...
> This is a move to the last stage of globalism.. everyone paid $2 an hour.
> Where do you actually stand in that context?



Perhaps this discussion should be in another thread so as to not hijack this one but for the record, I've held the same view since the 1990's.

Globalisation will crash and burn once the corporate office workers lose their jobs. That's the point where they'll wish they'd stood with the factory workers as they were marched out the door a generation earlier.

Globalisation has pretty much run its course in my view and the major trend going forward will be in the other direction, indeed that already seems to be underway. I intend that as an economic comment not a political one although the two are related.

Perhaps better to have a separate thread on it though.......


----------



## qldfrog

The economic link was all about the work from home technology seen as a saviour/investment forming a new trend.
I disagree as i witnessed the effect of the call centers work from home in the 90s where i extrapolate that, as for call centers, the west will loose not only the job but also the technology behind these
We will see outsourced jobs but also tools
While outsourced manufacturing saw loss of workers, the key players US, Japan and Europe kept selling the machines.i do not foresee that happening with this wave of remote jobs and so see structural issue with a long term positive trend but with the US sheltered.
Obviously, as long as feds keep pumping money in, we can still see bull market, but without the base/foundations such as increased productivity, age curves, which pushed the 1980s bull market trend.
This is in no way in contradiction with @ducati916 view, i just do not see a supra bull over decades anymore
And obviously see the stay at home fad as unsustainable, but why not trading it..just not an investment for long term
A new black tulip


----------



## qldfrog

I shut up now and stop the littering


----------



## ducati916

Lots of snippets:









Junk bonds, issues atm.






Have the Robinhood traders discovered VIX futures?

Now some positives:






You just knew at some point CEOs to prevent all of their Option awards to themselves from diluting the stock, had to bring back repurchase of stock. This is a significant driver of market prices higher.






Banks are coining it in commodity trading. Wait for a blow-up from 1 or more Hedge Funds/Banks:






The short volume in NG nearly always claims at least 1 victim a year.

From flippe-floppe-flye: there is a lesson in there






And finally:













It looks atm (don't hold your breath) that the (current) worst is behind us. If we hold the vol. in check through Friday, then we have reached the extent of the corrective decline. I added today to DPST and DFEN. I think this is the bottom. But given that this is Sept/Oct and elections round the corner, I could well be wrong.

I'll post the after market charts later.


jog on
duc


----------



## ducati916

Positive news:






Futures (probably) reacting to (buy) the rumour:






jog on
duc


----------



## aus_trader

Locally Banks are having a big day, something must be up   





_Disclosure:_ I hold BOQ in *Speculative Stock Portfolio*.


----------



## Smurf1976

aus_trader said:


> Locally Banks are having a big day, something must be up



I assume it relates to the government's ideas of relaxing requirements on borrowers?

If banks are less responsible for verifying ability to pay etc then they can lend more money and that brings more profit. Not necessarily good in the long term but short term it's good for banks at least.


----------



## aus_trader

Yeah.  I also heard on the news that there is extended support for small businesses that are facing bankruptcy, so that's got to be good for the bank balance sheets in terms of reducing their asset write offs.


----------



## sptrawler

Putting some balance into the lender/borrower responsibilities, if the lender has to take full responsibility they won't lend, simple really.


----------



## Dark1975

Although futures look either neg or positive right now, my view hasn't changed , my personal view is that we will slowly head lower as we head closer to the u.s elections,  the Nasdaq looking more likely pulling the general market down in turn which will pull the dow with it, 
As the old cliche goes  " when America sneezes the world catches a cold",  So some interesting buying opportunities in the xao the next 2 - 3 weeks, 
I think personally  after the u.s elections the dow and the xao will jump on the bull run, as with low interest rates where else can u put money, 
I will post a technical view later when I get back into my office


----------



## Dark1975

2hrs later futures look grim, friday jitters , could be a interesting week coming up


----------



## Dark1975

I noted on a technical on the Nasdaq 100 eft the 26ema crossed over on 12 ema shows a change in trend line and same on the Xao (asx)
note the cross overs shows the trend line, 
Tho saying this its only recently crossed over on the 14th of sept, I guess from a lot of building factors :
* Up coming U.s elections
*No second stimulas as yet ( democrats ploy i'd imagine to make trump look bad up and till lead up)
*covid numbers still growing 
*Nasdaq looming to such highs it was likely for a correction

Tho just my personal opinion , I'm thinking it will swing right around after the U.s election


----------



## ducati916

Trump is not helping matters re. the election:









The Bond market has calmed:






And stocks are following suit.

jog on
duc


----------



## ducati916

The gold bulls have gone quiet, or at least relative to the last few months, which is odd given the uncertainty around the election.

Long Term chart:






The turn (in hindsight) can be clearly seen and had one been looking, in real time (some were, Mr Rederob).

Now looking at a Short Term chart (same chart):






The breakdown and almost inevitable break higher easily seen in hindsight and probably in real time had one been looking. The question of course is: where to now?

My money (would be if I were trading this) be short gold to the support line above (remember this is a ratio chart) where one must then re-evaluate the trade. 

The problem that I have with gold trading is that there are so many theories that account for the causation in the movement of gold and keeping track of all the various theories is just too time consuming, because for me, it is all about interest rates (hence the above chart). Trading interest rates, which in trading gold you are trading by proxy, is fraught with difficulty as you are contending with Central Banks, primarily the Fed. In theory, now that the Fed. have confirmed low rates through 2021, gold should do well. However, tiny basis point moves in the 10Y seem to exert significant movement in gold.






I'm going to keep an eye on these relationships going forward (more closely than I have) as there could be some longer term swing trades that could interest me as long as I can jump on board early.

jog on
duc


----------



## ducati916

Both QQQ/SPY sitting on support:















Next week is shaping up to confirm the bottom in the pullback and trade back towards the highs in both indices.

The risk is that Bonds could re-ignite any weakness:






Bonds turned down Friday without any technical test, which means they could turn back up to test technically. Personally I don't think that they will, but that is a highly subjective and speculative statement. With the election pending and all manner of issues being raised by the election, the Bond market could be far more volatile than it is usually (unless the Fed. weighs in) while the politics sorts itself out.


jog on
duc


----------



## ducati916

Nice start to the week:






No comment required.

jog on
duc


----------



## Chronos-Plutus

ducati916 said:


> Nice start to the week:
> 
> View attachment 112384
> 
> 
> No comment required.
> 
> jog on
> duc




Would you like a dissertation?

I spent a fair few hours studying fluid mechanics today; to try and keep pace with the professors in this city; perhaps if I dedicate  5 hours a day for the next 10 years..

What did you do?

I help people that are worthy, when I can, but I don't really work for free!


----------



## Chronos-Plutus

Chronos-Plutus said:


> Would you like a dissertation?
> 
> I spent a fair few hours studying fluid mechanics today; to try and keep pace with the professors in this city; perhaps if I dedicate  5 hours a day for the next 10 years..
> 
> What did you do?
> 
> I help people that are worthy, when I can, but I don't really work for free!




*As long as Trump and Biden are not taking drugs; the game is fair this Tuesday!*


----------



## Chronos-Plutus

I will not bet and personally will not make any money either way on the debate.

*So let's see a fair debate!*


----------



## Chronos-Plutus

Biden will take drugs to debate. *Trump will not need drugs to debate him.*

There will be a glitch or an edge that Trump must find in the topics: if so; Biden (even with his drugs) will freeze, crack or stumble/crumble.

Realistically: Biden and Harris can't be the leaders of the free world. Sorry.


----------



## Chronos-Plutus

I will take the moral high ground as I did in 2016 and not bet on the election; however this is my recent prediction, with the hot spot in purple: *LOCKED-IN THIS IS IT*: I will call it comes to Mic, Win and Pen.


----------



## ducati916

Still the Bond market...






Currently just a blip, could settle...












Until the political issues are settled (which really don't matter either way) the markets will likely remain jittery.

Mr flippe-floppe-flye continues to flippe-floppe






jog on
duc


----------



## makteb

ducati916 said:


> Still the Bond market...
> 
> View attachment 112429
> 
> 
> Currently just a blip, could settle...
> 
> View attachment 112426
> View attachment 112427
> View attachment 112428
> 
> 
> Until the political issues are settled (which really don't matter either way) the markets will likely remain jittery.
> 
> Mr flippe-floppe-flye continues to flippe-floppe
> 
> View attachment 112425
> 
> 
> jog on
> duc



Pleasantly enjoy Mr Fly's ability to poetically convey his inner artistic side from the flare and excitement of the market.  Some look at mountains, some at abstract objects... for him the music appears in the randomness of numbers the splashing of candles both forming a beautiful picture in his mind.  Signs of a true artist that only others at the end of the human spectrum can understand. 

Thee who takes small gains takes small losses, thee who takes big gains takes big losses.  To the guppies out there, manage your risk appropriately and live to trade another day.

Apologies Duc for the derailment.


----------



## aus_trader

Love the part where he expresses his frustration Mr. duc. Maybe the shorts are losing...


----------



## ducati916

After the 1'st debate:






jog on
duc


----------



## ducati916

By all accounts the 'debate' was a waste of time. No surprises there. Markets seem indifferent.






All sectors having a pretty good day.






We are approaching that support line, which will probably line up with a resistance point in the market (I'll check later). If it does we may have a bit of jumping around.









Banks anticipating good news, which will eventually come. It's not a matter of 'if' just 'when'.






Long way to go to match the late '90's, but it has that feel.






The flippe-floppes continue.

Oil News:

*Market Movers*

- *Dominion Energy (NYSE: D)* was upgraded to Overweight by JPMorgan with a $84 price target. The bank said Dominion is “best positioned to highlight ‘green rate of change’ and attract incremental ESG investors.”

- *Baker Hughes (NYSE: BKR) *announced an order to supply main refrigerant compressors to four “mega trains” for Qatar Petroleum’s North Field expansion project. It is one of Baker Hughes’ largest LNG deals in the past five years.

- *Petrobras (NYSE: PBR)* said it would spend $6 billion to decommission 18 offshore platforms through 2024.

*Tuesday, September 29, 2020*

Oil prices slid on Tuesday as traders grew cautious on demand fears and rising coronavirus numbers in the U.S. and Europe. “Sentiment is suffering from the uncertainties related to Covid-19,” said Harry Tchilinguirian, head of commodities strategy at BNP Paribas SA.

*Oil stuck at $40. *Oil prices have been rangebound at around $40 per barrel for months, and there is little sign that prices will break out anytime soon. “The market is stuck,” Giovanni Staunovo, a commodity analyst at UBS Group AG, told Bloomberg. “For prices to rally, OPEC+ spare capacity needs to drop, and to see that, demand needs to recover further. As long as there’s not a second global lockdown, oil can’t fall too far below $40.”

*India cuts refinery runs.* Indian refiner Bharat Petroleum Corp. will maintain lower refinery runs due to weak diesel demand, a symptom of a slow recovery in industrial demand.

*Libya restarts exports. *Libya’s oil production has climbed to 250,000 bpd, up from 90,000 bpd, as the blockade on the country’s oil export terminals is partially lifted. Exports at the eastern ports of Hariga, Brega and Zueitina have resumed, but Es Sider and Ras Lanuf remain offline. JPMorgan and Goldman Sachs estimate that exports could rise to 0.5 mb/d by the end of the year, and potentially rising to 1 mb/d by the end of the first quarter in 2021.

*Rosneft criticizes BP’s energy transition.* *Rosneft (OTCPK:RNFTF)*, which partners with *BP (NYSE: BP)* in Russia, criticized the British company’s shift to renewables. “It is an existential threat for supply. It is an existential threat for price volatility... we will have a [supply] crunch, price volatility, and yes higher prices,” Rosneft's Didier Casimiro told the Financial Times Commodities Global Summit.

*Colorado drilling setbacks, emissions control, go forward. *The Colorado Oil and Gas Conservation Commission voted Monday for 2,000-foot setbacks. A final vote on that rule and many others is expected in early November. The oil and gas industry says the move will devastate drilling in the state by limiting drilling locations. Meanwhile, a separate state agency passed first-in-the-nation rules requiring companies to cut emissions from drill sits, storage takes and pipelines.

*Devon Energy merges with WPX. Devon Energy (NYSE: DVN) *will acquire *WPX Energy (NYSE: WPX)* in a $2.6 billion all-stock deal, a move that will make Devon larger than Apache Corp. (NYSE: APA) and *Marathon Oil (NYSE: MRO)*. The share prices of both Devon and WPX jumped on the news, but fell back on Tuesday. The move comes after *Chevron (NYSE: CVX) *acquired Noble Energy, and may signal more consolidation ahead. Notably, Devon has large acreage on federal lands, which could be at risk if Joe Biden wins the presidency. Acquiring WPX would diversify Devon’s holdings.

*Technology will be vital as oil and gas rebounds.* The oil and gas industry is going to have to rely heavily on technology to cut costs and increase efficiency. According to industry giant *Buurst Inc*, there are three key technology trends that will help revive the oil and gas industry. These trends include cloud storage, closing data centers, and cross-platform business partnerships.

*Natural gas prices surged on weather.* The U.S. west coast is seeing high temperatures, while the east is in a cold spell. Natural gas prices surged to $2.80/MMBtu, but fell back to around $2.50/MMBtu on Tuesday.

*Swedish battery maker raising $600 million. *Swedish lithium-ion battery manufacturer Northvolt is raising $600 million in equity, with investors including Volkswagen, Goldman Sachs and Spotify founder Daniel Elk. Northvolt aims to capture 25 percent market share in Europe by 2030.

*EPA pushes back on California ICE ban.* The U.S. EPA is raising legal questions about California’s plans to phase out gasoline and diesel vehicles.

_*Canada-to-Alaska railway to go forward.*_ U.S. President Donald Trump is set to approve a $22-billion freight railway project that will run between Alberta and Alaska to transport a variety of commodities such as oil, ore, and potash, as well as container goods.

*Trump’s offshore drilling ban hits offshore wind. *The Trump administration recently blocked offshore oil and gas drilling off the coast of Florida, Georgia, and North and South Carolina. But the restrictions could limit offshore wind as well.

*Judge removes BLM acting director. *For more than a year, William Perry Pendley has led the Bureau of Land Management as an Acting Director, having not received Senate confirmation. A U.S. judge ruled that his leadership was illegal, a ruling that removes him from the job. The ruling has broader implications. There are now legal questions over whether every BLM rule under his tenure may now be invalidated – decisions that may affect oil and gas leasing.

*Shell preparing thousands of job cuts. Royal Dutch Shell (NYSE: RDS.A)* is preparing thousands of job cuts as it nears the completion of a major restructuring.

*China on track to buy record LNG. *China is on track to increase LNG imports by 10 percent this year to a new record high.

*China’s car sales increase. *In a sign of ongoing recovery, China’s car sales have increased for two consecutive months.

*Guyana nears deal with ExxonMobil. *Guyana is close to reaching a deal with *ExxonMobil (NYSE: XOM) *to approve the company’s Payara project.

*Trafigura forms renewables unit. *Oil trader Trafigura announced plans to invest $2 billion in renewables.

*Oil and gas investment to fall, then rebound. *The amount of new money going into oil and gas FIDs will drop to around $53 billion, down from 2019’s $190 billion, Rystad Energy projects. FID spending will double next year and exceed pre-pandemic levels already from 2022, the firm said.


jog on
duc


----------



## qldfrog

morning Mr Ducati, hope all is good;
in the absence of your input a poor attempt at a summary of last night
The US session ended positive Russel and NASDAQ out performing but oil went down a bit; so second session in a row with significant positive in the US, a good sign in my opinion.bitcoin down..buying opportunity?
as far as I can see bonds were flat.
roll on


----------



## qldfrog

the difference between Duc and I is that he knows what he is talking about and could even have seen today's fall


----------



## aus_trader

qldfrog said:


> the difference between Duc and I is that he knows what he is talking about and could even have seen today's fall



I really liked duc's "Dr.Fly" captions. They were straight to the point with colorful language which made reading them a delight. And no fluff or padding to fill up articles that usual news writers do, it was jam packed with content from a trader's point of view. 

Don't worry you've made a good effort @qldfrog. Thanks.


----------



## qldfrog

Trying to keep info relevant and avoiding my obvious lack of knowledge, i want to share an article i  found interesting
https://www.barrons.com/articles/a-60-40-stocks-bond-strategy-no-longer-works-heres-what-to-do-instead-51601653163?siteid=yhoyhoof2

Otherwise, making money in the US with best daily return in a few days today.
Unexpected
Market doing ok with the Trump covid scare... 
But oil still going down


----------



## ducati916

We have a news story that probably does have some market moving potential, President Trump and this is what happens:

Let's start with Mr flippe-floppe-flye as he is American in America:






Now Trump has tested negative or at least that is what the newswires are reporting.









So the market obviously reacted and reacted negatively. Now the obvious question is: given the nature of COVID, had no-one priced in the possibility (probability) of Trump in an election season contracting COVID? Boris in the UK was hospitalised with it. 

So markets sit currently:






Which looks rotational. This could have looked quite different earlier. The interesting question would have been if it didn't look much different (ie the same sectors showing relative strength/weakness) what is the takeaway? Then the 'Trump' story is just a cover story for a rotation that is already taking place.

A more granular breakdown:









Everything that you would expect to be up is down and vice versa. Given that 1 President is much the same as another, demonstrated multiple times in the past, the Trump story is smoke.

Some macro data:






3 steps forward 1 step back. That is positive. The economy is adapting and moving forward.

Some subjective readings:






Clearly if you sit back for a while and think about the data and comments, there could well be important information contained therein.


Finally:






The open lower: a surprise?






Now this chart updates in real time. Yesterdays close would have left us at the top R 1.64 reading. A pullback was almost inevitable given where we sat. It could have gone higher, but the probabilities were low when we look at overall breadth - we just didn't have the numbers to drive the indices into outlier territory on the indices:






This is the QQQ, but the S&P500 looks essentially the same. With TRIN sitting where it was, consolidation was always on the cards with this type of breadth.

The Trump story (for me) was simply the easiest and most available causation story out there, hence I slept in late for the w/e.

jog on
duc


----------



## qldfrog

nice to see you back.but yes, even my energy sector in the green even with oil fall today.The rotation  story was even truer today than before


----------



## ducati916

qldfrog said:


> nice to see you back.but yes, even my energy sector in the green even with oil fall today.The rotation  story was even truer today than before





Morning Mr Frog, yes rotation is an economic reality and takes time. It is a process.

Actually a correction to my previous post:






POTUS has tested +'ve for COVID.

Which only underlines the fallacy of attribution of this to a flicker of volatility.


jog on
duc


----------



## ducati916

I like energy, but it has been in the doldrums for quite some time.






Probably more time required before looking more in depth.

Financials however:









Are looking like they have bottomed and are ready to start trending higher.

And Tech:











Ready to rejoin longer term trendline?

jog on
duc


----------



## ducati916

Probably through to the elections conclusion, it will be more important to watch the Bond market than the Stock market. I have dropped the timeframe just to make things easier to see.










Stocks are recovering but will still be prone to quick sell-offs out of the (seeming) blue. Likely any selloffs that we should encounter will be attributed to the news story of the day.

The Bond market however tells the story.






Above is the Bond market VIX. We are still potentially in a rising vol. situation. Because we never tested that trendline, it looks as if it will be tested. If it fails, stock vol. will jump alarmingly and we will be headed lower.

So will the Bond VIX hold?






From early August we can see the run to Treasury paper, which you can track in the VIX chart also. The square box is the turn lower (without touching the trendline in the VIX) above.

What makes this relevant is that Corporate Bonds offer higher yield than Treasury paper, but obviously carry more risk. Treasuries from the 3yr up the curve in the last few days have steepened by about 2-4 basis points and sit where we sat in August and which is 20 basis points higher than April. Translated onto our chart above, this means that the Bond market is pricing the risk as roughly equivalent as in April (where stocks moved higher) which should result in a continued rotation back into riskier Corporates. We can just see the break of the trendline above, which will correlate with the VIX and translate into lower stock vol. and higher prices.

Obviously Corporates benefit greatly from Fed. and Government handouts to those at risk of default, which is certainly playing out in the news currently. Policies, election news and promises will obviously impact markets in the short term. Long term, as history has demonstrated, there is no material difference to the market whoever takes the election.

Unless you are day trading, the best thing you can probably do is not look at the market again until January.

jog on
duc


----------



## ducati916

Not too much to add today:






Market looking good across the majority of sectors.

Bank earnings are on deck next week. Not expecting any outstanding results, nor any disasters.

jog on
duc


----------



## ducati916

Now that the market has closed, there is some interesting data.






Stock VIX is still elevated, even after a bumper day with stocks rising.






Likely because Bond VIX is still elevated.






Yet, the rotation back to Corporates is confirmed.

There is however another narrative developing:





















It seems that the Stock VIX has picked up really (really) high short selling.

Is this (again) a function of the Options market and traders buying excessive Calls?






No.

So the above data is correct: there has been today a really large volume of naked short sales.

Does Mr flippe-floppe-flye have any insight?










Err, no, not really.

Something to be cognitive of.


jog on
duc


----------



## peter2

Yes, I noticed the unusual strength in the VIX in the early hours of the US session. It's very unusual to see both the SPY and VIX going up together. The VIX soon reversed but with no strength.  I'm assuming this underlying demand for the VIX is due to the pending election.

Whatever the reason I have to respect that investors think something may happen soon.


----------



## ducati916

peter2 said:


> Yes, I noticed the unusual strength in the VIX in the early hours of the US session. It's very unusual to see both the SPY and VIX going up together. The VIX soon reversed but with no strength.  I'm assuming this underlying demand for the VIX is due to the pending election.
> 
> Whatever the reason I have to respect that investors think something may happen soon.





Actually, after ruminating over the chart (below) and having a coffee, I'm going to reverse my initial position and say that the Options market and the tremendous reversal in buying Calls, forcing the MM to short stock, probably has quite a bit-to-do with the total short position.






jog on
duc


----------



## ducati916

All about Bonds.

















The rise in yield to 0.78% in the 10yr suggests that 1% is in the offing which signals a slow return of the economy to some form of normalcy. Of course financial stocks (Banks) are on fire as a wider spread increases their profitability (the spread is wider on all points of the curve).

There will be new arguments around inflation due to rising yields, although there is no sign of it currently. Oil still remains stagnant. However as economies re-open, that will not remain the case. There will also be concerns on the dollar value of Junk Corporate debt and defaults. If yields continue to rise, gold will be crushed. There will undoubtably be calls for the Fed. to manage the curve at some point if it continues to rise.

jog on
duc


----------



## qldfrog

A bit of a shock as Trump canned talks of stimulus until election is over.
like him or not, he has balls to decide not to be blackmailed by the democrats.
Market wise, i breath better as i had taken bear positions on mondays inc a bear gamble on the US market
Now have to increase my sell threshold


----------



## aus_trader

qldfrog said:


> A bit of a shock as Trump canned talks of stimulus until election is over.
> like him or not, he has balls to decide not to be blackmailed by the democrats.
> Market wise, i breath better as i had taken bear positions on mondays inc a bear gamble on the US market
> Now have to increase my sell threshold



What instrument (i.e. Stock/ETF/Options) have you used for taking a short position on the US ? I would like to do the same with a small position with somewhat longer term horizon, but not sure how to do it cheaply and safely.

Why cheaply and safely: I don't want to spend a lot of money to take up a large position against US stocks for example as all that money will be tied up. On the other hand if there is a massive "unprecedented" FED pump, I don't want to be caught short with a huge position against me. I thought there might be a cheap option that I could allow to expire worthless in case I am wrong due to the possibility of FED pumping the sh#t out of me, but option premiums are very high to my liking at the moment


----------



## qldfrog

aus_trader said:


> What instrument (i.e. Stock/ETF/Options) have you used for taking a short position on the US ? I would like to do the same with a small position with somewhat longer term horizon, but not sure how to do it cheaply and safely.
> 
> Why cheaply and safely: I don't want to spend a lot of money to take up a large position against US stocks for example as all that money will be tied up. On the other hand if there is a massive "unprecedented" FED pump, I don't want to be caught short with a huge position against me. I thought there might be a cheap option that I could allow to expire worthless in case I am wrong due to the possibility of FED pumping the sh#t out of me, but option premiums are very high to my liking at the moment



Bbus


----------



## finicky

My guru says *strong* October 
@DaveHcontrarian on  twitter


----------



## qldfrog

finicky said:


> My guru says *strong* October
> @DaveHcontrarian on  twitter



i actually expect strong


----------



## aus_trader

qldfrog said:


> Bbus



Problem with this inverse ETF is it's good for short term trading. But you don't want to leave it on for a longer perspective. The reason is it loses value over time, a kind of decay that is inbuilt with it's construction.

Agree with you guys, there is less likely to be a downturn before the US election is done and dusted. After which markets may decide the direction based on the amount and frequency of FED pumping required by the new US president. I think for the time being, there may be just short peaks and troughs due to the uncertainty of the election outcome.


----------



## ducati916

So of course on the day POTUS tweets at the close, I had a busy day at work followed by a class in the evening, so by the time I got home I couldn't be bothered to update. Anyway, today, POTUS reverses himself.

The point is:






Elections and who wins are irrelevant. They cause a lot of noise but no signal.

Mr flippe-floppe-flye trading intra-day, churning positions:









Today, POTUS reverses himself and markets reverse.

Coincidently, these were taken yesterday:









A pause was always likely. It would seem POTUS did us a favour and launched the market over a technical resistance point.

Bonds have resumed trend and Financials have caught fire again. Gold, if yields continue to rise, will continue to fall.






jog on
duc


----------



## ducati916

aus_trader said:


> What instrument (i.e. Stock/ETF/Options) have you used for taking a short position on the US ? I would like to do the same with a small position with somewhat longer term horizon, but not sure how to do it cheaply and safely.
> 
> Why cheaply and safely: I don't want to spend a lot of money to take up a large position against US stocks for example as all that money will be tied up. On the other hand if there is a massive "unprecedented" FED pump, I don't want to be caught short with a huge position against me. I thought there might be a cheap option that I could allow to expire worthless in case I am wrong due to the possibility of FED pumping the sh#t out of me, but option premiums are very high to my liking at the moment





So safely: (cheap is a relative term):

Typically I will, using NASDAQ as an example:

Buy a CALL on SQQQ; and
Buy shares in TQQQ to the correct delta (which on an opening trade is 0.50).

You now have a market neutral position that can profit either higher or lower. By playing with the delta you can adjust to your bias. Essentially if the market goes pretty much nowhere, the position will lose the premium (but the loss is fixed to the cost of the option).

If the market rises: you profit from your long position being delta 1.0 and your loss in the CALL being fixed.
If the market falls: you profit from the CALL gaining value at x2 (assuming ratio of 2:1 with delta 0.5 at open of trade).









These are the current prices on x3 leverage on QQQ for 30 odd days expiration.

jog on
duc


----------



## aus_trader

ducati916 said:


> So safely: (cheap is a relative term):
> 
> Typically I will, using NASDAQ as an example:
> 
> Buy a CALL on SQQQ; and
> Buy shares in TQQQ to the correct delta (which on an opening trade is 0.50).
> 
> You now have a market neutral position that can profit either higher or lower. By playing with the delta you can adjust to your bias. Essentially if the market goes pretty much nowhere, the position will lose the premium (but the loss is fixed to the cost of the option).
> 
> If the market rises: you profit from your long position being delta 1.0 and your loss in the CALL being fixed.
> If the market falls: you profit from the CALL gaining value at x2 (assuming ratio of 2:1 with delta 0.5 at open of trade).
> 
> View attachment 112793
> View attachment 112794
> 
> 
> These are the current prices on x3 leverage on QQQ for 30 odd days expiration.
> 
> jog on
> duc



I was thinking of buying an inexpensive put, e.g. out of the money. But what you showed could work well provided the market doesn't stay range-bound.


----------



## ducati916

aus_trader said:


> I was thinking of buying an inexpensive put, e.g. out of the money. But what you showed could work well provided the market doesn't stay range-bound.





That would certainly work, much easier (set & forget). With my strategy, IV is an issue, that is essentially what you are trading. A big move in either direction and you'll end up profitable.

Even range bound can be profitable, but you will have to adjust the position and this is where the IV becomes the issue. Essentially realised IV must exceed postulated IV and you realise that profit through adjustments. This is 'gamma scalping' and works really well with volatile stocks. TSLA has been a great stock earlier in the year for this. The QQQ's have also been moving and sufficiently so (to date) to make this strategy profitable.

jog on
duc


----------



## ducati916

I sense bearish sentiment percolating. Possibly due to the historical import of Sept./Oct. In the past 4yrs Oct. for SPY:






In the previous 3/4 yrs it has been a swoon. In 2018 things deteriorated into a serious decline. However look at the signal the Bond market provided in 2018/2019






Current






Also the PUT/CALL ratio over 3 timeframes









Now I haven't drawn the lines but:

Fig.1 From 2018, there is a bias to Calls decreasing Puts increasing (all year) into the decline. Currently we have the converse with a blip and what looks like the resumption of that Bull bias.

Fig.2 This current bullishness is more clearly seen. The Bears are far weaker currently.

The aggregate moving towards and above their 50day






We still have issues here. This has been due to the undue influence of the major Tech. names and otherwise lacking breadth from July onwards. For a healthy market we need full participation as there was leading into May from the lows.

Last word to Mr flippe-floppe-flye:






jog on
duc


----------



## ducati916

So this was an interesting post: is it true?






Let us examine the evidence:






VIX is still headed lower. The issue for me is that it is starting to stretch from its trend-line. At the green support, which is also coincidentally a pivot point, assuming no prior change, I would expect vol. to jump back higher. 






The 50 has hit its trend-line. Now, does it move through or turn lower? It can turn lower while the market as a whole continues higher, which is then an early warning to either (a) get out, (b) hedge, (c) go short (which of course is really time frame dependant because currently there is no macro signal, we are only talking about swing trade time frames).






The 20 is already at its resistance point. I am less inclined to agree that there is significant upside remaining prior to a short term pullback.






Bond vol. similar to stock vol.






This is the chart that most closely cleaves to the opening statement: stocks could trade to the outlier bound. Will they? On the previous evidence all except the 20 confirm that they could and the probability is slightly higher that they will.

Last word to flippe-floppe-flye:






jog on
duc


----------



## ducati916

Markets continue higher:






With good breadth:






Economy continues to slowly open up:






And flippe-floppe-flye still alive and kicking:






So for the moment all in the market is hunky dory.

jog on
duc


----------



## ducati916

There has been (another) surge in short term Option activity:






This is the weekly QQQ contract. Two strikes standout: 290/295. Again, will necessitate as a potential hedge, dealers buying stock (there are other ways, but generally this is the easiest).

This is the intra-day VIX. It is meh.






Yet the market is:






On fire.

Sectors:






A bulge again in Tech. Earlier it was apparent, but not as pronounced. Now far more pronounced.

End of day charts could be illustrative later today.

jog on
duc


----------



## ducati916

After market close:






Confirmation of significant and material CALL buying (which will mean buying stocks to hedge the position).






VIX is meh. The squares indicate that this VIX shape (has recently) indicated a rise in the VIX.






After a surge, this indicator is also meh.






No signal yet, but again, where we had a 2% day and at one point 3% in the QQQ, not what you would expect to see.






Yields marginally higher, good for the Financials.






Futures pretty meh.

So the big surge in Options volume at the 290/295 strikes are for expiry on Friday. At some point (probably not tomorrow) if the market continues to rise, those profits will have to be taken off the table which will include selling the hedges. I'm guessing Thursday or Friday and this position will reverse. That means, be ready for a sell-off towards the end of the week.






While flippe-floppe-flye thinks the top is in, I would give it to Thursday, possibly Friday. But guaranteed Friday, it is over for these CALL positions.

jog on
duc


----------



## ducati916

Earnings season is back with Banks first off the rank:






JPM & C already reporting









Market






Slight uptick in vol. has this effect:






Which rather suggests the mega-caps are driving the market direction again. AAPL, AMZN, GOOG, TSLA are all meh. Remember, the monster CALL buying was actually in the QQQ itself and although its constituents benefit over time, 1 day is not sufficient time for this effect to occur.

So I have now hedged all major positions. Probably should have done it yesterday.

jog on
duc


----------



## ducati916

Where we sit with earnings to come:






With 2 of the big sectors in OB, we may still have some downside yet.






Here are the Tech. earnings and dates.









The volatile ones, which will have some good earnings trades attached to them with raised IV in the Options. TSLA being one of the best last time round:











That large bulge in the CALL Options is gone (closed out yesterday) hence the selling pressure yesterday triggering vol.

Mr flippe-floppe-flye having issues atm.






jog on
duc


----------



## ducati916

Looks like the 'bottom' is in:









This is an aggressive entry mind. It is entirely possible once the EOD data can be seen that the market may need to settle another day or two. However, I have now taken off the hedges.

jog on
duc


----------



## ducati916

Market in a process of finding a floor in short term correction:
	

		
			
		

		
	









Vol is still (obviously) elevated, but the breadth is again increasing, which means that the market is stabilising for a move higher.






The effect of the Fed. cannot be overstated:












Companies (if not individuals) will weather the storm. The market (reflecting that reality) will continue to rise. Obviously there are concerns about the consumer (hence all the news stories about stimulus packages) but she will pull through absent a few casualties.

Flippe-floppe-flye, not so optimistic:






jog on
duc


----------



## aus_trader

ducati916 said:


> Market in a process of finding a floor in short term correction:
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 113118
> View attachment 113119
> 
> 
> Vol is still (obviously) elevated, but the breadth is again increasing, which means that the market is stabilising for a move higher.
> 
> View attachment 113120
> 
> 
> The effect of the Fed. cannot be overstated:
> 
> View attachment 113115
> View attachment 113116
> View attachment 113117
> 
> 
> Companies (if not individuals) will weather the storm. The market (reflecting that reality) will continue to rise. Obviously there are concerns about the consumer (hence all the news stories about stimulus packages) but she will pull through absent a few casualties.
> 
> Flippe-floppe-flye, not so optimistic:
> 
> View attachment 113114
> 
> 
> jog on
> duc



Interesting how Dr.Fly is holding SQQQ. Unless there is actually a drop or a crash in the market, SQQQ will only lose value over time. In Dr.Fly's words it is a decaying piece of sh#t of an instrument to use for betting against the market.


----------



## peter2

I don't think SQQQ is a long term hold. In this case I think SQQQ is a position that ensures FFFly gets out of bed the next day. He can't sleep in knowing he has a position to defend.


----------



## Chronos-Plutus

I got it wrong on the trajectory and I apologize.

However I think Trump will win:


----------



## ducati916

So a few comments to address:

First off the x3 leverage ETFs
	

		
			
		

		
	






So QQQ (main chart) returns from the bottom to current: 79% +/-
TQQQ returns 196% +/-

So it should have returned 240% +/-. Did it fail? Well yes and no. Yes it failed as it bled costs/hedges/etc, but no in that if you held it, your returns are significantly higher than they would have been. Of course your losses would have been greater as well. I prefer the x3 ETFs because:

(a) An ETF will return less than an individual stock that takes off. Using ZM as an example:






Lets say you bought at $100: today you would have returned 461% +/-. Now an ETF (any) will struggle to match that return. The x3 ETFs (assuming you get market direction correct) at least keep you in the ballpark. But from a risk point of view, earnings miss etc. they are far more stable and you get part of the performance in any case.

Now I had a question in my private mail re. the post about removing hedges, VIX was 'bottoming' and the aggressive entry. So look at the chart below:






The boxes highlight VIX readings on any given day. I calculate manually, the closing VIX each day. What that shows is whether VIX is (absent a signal indicated via a break in the trend-line) getting stronger or weaker. If it is getting stronger as it was (far left) I know that at some point vol is going to ramp up. Cross indexed with other charts (which I post) I can get the timing pretty close. 

So we start with:






That shape also has a ranking value, which indicated that it was likely to turn higher, which it did. Which a couple of days later was followed by this: now I can calculate the VIX at any point (intra-day if I wish) and act accordingly. That is essentially what I did. I calculated it near the close and acted just prior to the close.






In the same way that a 'bottom' can be calculated, so can a 'top'. I believe Mr Skate runs a very similar calculation in his 'Blue Bar' indicator.

So why take an aggressive entry?

Laziness really. I had a very busy day at work for Friday NZ time (Thursday US time) and could not be bothered to set the alarm for 3am or whatever time that I thought the market would bottom, so I rebalanced a day earlier. Hopefully that answers the question that I received.

On general market news:












Interest rates, if you were in any doubt, are the dog and not the tail:









And of course, Mr flippe-floppe-flye has returned to his rightful place atop the mountain:






jog on
duc


----------



## qldfrog

ducati916 said:


> So a few comments to address:
> 
> First off the x3 leverage ETFs
> 
> 
> 
> 
> 
> 
> 
> 
> 
> View attachment 113186
> 
> 
> So QQQ (main chart) returns from the bottom to current: 79% +/-
> TQQQ returns 196% +/-
> 
> So it should have returned 240% +/-. Did it fail? Well yes and no. Yes it failed as it bled costs/hedges/etc, but no in that if you held it, your returns are significantly higher than they would have been. Of course your losses would have been greater as well. I prefer the x3 ETFs because:
> 
> (a) An ETF will return less than an individual stock that takes off. Using ZM as an example:
> 
> View attachment 113187
> 
> 
> Lets say you bought at $100: today you would have returned 461% +/-. Now an ETF (any) will struggle to match that return. The x3 ETFs (assuming you get market direction correct) at least keep you in the ballpark. But from a risk point of view, earnings miss etc. they are far more stable and you get part of the performance in any case.
> 
> Now I had a question in my private mail re. the post about removing hedges, VIX was 'bottoming' and the aggressive entry. So look at the chart below:
> 
> View attachment 113185
> 
> 
> The boxes highlight VIX readings on any given day. I calculate manually, the closing VIX each day. What that shows is whether VIX is (absent a signal indicated via a break in the trend-line) getting stronger or weaker. If it is getting stronger as it was (far left) I know that at some point vol is going to ramp up. Cross indexed with other charts (which I post) I can get the timing pretty close.
> 
> So we start with:
> 
> View attachment 113188
> 
> 
> That shape also has a ranking value, which indicated that it was likely to turn higher, which it did. Which a couple of days later was followed by this: now I can calculate the VIX at any point (intra-day if I wish) and act accordingly. That is essentially what I did. I calculated it near the close and acted just prior to the close.
> 
> View attachment 113189
> 
> 
> In the same way that a 'bottom' can be calculated, so can a 'top'. I believe Mr Skate runs a very similar calculation in his 'Blue Bar' indicator.
> 
> So why take an aggressive entry?
> 
> Laziness really. I had a very busy day at work for Friday NZ time (Thursday US time) and could not be bothered to set the alarm for 3am or whatever time that I thought the market would bottom, so I rebalanced a day earlier. Hopefully that answers the question that I received.
> 
> On general market news:
> 
> View attachment 113184
> 
> 
> View attachment 113190
> 
> 
> 
> Interest rates, if you were in any doubt, are the dog and not the tail:
> 
> View attachment 113181
> View attachment 113182
> 
> 
> And of course, Mr flippe-floppe-flye has returned to his rightful place atop the mountain:
> 
> View attachment 113183
> 
> 
> jog on
> duc



Mr Duc,
Maybe due to my poorer english, the general exhaustion of a removalist or just stupidity:
You mentioned you calculate Vix manually?
I always thought vix was the ^VIX - CBOE Volatility Index 
So vix or/and vix/spy can be retrieved directly even intra day?
And vix increasing means vol is getting higher...vix being volatility index, 'vol' in that context means volume?
A bit confused.
Have a great weekend


----------



## qldfrog

Great pedagogy efforts Duc.much thanks...
Sadly i lost smiley or links access in the new site version,but at least my typing is not mangled anymore


----------



## qldfrog

And is this divergence of interest:








						Bond Markets Brace for ‘Blue Wave’ That’s Soothing Stock Traders
					

(Bloomberg) -- With 18 days to go until the U.S. election, growing odds that Democrats will take control of the White House and the Senate is sending volatility gauges for stocks and bonds in opposite directions.The Cboe Volatility Index -- known as the equity market’s “fear gauge” -- has been...




					finance.yahoo.com
				



?


----------



## ducati916

qldfrog said:


> Mr Duc,
> Maybe due to my poorer english, the general exhaustion of a removalist or just stupidity:
> You mentioned you calculate Vix manually?
> I always thought vix was the ^VIX - CBOE Volatility Index
> So vix or/and vix/spy can be retrieved directly even intra day?
> And vix increasing means vol is getting higher...vix being volatility index, 'vol' in that context means volume?
> A bit confused.
> Have a great weekend





Mr Frog,

Yes I calculate not the VIX value, that is a market value, but an intra-day calculation of the ratio that creates an index number, which, when contrasted against other charts (to which I also calculate an index number for) gives me an idea of when turning points might assert themselves. 'Vol' is volatility rather than volume. 

So yes, VIX/SPY ratio is a live intra-day chart, which makes it very useful and yes an increasing VIX is an increasing volatility.

So the EOD charts:






A surge towards the close of PUT purchases, which means the inverse of CALL purchases: Option MM are short PUTS (sold to purchasers) therefore to hedge, they will sell short stock/futures. Hence the hard sell-off into the close.






The declining issues are pretty much at their support point.






Another shorter term look at the same chart.

The index number for this (above) chart is also sitting on a 'support' reading. This rather suggests that the close wasn't painted (which happens quite frequently) but rather was a function of that PUT buying.

This is the second time this week that really big Options activity has had a material impact on the market. Under more normal conditions, the VIX would have declined and the market risen. As it stands that didn't quite work out that way today. 

And the VIX:






So we still have no signal: the signal being a break of the trend line. As the other charts now indicate however, the downside is pretty limited and the (far higher) probability is to position for higher prices, with a break in the VIX trend line unlikely. To obtain that break, we would need a sell-off comparable to the sell-off earlier in the year.

The only chart that gives pause for concern is:






Where we see a 'potential' break of the trend line and a move to safety in the 10yr Note. We'll have to see how this plays out next week.

jog on
duc


----------



## ducati916

Time is probably (about) right for a pairs trade in the indices:

Below is the correlation:










In the table below, we are interested in the SPY/QQQ. If the SPY rises, 8% of the time the QQQ will fall. If we are placing a pairs trade Long SPY Short QQQ, we make money on both legs. However 8% is low. Generally, we will make money on 1 leg, lose it on 1 leg.











Which translates as:






So we will be trading the second lowest conditional probability: SPY/QQQ

To date:






There is a 25% spread. Time for a return to mean trade?






In a shorter time frame:






Not shown above is the longer term trend line. Above is the shorter term trend, which is now signalling a return (potentially) to the longer term trend.

Now there are a number of ways to structure the trade: Futures, ETFs, Options or a mix of all. I'll be looking at the various ways for a follow up post.

The advantage of the trade is that it is market neutral: it should show profit whether the market rises or falls.

jog on
duc


----------



## ducati916

Vol. still drifting higher. Currently it is not an issue. That could however change. We are sitting on the signal point. If we blow through that, we will have an actual decline rather than a time correction sideways, which is what we have currently.






Market is trying to find a bottom:






All sectors are pretty meh:






See how strongly or weakly the market closes.

jog on
duc


----------



## ducati916

A mix of news in the market:






Doing well, probably better than could be expected.






Of course with the election looming large, there will be endless speculation and repositioning.






All sectors doing well today after some poor days (for the bulls) the last few days.






Still not out of the woods yet. See how the EOD stuff looks later.

And a bunch of Oil news:

*Market Movers*

-    *Halliburton (NYSE: HAL) *said that U.S. shale drilling activity has bottomed out and could be staging a rebound.

-    *Transocean (NYSE: RIG)* received a notice from the New York Stock Exchange of non-compliance with continued listing standards.

-    *EOG Resources (NYSE: EOG) *saw its share price jump last week on speculation that a “major company” is considering a bid to take over EOG.

*Tuesday, October 20, 2020*

Oil remains anchored at around $40 per barrel, awaiting new direction. Coronavirus cases are on the rise and raise new concerns about demand as travel restrictions begin to increase. In the U.S., the market is hoping for federal stimulus but odds look remote until after the election.

*ConocoPhillips confirms takeover plan for Concho.* *ConocoPhillips (NYSE: COP) *has agreed to purchase *Concho Resources (NYSE: CXO) *for $9.7 billion, setting up the largest U.S. oil deal since the onset of the global pandemic. Combined, the company would be the largest U.S. independent, and its Permian output would only trail *Occidental Petroleum (NYSE: OXY)*.

*Halliburton posts fourth straight loss. Halliburton (NYSE: HAL) *reported its fourth straight quarterly loss on Monday, although the company still beat analysts’ estimates. Halliburton struck an optimistic tone. “The pace of activity declines in the international markets is slowing, while the North America industry structure continues to improve, and activity is stabilizing,” Chief Executive Officer Jeff Miller said in a statement.

*Rig count jumps by most since January. *The U.S. rig count rose by 13 (12 oil rigs, 1 for natural gas), the largest weekly increase since January. The increase also adds some evidence to the notion that drilling has bottomed out and could be in recovery mode.

*Refiners turn to biofuels. *U.S. and European oil refiners facing the prospect of closure are switching to biofuels. *BP (NYSE: BP)*, *Total (NYSE: TOT)* and *Eni (NYSE: E)* have all recently announced plans to convert aging refineries to handle biofuels. The strategy “allows plans to play a role in the energy transition, creates long-term value and mitigates the costs of a full shutdown and site cleanup,” Rob Turner, partner at PWC, told Reuters.



*IMF: Oil at $40-$50 in 2021.* Oil prices are not expected to rise much next year, and will stay in the $40-50 a barrel range, the IMF said.

*Refinery glut persists for years.* Refinery margins remain close to zero across most regions, and utilization is down 10 percent from year-ago levels, according to Bank of America Merrill Lynch. At the same time, new greenfield refineries are set to come online, adding 6 mb/d of new capacity between 2021 and 2023. That is unless other refineries shut down.

*Wind and solar cheapest power in most places. *Wind and solar power are the cheapest forms of new electricity in most of the world today, according to Bloomberg New Energy Finance. A separate study from Lazard finds that the levelized cost of electricity for solar and wind is lower than existing gas and coal when subsidies are included.

*Aramco scales back $20 billion chemical plant. Saudi Aramco (TADAWUL: 2222) *has scaled back plans for its $20 billion oil-to-chemicals plant as it hopes to shore up its finances.

*OPEC+ on brink of crisis. *The OPEC+ member countries are on the brink of a financial crisis if the latest assessments of the International Monetary Fund (IMF) are accurate. The IMF has presented a very bleak outlook for an economic recovery in the Middle East and Central Asia, predicting a 4.1% contraction for the region.

*Global finance turns against fossil fuels. *Fifty globally significant financial institutions have introduced policies restricting oil sands and/or oil and gas drilling in the Arctic including 23 to date this year, according to a new report. “Over 140 global financial institutions have already restricted thermal coal financing, insurance and/or investment and we are now seeing a similar accelerating shift of capital away from oil and gas exploration,” the report’s author said.

*OPEC+ discusses demand outlook. *OPEC+’s monitoring committee met on Monday to assess the status of the oil market, which faces demand concerns due to rising covid-19 infections as well as the return of Libyan supply.

*NJ calls for 100% EVs by 2035. *New Jersey has proposed a ban on gasoline vehicles by 2035, the only state so far to follow in California’s footsteps.

*ISIS calls for attacks on Saudi oil industry. *The Islamic State has called on its members to start targeting Saudi Arabia oil infrastructure as punishment for the Kingdom warming up to Israel. “Targets are plenty…Start by hitting and destroying oil pipelines, factories, and facilities which are the source (of income) of the tyrant government,” a spokesman for ISIS said.

*Morgan Stanley: low bar for “outperformance” for E&Ps.* Shale E&Ps did so poorly in the third quarter relative to crude oil that their stocks now look cheap, according to Morgan Stanley. “We see a low bar for outperformance and tilt positive into the quarter,” the bank said in a note. Other positive trends include improved valuations, a strategic shift from growth to free cash flow, and consolidation, all of which create “an improving risk-reward.”

*North Dakota oil output increases.* North Dakota’s oil production rose about 12% to 1.16 mb/d in August.

*Diamondback: Shale shouldn’t grow. Diamondback Energy (NYSE: FANG) *provided an operational update on Monday, in which the company said it would keep production flat going forward. Also, CEO Travis Stice warned against others trying to grow. “Our industry…must acknowledge two fundamental truths: we have a significant influence on the global oil market, and today that market is oversupplied,” Stice said. “As such, if North American producers decide to grow again, even at mid-single-digit rates, we will magnify the issues our industry is fighting today and face repercussions from other global producers.”

*Automation sweeping over oil industry. *Automation is growing in offshore oil drilling. Reuters looks at how *Equinor (NYSE: EQNR)* is using automation and the role that played in a recent workers’ strike.

*Pioneer Natural Resources in talks with Parsley Energy. Pioneer Natural Resources (NYSE: PXD)* is in talks with *Parsley Energy (NYSE: PE) *about a tie-up. The companies’ executives – Scott Sheffield and Bryan Sheffield – are father and son.

Finally Mr flippe-floppe-flye:










Tricky tape atm.

jog on
duc


----------



## ducati916

TSLA time:












Pricing in a 6% move.

Sell CALLS @ $450 strike
Sell PUTS @ $402.50 strike

Not priced as well as last time round (ie. they are more efficiently priced now).

jog on
duc


----------



## qldfrog

ducati916 said:


> TSLA time:
> 
> View attachment 113482
> View attachment 113483
> View attachment 113484
> 
> 
> Pricing in a 6% move.
> 
> Sell CALLS @ $450 strike
> Sell PUTS @ $402.50 strike
> 
> Not priced as well as last time round (ie. they are more efficiently priced now).
> 
> jog on
> duc



On the oil field, surprise fall in diesel stockpile..fastest ever recorded ..but stating from very high.
Linked to slower production but also higher consumption


----------



## qldfrog

Still looking for link but no luck so far.read this last night


----------



## ducati916

Market continues to go essentially nowhere:









Vol. is still elevated and has strengthened, but not enough to cause a panic or fall yet. Attribution for this higher level:






The election. Who knows.






Markets have a good history of weathering storms. Not a good idea to bet against Bull markets.






Some still do:






TSLA






And I closed both legs for a profit.














Pricing is currently for an 8% move, I only had a position pricing a 6% move. The profit was available: I took it.

jog on
duc


----------



## ducati916

Meh tape is starting to resolve:






First up the VIX: it could be argued that the trend line is now support for VIX to move higher. There are a number of arguments against that and that rather the trend line is still valid and VIX is to move lower: (i) my index number (after moving higher) is again moving lower; and

(ii)






We seem to have found support; and

(iii)






Potential support. This is clearly in no-mans-land, so how does that lean towards the Bulls? Again an index number that is divergent from the chart. It is not a significant divergence, but it is there. However it has to be said that it could change pretty quickly.

And finally (iv)






We simply have a correction through time and that PP is looking real solid. All sectors are looking strong (good breadth).






Therefore tomorrow, the market moves higher and holds its gains and the Bull is back on.

Of course, Mr flippe-floppe-flye is onboard:






jog on
duc


----------



## ducati916

So 3 news stories dominate currently: (a) Election, (b) COVID and (c) MMT in no particular order or coherence. Of these stories, which if any, have any implications for the market? (a) Election: no. Stocks don't care. (b) COVID: no. Stocks don't care. (c) MMT: yes. Stocks do care and care quite a lot. In MMT I include Monetary Policy (interest rates) as part and parcel. So the 'stimulus' talks/negotiations are not really critical for the market per se, but if agreed upon, will send the market higher. Of far more importance have been the rising yields over the past few days.






Banks love a steepening curve. The rest of the market, meh, not so much. The rest of the market prefers the 0.7% range.






The rest of the market gets their financing via the 10yr. If the 10yr rises (in yield) then financing become more expensive. If due to COVID or any other issues, you require cheap financing, rising yields are not a happy place. Hence, they would look to the Fed. to step in and cap the rise in yields.






Moving in the right direction, but Bond market jitters could upset the apple cart again.






We are moving higher, it is just a really miserable way to do so.

Mr flippe-floppe-flye:






jog on
duc


----------



## ducati916

Some longer term charts highlighting the repetitive nature of markets and probabilities that can be calculated from them.

First up: Seasonality











Sept/Oct = 100% for the 10 year (but it could be the 30 year)

How it plays out in the market:






Notice the dates: Sept/Oct resolving (usually) into Nov/Dec. (remember Nov/Dec are 75%/50%)











Market ready to move back to trend-line: although, the end of the Sept/Oct seasonality may not yet be fully resolved (remember the Nov/Dec) but will indicate through a breaking of the trend-line, that this year's cycle is complete.

It was said that the cycle in Sept/Oct was due to the harvest being brought in. Banks would restrict lending in this period to facilitate finance to the farmers. Which may or may not be true. It does not however explain how this phenomenon remains into the 21'st century.

jog on
duc


----------



## ducati916

Well the market turned to custard over the w/e.






There are the headlines, take your pick as to causation.

Placed hedges back (too late of course) but if the market continues to tank, will be happier tomorrow.

jog on
duc


----------



## qldfrog

ducati916 said:


> Well the market turned to custard over the w/e.
> 
> View attachment 113716
> 
> 
> There are the headlines, take your pick as to causation.
> 
> Placed hedges back (too late of course) but if the market continues to tank, will be happier tomorrow.
> 
> jog on
> duc



My volatility systems went bear a while back and happy so far..not so much with my trend ones who went in a relative buying spree yesterday..
One area i am keeping a keen eye on is BTC.
Cryptos are doing quite well lately and last night fall as far as i can see remains subdued in the crypto world


----------



## Value Hunter

While I would not buy most tech stocks at todays prices I think Financials and Energy stocks are mostly value traps. 

On the one hand high levels of fines for fraud and remediation costs, etc are here to stay for banks for a long time to come. Also depressed interest rates (which will remain low for a long time) is crimping their net interest margins. This will remain for many years. But the biggest concern for banks long-term is fintechs, decentralized finance, blockchain solutions, etc. Banks are dinosaurs and are not keeping up with the times and the pace of technological innovation. They will eventually fade into the background just as companies like Research in Motion (Blackberry) once did. In terms of funds management active funds are still losing market share to index investing so most fund managers will be a bad investment.

Oil companies are structurally challenged as alternative energy costs of production keeps dropping year after year after year. This means long-term trend for oil prices is not good. At this rate most oil companies won't be profitable in another ten years time (many are already losing money as we speak). 

If I was looking at financials I would be looking at disruptive fintechs (rather than traditional banks) and if I was looking at energy stocks it would be renewable energy companies (rather than oil and gas stocks).

Just my 2 cents.


----------



## qldfrog

Value Hunter said:


> While I would not buy most tech stocks at todays prices I think Financials and Energy stocks are mostly value traps.
> 
> On the one hand high levels of fines for fraud and remediation costs, etc are here to stay for banks for a long time to come. Also depressed interest rates (which will remain low for a long time) is crimping their net interest margins. This will remain for many years. But the biggest concern for banks long-term is fintechs, decentralized finance, blockchain solutions, etc. Banks are dinosaurs and are not keeping up with the times and the pace of technological innovation. They will eventually fade into the background just as companies like Research in Motion (Blackberry) once did. In terms of funds management active funds are still losing market share to index investing so most fund managers will be a bad investment.
> 
> Oil companies are structurally challenged as alternative energy costs of production keeps dropping year after year after year. This means long-term trend for oil prices is not good. At this rate most oil companies won't be profitable in another ten years time (many are already losing money as we speak).
> 
> If I was looking at financials I would be looking at disruptive fintechs (rather than traditional banks) and if I was looking at energy stocks it would be renewable energy companies (rather than oil and gas stocks).
> 
> Just my 2 cents.



I see your point but think about the existing fleet of ice  vehicles, even the ones being sold today, headlines are on EV, numbers are still with ICE;
Covid lockdowns have had far more impact than ev transition, and India and Africa are just ramping up.
Oil will still be king for the next 2 decades at least..just not star.and if the big western banks start reducing loans investments, oil will just be more expensive so more profit
I think actually oil company are the buy of the decade.
Look at tobacco players 20y ago...amazing returns


----------



## ducati916

Still waiting on some of the EOD charts to update, however, 2 to look at:







Obviously the VIX blew higher today. On the longer term chart, we're looking to see if resistance holds. Maybe yes, maybe no.






Hindsight is a wonderful thing.

Mr flippe-floppe-flye:






We're going lower before we go higher. Of a more pressing concern is this the start of a topping process that takes us a lot lower? The next rally higher will provide a lot more information on that. Most tops are a bit of a process. We will definitely need a broad based market move.

*And now it does:






We're headed to that support point below. Whether that holds or folds we'll find out. If not, next stop the one below.

jog on
duc


----------



## ducati916

Value Hunter said:


> While I would not buy most tech stocks at todays prices I think Financials and Energy stocks are mostly value traps.
> 
> On the one hand high levels of fines for fraud and remediation costs, etc are here to stay for banks for a long time to come. Also depressed interest rates (which will remain low for a long time) is crimping their net interest margins. This will remain for many years. But the biggest concern for banks long-term is fintechs, decentralized finance, blockchain solutions, etc. Banks are dinosaurs and are not keeping up with the times and the pace of technological innovation. They will eventually fade into the background just as companies like Research in Motion (Blackberry) once did. In terms of funds management active funds are still losing market share to index investing so most fund managers will be a bad investment.
> 
> Oil companies are structurally challenged as alternative energy costs of production keeps dropping year after year after year. This means long-term trend for oil prices is not good. At this rate most oil companies won't be profitable in another ten years time (many are already losing money as we speak).
> 
> If I was looking at financials I would be looking at disruptive fintechs (rather than traditional banks) and if I was looking at energy stocks it would be renewable energy companies (rather than oil and gas stocks).
> 
> Just my 2 cents.





With regard to oil/gas:





















I don't see any real issues at least into the near future.

Their valuations will come back. Not today, but down the road a little.

jog on
duc


----------



## ducati916

So markets meandering somewhat, I am leaving the hedges in place as we will have to establish a new trend for the VIX, the last cycle is kaput. Market has not reached an extreme level yet, so we could still have some more fireworks to come:






Some more on Oil:






Oil is about as unpopular as anything has been. As always, when a sector is hated, there is required a catalyst to trigger a re-evaluation:






Maybe yes, maybe no. The use of oil is not going away anytime soon.






Reasons to be careful.

Mr flippe-floppe-flye:






jog on
duc


----------



## ducati916

Value Hunter said:


> While I would not buy most tech stocks at todays prices I think Financials and Energy stocks are mostly value traps.
> 
> On the one hand high levels of fines for fraud and remediation costs, etc are here to stay for banks for a long time to come. Also depressed interest rates (which will remain low for a long time) is crimping their net interest margins. This will remain for many years. But the biggest concern for banks long-term is fintechs, decentralized finance, blockchain solutions, etc. Banks are dinosaurs and are not keeping up with the times and the pace of technological innovation. They will eventually fade into the background just as companies like Research in Motion (Blackberry) once did. In terms of funds management active funds are still losing market share to index investing so most fund managers will be a bad investment.
> 
> Oil companies are structurally challenged as alternative energy costs of production keeps dropping year after year after year. This means long-term trend for oil prices is not good. At this rate most oil companies won't be profitable in another ten years time (many are already losing money as we speak).
> 
> If I was looking at financials I would be looking at disruptive fintechs (rather than traditional banks) and if I was looking at energy stocks it would be renewable energy companies (rather than oil and gas stocks).
> 
> Just my 2 cents.





With regard to banking and fintech:






























Certainly challenging the traditional banking system. It can be seen that the banks are adopting the new technologies and in many cases buying them. So certainly an early investment in the right fintech could prove very lucrative a number of different ways.

jog on
duc


----------



## ducati916

Bad day for stocks again:






VIX blew through resistance and headed higher, with stocks falling. One thing to note: while VIX has surged 20%/5%/20% stocks have not fallen proportionally.They have fallen, but not as much as might be expected.

Intra-day TRIN is signalling a bottom:






This will fluctuate through the day (obviously) and until some of the EOD stuff is updated, always a bit risky to call a bottom. However I think that the EOD indicators will probably also start to signal a bottom.

What I have done is take profit on 50% of the hedges. The other 50% remain in place.

jog on
duc


----------



## qldfrog

not really improving so far....let's see EOD


----------



## frugal.rock

qldfrog said:


> not really improving so far....let's see EOD




Nothing got better I think...






The weekly vix does indicate that it may have found resistance, however as per the yearly here, if it goes through this current level, ouch...
Hopefully the guru @ducati916 has more to fill us in.
At one stage, crude wti was down 6%, but ended 0.4% up. Bizarre.


----------



## fergee

frugal.rock said:


> Nothing got better I think...
> 
> View attachment 113897
> 
> 
> The weekly vix does indicate that it may have found resistance, however as per the yearly here, if it goes through this current level, ouch...
> Hopefully the guru @ducati916 has more to fill us in.
> At one stage, crude wti was down 6%, but ended 0.4% up. Bizarre.
> 
> View attachment 113898



Looks good from where I'm standing


----------



## ducati916

So yes, other charts confirm that we have pretty much reached a point where we move higher:













The question is: Bull market over? No, I don't think so, but, we'll find out. Just the end of the Sept/Oct. volatility, which should settle down post election, assuming the transition is reasonably litigation free.






jog on
duc


----------



## frugal.rock

G'day Duc, 
Is the September October volatility a annual thing? as I had noticed it was choppier than July August for Aus market anyway.

Hmm, post election. Was musing about that this morning. 
What are the chances it all gets very very ugly?... it seems the undercurrent powers are willing and empowering a shitestorm to occur.
Cheers.


----------



## ducati916

frugal.rock said:


> G'day Duc,
> Is the September October volatility a annual thing? as I had noticed it was choppier than July August for Aus market anyway.
> 
> Hmm, post election. Was musing about that this morning.
> What are the chances it all gets very very ugly?... it seems the undercurrent powers are willing and empowering a shitestorm to occur.
> Cheers.





Mr Rock,

Yes, pretty much:






Re. Election...no, post election the market (if history is any indicator) will rip higher whoever wins.

jog on
duc


----------



## ducati916

So a better start to the day if you are a bull:










VIX is also lower.

This is the chart that's interesting:






So this is yesterday's chart. It has (recently) had significant fluctuations in the ratio, which means there are higher than usual volumes going through in one direction and then (often) reversing the next day. This indicates outright (day trader) speculation rather than a position or hedging, which is madness as you are hard pressed unless you go DITM (delta 1.0) to profit over very short time frames with Options. 

Today's chart will probably show another large reversal in the ratio. The PUT/CALL ratio has always been interesting at extremes, but currently it is increasingly useful day-to-day as it seems to track (Robinhood?) day traders who are using Options rather than Stock or Futures, making for some choppy trading.

Mr flippe-floppe-flye:






jog on
duc


----------



## Dark1975

Banks brace for 'big bang' switch on $80 trillion worth of swaps
					

In a critical development in the global shift away from old benchmarks that was triggered by Libor's shortcomings, interest-rate swaps on more than $80 trillion in notional debt will transition this weekend to a new rate for determining their value.




					www.americanbanker.com
				




Hey duc
Wounder if you could take a look at this and would this add to a black Monday?
Just a theory
But this has been quietly played down,
Tho after reading this I settled out to 90% in cash till after Monday
What your thoughts?


----------



## ducati916

Dark1975 said:


> Banks brace for 'big bang' switch on $80 trillion worth of swaps
> 
> 
> In a critical development in the global shift away from old benchmarks that was triggered by Libor's shortcomings, interest-rate swaps on more than $80 trillion in notional debt will transition this weekend to a new rate for determining their value.
> 
> 
> 
> 
> www.americanbanker.com
> 
> 
> 
> 
> 
> Hey duc
> Wounder if you could take a look at this and would this add to a black Monday?
> Just a theory
> But this has been quietly played down,
> Tho after reading this I settled out to 90% in cash till after Monday
> What your thoughts?





Interesting article. The date precedes the current weakness that we are currently embroiled in. For the Banks it has been a non-issue as they are up since that article, particularly the smaller regional banks. Banks are not the only holders of SWAPS however.





So could it have been a factor in the current weakness or even causative in the market? It could be. The trouble with trading (or trying to) the news is that it is highly subjective and therefore very difficult. All of the news will be embedded somewhere in the price. Easier to trade the price and ignore the news, don't double count it.

By way of another example:






The economy (shock) is not great.

As a result, sentiment is (currently) way down.






An example of this data analysed:






Volatility obviously high(er) than it has been:






Which represents the range of the swings, ie. the entire market (pretty much) moves in one direction, flippe-flopping day-to-day.

Today as another example:






However, there is good news (I think!):






We have a fall in the VIX, no new high (above & below):






Which (for the moment) is a topping process in VIX and a bottoming process in Stocks. It will obviously play out next week.

jog on
duc


----------



## Dark1975

ducati916 said:


> Interesting article. The date precedes the current weakness that we are currently embroiled in. For the Banks it has been a non-issue as they are up since that article, particularly the smaller regional banks. Banks are not the only holders of SWAPS however.
> 
> View attachment 114002
> 
> So could it have been a factor in the current weakness or even causative in the market? It could be. The trouble with trading (or trying to) the news is that it is highly subjective and therefore very difficult. All of the news will be embedded somewhere in the price. Easier to trade the price and ignore the news, don't double count it.
> 
> By way of another example:
> 
> View attachment 113998
> 
> 
> The economy (shock) is not great.
> 
> As a result, sentiment is (currently) way down.
> 
> View attachment 113999
> 
> 
> An example of this data analysed:
> 
> View attachment 114000
> 
> 
> Volatility obviously high(er) than it has been:
> 
> View attachment 113997
> 
> 
> Which represents the range of the swings, ie. the entire market (pretty much) moves in one direction, flippe-flopping day-to-day.
> 
> Today as another example:
> 
> View attachment 114001
> 
> 
> However, there is good news (I think!):
> 
> View attachment 113996
> 
> 
> We have a fall in the VIX, no new high (above & below):
> 
> View attachment 114003
> 
> 
> Which (for the moment) is a topping process in VIX and a bottoming process in Stocks. It will obviously play out next week.
> 
> jog on
> duc



Thank you for your invaluable input duc


----------



## ducati916

And at EOD, all the ducs are in a row:












All confirming that the probability is now high that the bottom is in. I'll remove the last 50% of my hedges on Monday.

jog on
duc


----------



## ducati916

So a better start to the week:

Earnings are doing well:









The election is this week and assuming the result is not contested, we should be back to business as usual:






Vol. is dropping:






Good broad based participation currently:






Bit of a rotation occurring (it has been for a while now)






What we could be looking at statistically:





Mr flippe-floppe-flye:






jog on
duc


----------



## qldfrog

funny thing about people trying to justify link between next us president polls and share market:
headlines today:




so the frog relates to his English old learnings and think: 
* the market wants Trump to win* 
yet he reads on the same day from _Goldman Sachs_:
_
The Presidential Predictor matches Wall Street’s forecasts. Goldman Sachs analysts predict a “blue wave,” in which Democrats will retake the White House and Senate and maintain control of the House of Representatives.

Goldman believes that could be a positive outcome for markets.

“Such a blue wave would likely prompt us to upgrade our forecasts,” Goldman Sachs chief economist Jan Hatzius wrote in a report last month._
mr LeDuc is probably right:  the market does not care nor does it really care about Covid infection numbers..i do not either why would the market?


----------



## qldfrog

qldfrog said:


> funny thing about people trying to justify link between next us president polls and share market:
> headlines today:
> View attachment 114149
> 
> so the frog relates to his English old learnings and think:
> * the market wants Trump to win*
> yet he reads on the same day from _Goldman Sachs_:
> 
> _The Presidential Predictor matches Wall Street’s forecasts. Goldman Sachs analysts predict a “blue wave,” in which Democrats will retake the White House and Senate and maintain control of the House of Representatives.
> 
> Goldman believes that could be a positive outcome for markets.
> 
> “Such a blue wave would likely prompt us to upgrade our forecasts,” Goldman Sachs chief economist Jan Hatzius wrote in a report last month._
> mr LeDuc is probably right:  the market does not care nor does it really care about Covid infection numbers..i do not either why would the market?



But the market may not like incertitude?? yet it went up yesterday....


----------



## frugal.rock

ducati916 said:


> The election is this week and assuming the result is not contested, we should be back to business as usual:



It's bizarre how many shops are boarding up their windows in the US, Twister Trump is bearing down.
If he loses, he will claim victory anyway.
Beware the impending storm.
There is massive amounts of energy from both sides.... the losers are gonna be sore.


----------



## qldfrog

frugal.rock said:


> It's bizarre how many shops are boarding up their windows in the US, Twister Trump is bearing down.
> If he loses, he will claim victory anyway.
> Beware the impending storm.
> There is massive amounts of energy from both sides.... the losers are gonna be sore.



and if Biden looses?..same will blame the Russians or Martians


----------



## frugal.rock

Currently looking like the market is staying positive from the futs.
Hope Mr Le Duc updates over the election period.


----------



## ducati916

Market broadly moving higher:






The issue atm for VIX is that we do not have a second point on which to draw our trend line.






We are approaching a support point, which coincides with a PP. My 'feeling' is that we pass through that support point and PP. If we do not, then I 'feel' we may get our second point to which we can draw a trend line extending forward.

My 'feel' is based around a conclusion to the election. It makes no difference who wins, only that someone wins. What we don't want is a nil result heading off to litigation etc. If we have a result, we pass through support. No result and possibly we bounce at support (bad for the market) and see what happens after that.

Given that a 'nil' result has so widely been flagged, discussed, etc. I don't think it will actually occur. There will likely be a result and stocks will move forward and higher into the next disaster. The Options market via SPY straddles is pricing in (by Friday) a 4.2% clear winner with PREDICTIT calling for a 75% chance of a winner by Friday. 

A winner by Friday has the market 2.8% higher. A nil decision has the market 8.2% lower. One is almost tempted you replace hedges.


jog on
duc


----------



## qldfrog

Trump wins most likely, which is bad news for the oz economy as China will keep going into confrontation instead of us enjoying Xi fuc..ing the west but buying our iron ore


----------



## qldfrog

No the next step is intifada street war which will not be nice on the market.wait and see


----------



## ducati916

Interesting day:

The election is currently undecided:












The market is indifferent, VIX down 20%+






History suggests Trump based on a pattern of 2 terms:






Is that what the market is voting for?

My main man, flippe-floppe-flye says no!






Is he right?






Now I think this is an EOD chart. Which means, Treasuries will jump big time at EOD on this chart. Is it a factor?






Well the Bond VIX, says no, Bond vol. is also falling. Bond yields are falling back into a trading range:






Anything to worry about? ATM, probably not. 

Could everything change if the the election goes one way or t'other, possibly. However history suggests (strongly) that whoever is in the WH stocks do just fine.

The market (I believe) is rallying not for one or the other, rather, because it looks as if there will be a clear winner and the decision will be this week and not drawn out into Dec.

jog on
duc


----------



## ducati916

The answer:

Gridlock in the Senate/Congress/WH






Stocks will rock!

jog on
duc


----------



## ducati916

Latest:












jog on
duc


----------



## qldfrog

If this is true, expect trouble ahead
I quote
The Federalist reports:



> ‘_Then, something strange happened in the dead of the night. In both Michigan and Wisconsin, vote dumps early Wednesday morning showed 100 percent of the votes going for Biden and zero percent—that’s zero, so not even one vote—for Trump._
> ‘_In Michigan, Biden somehow got 138,339 votes and Trump got none, zero, in an overnight vote-dump._
> ‘_When my Federalist colleague Sean Davis noted this, Twitter was quick to censor his tweet, even though all he had done was compare two sets of vote totals on the New York Times website. And he wasn’t the only one who noticed—although on Wednesday it appeared that anyone who noted the Biden vote dump in Michigan was getting censored by Twitter._’



Something fishy is going on, folks. You simply don’t find 140,000 votes to zero in a swing state. Or any state for that matter.
..
I do not expect a smooth handover one way or another...
That should seriously affect the short-term market move


----------



## frugal.rock

USA, USA....
ugly states of america....


----------



## ducati916

So another gap higher. Caution:






The elastic band is stretched pretty tight atm. We do not have a new trend line at the moment. We know the old one acted as support the last time. Now this is very 'subjective', but just look at the angle of dangle the VIX has dropped at currently. I am expecting a bit of a snap back, possibly tomorrow, given that it's a Friday and there could be a lot of 'news' bandied about.

Second:






Again, too much too soon. 2020 is an outlier year in many (if not all) respects. Vol. is still high (very high in comparison to last couple of years) and that means we are not out of the woods quite yet.






There is a little red mark at the point of resistance just above our trend line. Now the Sept/Oct trend is likely finished, but it is not yet confirmed. It is a process. That process is underway. That process means that we could 'adjust' a little, until we are ready to move forward again.

Look at advancing issues:






We are stretched.






Mr flippe-floppe-flye. 

jog on
duc


----------



## ducati916

Some vol. studies underpinning the elastic band theory:





















jog on
duc


----------



## ducati916

Yesterday's caution, is today's re-implementation of hedges. Simply, too far, too fast. 3 charts of concern:













To the strength of the trend, which currently is counter cyclical:






It looks suspiciously like we are going to fall back into that counter cyclical trend. I would be looking (on this chart) for support to hold x3 and the next move higher to break that trend line signalling a resumption of the primary trend (bull) once again.

Which is potentially going to be confirmed by the VIX






The trend line can act as support. I think we dip slightly below and move higher, which means falling stocks.

The fall (potential) in stocks will re-establish the primary trend (bull) moving into 2021. The question is, how scary will the MM make it?

My main man, flippe-floppe-flye:






jog on
duc


----------



## Dark1975

Thats some pretty high futures, I guess joe biden has brought a lot of confidence in the market, let the bulls run out of the gate


----------



## peter2

It gets better....


----------



## wabullfrog

Dark1975 said:


> Thats some pretty high futures, I guess joe biden has brought a lot of confidence in the market, let the bulls run out of the gate




Pfizer appearing to have a bit of success in it's vaccine trial probably a big contributor to the recent spike.









						Pfizer’s Covid-19 vaccine proves 90% effective in latest trials
					

The vaccine proved to be more than 90% effective in the first 94 subjects who were infected by the new coronavirus and developed at least one symptom, the companies said Monday.




					www.foxbusiness.com


----------



## Dark1975

peter2 said:


> It gets better....
> 
> View attachment 114401



Yeah makes sense , I guess we will see a strong market trend, the dow and nasdaq are 1hr away from opening,
Tho the general market will move 5% up today the only losers will be the stay  at home tech like zoom and Netflix will be with this vaccine announcement,
Wouldn't be surprised if airlines shares boom today,


----------



## ducati916

Some early birds already touching on today's market. Starting with vaccine news:






The selloff in Treasuries is a worry:






Again, too far, too fast. Rising yields can have ramifications. The rising yield has created a situation where, even with the rise in the market, we still remain in a stealth cyclical bear in stocks from Sept/Oct. I expect this to resolve in the Bulls favour, but we might have a bit of a sell-off first in stocks.






VIX has fallen another 13% today. The elastic band is due a snap back if not today, tomorrow.






Mr flippe-floppe-flye






Gold hating the rise in yield
















That gap higher, this just opens the door for the MM to play their games. This market is going higher no question, but there is plenty of opportunity to manipulate prices this side of Christmas and with that sort of gap, on 'news', classic reversal should be expected, just testing those who a newly long.

jog on
duc


----------



## ducati916

Financials had a good day at the office:










Not so much Mr flippe-floppe-flye






The VIX this morning was down 13%. It ended up +2%. That is a really significant turnaround:







So I'm expecting selling to come back into the market.

Think of it this way: the MM hold stock as inventory. Now that the election is over, a vaccine is mooted to be on the way, everyone is suddenly bullish and wanting stock, but you have just sold a lot of your inventory to today's buyers. You are low. What to do? Drop the market like a motherf***er and watch the volume of sellers wanting to exit deliver you stock. Systems will exit, stops triggered, keep it dropping until you have the inventory to see you through January next year, then, bounce it higher, squeeze any short-sellers dumb enough to short new positions and rocket the market to new highs.

Now I don't have a trend line on the VIX. This long squeeze will re-establish a second point that will form our new trend line moving forward.


jog on
duc


----------



## ducati916

This seems like the point where we move into stage two of the bull market, the end of the beginning:






The graph above shows the economic cycle in blue, the stock market cycle in orange and the best performing sectors at the top. The blue economic cycle corresponds to the business cycle shown above. The centerline marks the contraction/expansion threshold for the economy. Notice how the orange market cycle leads the business cycle. The market turns up and crosses the centerline before the economic cycle turns. Similarly, the market turns down and crosses below the centerline ahead of the economic cycle.

The technology sector is the first to turn up in anticipation of a bottom in the economy. Consumer discretionary stocks are not far behind. These two groups are the big leaders at the beginning of a bull run in the stock market.

The top of the market cycle is marked by relative strength in materials and energy. These sectors benefit from a rise in commodity prices and a rise in demand from an expanding economy. The tipping point for the market comes when leadership shifts from energy to consumer staples. This is a sign that commodity prices are starting to hurt the economy.

The market peak and downturn are followed by a contraction in the economy. At this stage, the Fed starts to lower interest rates and the yield curve steepens. Falling interest rates benefit debt-laden utilities and business at banks. The steepening yield curve also improves profitability at banks and encourages lending. Low interest rates and easy money eventually lead to a market bottom and the cycle repeats itself.

So where are we?






















I have all my positions hedged atm. I am expecting a decline in the broad market before we take the next leg higher.

jog on
duc


----------



## ducati916

So two big 'news' events (stories) have been under consideration by the market over the last 3 days. The thinking is possibly: how does this effect the inflation meme? Some data:






Stocks love low inflation the mostest.






Confirmed.

Current:






But, if there is a viable vaccine, does inflation pick up? The Fed. has been operating on the premise of COVID destroying the economy. Does the Fed. raise in a vaccine based scenario, hold off, inflation? What about the $US?






Dollar currently in a holding pattern with the Euro. Europe has/is going into lockdown. Effects?

Gold has been pretty quiet recently:






Falling in response to rising yields. That trend looks set to continue.


What does all of the above add up to = Uncertainty.

Markets hate uncertainty. Generally they shoot first, ask questions later.


jog on
duc


----------



## ducati916

It's all about the Bonds....









There is something afoot in the Bond market which is spilling over (slowly) to stocks. Take your pick as to causation, the result and consequences are all that matter.






Still early days, but this could be like a duc on a pond: calm above, roiling below. We'll see.

Meanwhile, Mr flippe-floppe-flye continues to amaze:









jog on
duc


----------



## ducati916

The nature of the market in stocks, is being dictated currently by the Bond market. The nature of that relationship seems to have reversed circa August. Now Bonds rise in yield, Stocks rise: yields fall, Stocks fall. Why might that be?

Growth stocks (GOOG, AMZN, FB, MSFT veterans and upstarts ZM, TSLA, etc) have their cash flows (no dividends largely) valued (more) highly when yields are non-existent. The period June - July saw those growth stories explode in a low yield (getting lower) environment. 







Currently we are seeing a rotation out of growth into value. Why would that make any difference to the Bond/Stock relationship? Yes you would expect to see declining valuations on the big growth stocks and this has been picked up on:






But it does not explain this current situation. A problem for another day. Anyone who knows, feel free to provide the answer.

Have a look at the sectors:






Energy = inflation. Something to keep a close eye on.

Meanwhile Mr flippe-floppe-flye has a mug or two that he would like to sell you:







I have taken the uptick today to add to my hedges to go net 'short'. As that implies, I'm not loving this market atm.

jog on
duc


----------



## ducati916

Some very positive headlines:






Yet the market is only ho-hum












Energy looking strong, which could be stoking inflation fears in the Bond market as yields are higher again.






The impending move of the 50 over the 200 however has 'technical' implications. A return to 1.9% yield? Is that an issue?

Study confirms the PPT









With the publication of the study...and rising yields...an issue?

I am holding for the moment, my net short position. The undercurrents in the market are insidious currently. They may well work themselves out. Until they do however, I'll hold net short. Usually (almost always) in a bull market, which we have, I would hold only a neutral hedge if I felt a decline were on the cards. The past 2 weeks (decline followed by huge snap back) to the current situation, where really good news hardly moves the needle...has me concerned.

Mr flippe-floppe-flye:






We'll see how the week develops.

jog on
duc


----------



## ducati916

Just looking at the macro-picture:





















Fundamentally, not an attractive picture. Of course the fundamentals are very slow moving and can become even more stretched than they are currently. However, with the split through Congress & Senate, the hoped for stimulus is going to be a lot less than it would have been with a Blue Wave type of victory. How important is (a) the size of the stimulus to the market, (b) timing of the release of the vaccine, (c) movement in Treasury and Corporate Bond markets? These are now (at least) 3 questions that will have a medium term (next 3 months) impact on the market, with the potential to create a much longer term impact (trend).

Then, a question for another day: the effect of the 2020 election moving forward.

jog on
duc


----------



## ducati916

So gold:






Seems to have gone quiet on the forum of late. Anyway, it is reaching an inflection point (probably in the next day or four) which will see the continuation or resumption of it's uptrend or a break of that trend and further price depreciation. Gold (my prediction) continues to decline because interest yields (10yr) will continue to rise to at least 1% and potentially 1.1% - 1.3% from where we are currently 0.88%.

Which is a contradictory position if we are discussing either inflation, disinflation or deflation. Of the 3, deflation (a liquidation of corporate debt) carries the most risk because that would lead to a hyper-inflation, when, the Fed. would declare its liabilities as legal tender. With a falling POG, the market would be saying that this risk is receding. A rise in yields (move out of Treasuries) carries the same message. Personally I hope that is true, but, I'm hardly convinced.

Of the 2 remaining, disinflation will continue to predominate at least until the vaccine is up and running with world economies re-opening with a return to 'normal', although normal may be slightly different to pre-pandemic, it won't be that different. The big driver of disinflation will likely be the drastically reduced stimulus coming out of Washington, due to the split Congress & Senate and (possibly) the view that a vaccine in the pipeline reduces the need for a hefty stimulus.

Will stocks in the short term be impressed? Likely not. So currently we have the countervailing forces: bullish on vaccine and first term of a new President: disappointment at the lack of a stimulus to boost earnings and with high valuations, possibly a reason for a breather. As of today, the concurrent move into the new issuance of corporate debt has been significant. It is essentially all BBB rated (junk). Defaults in the Junk market are already high and getting higher, although it doesn't seem to have hit the media radar yet.

The Options market:






Bullish. Not yet at an extreme, but volatile and apt to change position very quickly. The chart is from yesterday and will not reflect todays lower open.

For the moment at least, I remain net short.

jog on
duc


----------



## qldfrog

I just increased the cash portion of my US portfolio;
as i was doing this, one position actually surprised me on the upside:




This ETF was first mentioned here and is really compatible with the Great Reset expected winners;
I understand Mr Duc is not playing that long term here
but being in a "stock" with a government backed future (as is DFEN) can not be bad and big money is quite happy with an hydrogen future  from Mrs Harris: bombs and truck 
Boys, the swamp is BACK and  Mr flippe-floppe-flye should rejoice


----------



## ducati916

This is one of those rather perplexing market periods. We have lots of good news from the headlines, but, the underlying economic fundamentals are slowing. The good news, will, one would think, eventually help the fundamentals. The question is (I guess) do they dip before rising? So first the fundamentals:















Nothing that shouldn't be expected. But markets are forward looking and just having been through an earnings cycle, will be looking at next reporting quarter to try and guess how they will be impacted.

Then we have the good news:












And good news for AMZN (not such great news for everybody else). Yet, on confirmation of a second vaccine the market is ho-hum and AMZN is actually down a tad.






I'll post my normal charts up later after EOD, but, everything is streeeeeetched to extremes, which combined with an irresponsive market to positive news and reasonable economic data, should be a concern.

Mr flippe-floppe-flye:






A warning from the Turkey-gods. Another market indicator that holds market moving power that probably is not that well known. You will find out significantly more as it starts to exert its seasonal power.

@qldfrog: yes, missed the alternative power ETF. I'll try and grab it on the next downturn. I really like the 'government' supported aspect!

I remain net-short. I feel that it is one of those Taleb moments: "Yes, the market could go higher and it probably will, but if it does it will only be by about 1%, whereas it could go lower and it could be by a lot." Not an exact quote, but you get the gist.

And last Bitcoin:






Bitcoin and gold seem to have diverged, which is odd as they are in purpose, essentially the same thing. A hedge, an insurance policy, whatever. Gold is meandering, Bitcoin is ripping. Why?

jog on
duc


----------



## qldfrog

ducati916 said:


> This is one of those rather perplexing market periods. We have lots of good news from the headlines, but, the underlying economic fundamentals are slowing. The good news, will, one would think, eventually help the fundamentals. The question is (I guess) do they dip before rising? So first the fundamentals:
> 
> View attachment 114897
> View attachment 114898
> View attachment 114899
> View attachment 114900
> 
> 
> Nothing that shouldn't be expected. But markets are forward looking and just having been through an earnings cycle, will be looking at next reporting quarter to try and guess how they will be impacted.
> 
> Then we have the good news:
> 
> View attachment 114894
> 
> 
> 
> View attachment 114896
> 
> 
> And good news for AMZN (not such great news for everybody else). Yet, on confirmation of a second vaccine the market is ho-hum and AMZN is actually down a tad.
> 
> View attachment 114902
> 
> 
> I'll post my normal charts up later after EOD, but, everything is streeeeeetched to extremes, which combined with an irresponsive market to positive news and reasonable economic data, should be a concern.
> 
> Mr flippe-floppe-flye:
> 
> View attachment 114901
> 
> 
> A warning from the Turkey-gods. Another market indicator that holds market moving power that probably is not that well known. You will find out significantly more as it starts to exert its seasonal power.
> 
> @qldfrog: yes, missed the alternative power ETF. I'll try and grab it on the next downturn. I really like the 'government' supported aspect!
> 
> I remain net-short. I feel that it is one of those Taleb moments: "Yes, the market could go higher and it probably will, but if it does it will only be by about 1%, whereas it could go lower and it could be by a lot." Not an exact quote, but you get the gist.
> 
> And last Bitcoin:
> 
> View attachment 114895
> 
> 
> Bitcoin and gold seem to have diverged, which is odd as they are in purpose, essentially the same thing. A hedge, an insurance policy, whatever. Gold is meandering, Bitcoin is ripping. Why?
> 
> jog on
> duc



About Gold vs Bitcoin:
Gold is extremely influenced not to say manipulated by big money and Fed banks of the world, Bitcoin far less and represents more truly the investors' sentiment,not to say the true world.My way of seeing this divergence...


----------



## ducati916

So now the market has closed for the day, updated EOD charts:

The correlation twixt BTC/GLD/US $






There is a divergence: higher 50 EMA advancing, lower high on market: always an ugly indication.






PUT buyers back in force.







My 'trend' indicator. The trend is still favouring the Bears.






Longer term view:






A more granular look: 






The trend line as drawn? Valid? This enters into a discussion of T/A principles. Provide your thoughts.

An alternative:






Again, even valid?

Not a good look for the bulls (below):






My gauge of inflation. Zero. Disinflationary still.






jog on
duc


----------



## ducati916

Today I'll start with 2 views of the same ETF:






So above we have SPY x3 long. Would you (on this chart) want to go long (which is long the market)?

Below:






Would you prefer to go long this chart (which is short the market)?

The market generally, looks like this currently:













Bit of a move back to Treasuries, out of commodities, out of stocks. Now a 1 day fluctuation is nothing to get excited about one way or another. Except below, we have Bond vol. Which looks different to stock vol.






Stock vol. has an indeterminate trend line, one iteration could almost be argued to be supportive of lower vol. going forward (see yesterday's charts). Not so with Bond vol. Bond vol. always trumps stock vol. 










So, if this is accurate, a lot of vol. can be and is being, generated by the Bond market via Options, which we have seen. There are larger than average swings in PUT/CALL ratios recently, which added to the Robinhood traders, has generated some pretty big moves.

What does Mr flippe-floppe-flye think today?






Back to Tech. 

As we stand as of the moment:






Approaching the w/e which would you rather be? I remain, net short.

jog on
duc


----------



## ducati916

POTUS would seem to be undertaking a scorched earth policy, this was released 8.15pm US time (obviously after the markets are closed):












Now looking at the VIX. Observe the 2 blue boxes:






We have had this type of market quite recently. It didn't end well. Now it is not exactly the same, but as Twain opined, history doesn't repeat but it does rhyme.






jog on
duc


----------



## ducati916

Something very odd is occurring:















It could be described as a run to safety, but a very quiet one.


jog on
duc


----------



## Dark1975

Typically the markets are in a general bullish trend, im actually now as if friday 94% cash, knowing that before it could be like the aftermath of 2009 we had a one of the longest bullish runs till Feb 2020, altho logic dictates that with all the right news and vaccines getting released we are in that general trend.
Tho my theory is quite hypothetical:
Im now going to day trade quite lightly till Jan 26th, my theory could be totally wrong, but would it be obsurd to think that the long winter with massive covid numbers would spike alot especially with thanks giving coming in the u.s,
It could be possible that old joe when he takes office would he shut down the economy?
This is my thinking? Could be totally wrong?
Any thought's?
And really would any 1 take a vaccine only 2months on trial,  maybe only putin's daughter,
Any thoughts ?


----------



## ducati916

Dark1975 said:


> Typically the markets are in a general bullish trend, im actually now as if friday 94% cash, knowing that before it could be like the aftermath of 2009 we had a one of the longest bullish runs till Feb 2020, altho logic dictates that with all the right news and vaccines getting released we are in that general trend.
> Tho my theory is quite hypothetical:
> Im now going to day trade quite lightly till Jan 26th, my theory could be totally wrong, but would it be obsurd to think that the long winter with massive covid numbers would spike alot especially with thanks giving coming in the u.s,
> It could be possible that old joe when he takes office would he shut down the economy?
> This is my thinking? Could be totally wrong?
> Any thought's?
> And really would any 1 take a vaccine only 2months on trial,  maybe only putin's daughter,
> Any thoughts ?





1. Re. Bull/Bear markets: I will seek to differentiate a bull environment from a bear using (a) macro-economic conditions and (b) technical studies for the market. ATM, there is nothing to suggest that the secular bull is dead. However, you can also have cyclical bears contained within the bull, which is where (possibly) we are currently. If that is true, I would expect it to resolve by January, with a new Presidential cycle being superimposed on the seasonality. As the chart demonstrates, we can have a bad Nov/Dec.






2. Re. spike in C19 and shutdowns: who knows. Certainly the numbers are spiking currently. Would Biden close the economy and even if he did, how successful might that be? If successful, how much damage? And most importantly how would the market react? All unknown. Staying nimble in this type of situation is to be prudent.

3. Re. vaccine: As I am NZ based, I have the luxury of watching others step up to be test rabbits. I think it will be ok, but who really knows.


Currently I am net short and have been all week. With the push of a button, I can be net long. I am short because (a) there has been positive news (vaccine) and other news stories, yet the market has gone nowhere, (b) all of my charts are suggestive of a bear move (hasn't eventuated yet), (c) the general vibe seems to be bullish, but ignoring the market evidence.

And Oil news:

Oil prices pared recent gains as investors nervously watch the spread of Covid-19, which has tempered bullishness following positive vaccine news. “It’s not good news,” Bill O’Grady, executive vice president at Confluence Investment Management in St. Louis, told Bloomberg. “This is probably going to be a disappointing travel holiday coming up, and that’s going to weigh on demand.” Still, there are signs of life in global oil demand visible beyond the near-term coronavirus wave. 

*Asia’s oil demand looks strong. *While oil demand in Europe and the United States continues to disappoint, refiners in Asia are racing to procure crude from around the world, giving the oil market some hope that at least in one region, demand is strengthening in the fourth quarter.

*China’s oil binge to extend into 2021. *China stockpiled oil this year when prices were cheap, offering an extra bit of demand to the market. Reuters reports that China’s private refiners will stockpile an additional 100 million barrels in 2021.

*Oil demand primed for recovery. *Crude oil demand is likely to rebound next year following the promising news about a vaccine against the novel coronavirus, according to Fitch Ratings.

*Goldman Sachs: Structural bull market on the way. *Goldman Sachs said in a new report that not only will oil prices rise next year, but we could soon see a “structural bull market on par with the 2000s.” The bank says under-investment in new commodity supplies, fiscal stimulus to rebound from the pandemic, and the risk of higher inflation all point to a bull market in the 2020s.

*GM raises bet on EVs. GM (NYSE: GM)* told investors that it plans on spending $27 billion on electric vehicles through 2025, an increase over prior plans by 35%. The automaker intends to introduce 30 different models over the next four years, some of which will have a sticker price cheaper than $35,000. “We have everything in place to accelerate mass adoption of EVs,” GM CEO Mary Barra said at a Barclays auto conference. “We want to be No. 1 in EVs.” The company aims to cut the cost of manufacturing battery packs by 60%, which would mean reaching cost parity with gasoline vehicles by 2025.

*Iberdrola aims to dominate hydrogen. *Spanish utility *Iberdrola (BME: IBE) *is building a 200-megawatt electrolyzer and has plans for an additional 600 MW over the coming years. 

*EU wants 300 GW of offshore wind by 2050. *The EU’s new “Offshore Renewable Energy Strategy” calls for increasing offshore wind from 12 to 300 GW by 2050. In the interim, the plan calls for 60 GW by 2030. Hitting the 2050 target will require $940 billion in investment.

*Libya’s oil to hit 1.25 mb/d.* Libya’s oil production has reached 1.25 mb/d, according to the country’s National Oil Corp. The cuntry's output could rise to 1.3 mb/d within a month.

*Natural gas prices fall on mild weather. *Natural gas prices fell below $2.70/MMBtu this week as the U.S. saw warmer weather. At the end of October, prices had surged close to $3.50/MMBtu. “November’s mild weather has flipped the script,” Gelber & Associates analysts said in a recent note.

*California considers a 90% EV target for Uber and Lyft. *California regulators are considering a rule that will require ride-hailing fleets to transition to 90% electric by 2030.

*California wants Imperial Valley to be “Lithium Valley.” *California’s Imperial Valley holds vast reserves of lithium. A report from earlier this year found that the Salton Sea could produce 600,000 tons of lithium per year, nearly 8 times the size of the entire world’s production in 2019. A growing number of mining companies and investors are looking at the region’s lithium potential.

*Solar group wants Biden to end solar tariffs. *The solar industry wants the Biden administration to use an executive order to repeal the Trump administration’s 2018 order that slapped tariffs on imported panels.

*Middle East oil producers drowning in debt. *Arab Gulf oil producers are losing billions of U.S. dollars from oil revenues this year due to the pandemic that crippled oil demand and oil prices. Because of predominantly oil-dependent government incomes, budget deficits across the region are soaring.  

*UAE clarifies its position in OPEC. *Anonymous UAE officials claimed earlier in the week that the country was considering breaking away from OPEC, citing the difficulties it is facing due to the stringent production cuts it must adhere to. Now, the UAE’s Energy Minister has officially responded to the allegations. 

*Enbridge to buy Spectra Energy for $3.3 billion. Enbridge (NYSE: ENB)* will buy the rest of *Spectra Energy Partners* for $3.3 billion in stock. Enbridge already owns 83% of Spectra.

*Investors shifting capital from fossil fuels to renewables. *According to Morningstar, investors funneled 1.9 billion euros into European renewable energy investments between July and September, up 11-fold from a year earlier. By comparison, conventional energy funds saw less than 115 million euros flowing in.



jog on
duc


----------



## Dark1975

ducati916 said:


> 1. Re. Bull/Bear markets: I will seek to differentiate a bull environment from a bear using (a) macro-economic conditions and (b) technical studies for the market. ATM, there is nothing to suggest that the secular bull is dead. However, you can also have cyclical bears contained within the bull, which is where (possibly) we are currently. If that is true, I would expect it to resolve by January, with a new Presidential cycle being superimposed on the seasonality. As the chart demonstrates, we can have a bad Nov/Dec.
> 
> View attachment 115038
> 
> 
> 2. Re. spike in C19 and shutdowns: who knows. Certainly the numbers are spiking currently. Would Biden close the economy and even if he did, how successful might that be? If successful, how much damage? And most importantly how would the market react? All unknown. Staying nimble in this type of situation is to be prudent.
> 
> 3. Re. vaccine: As I am NZ based, I have the luxury of watching others step up to be test rabbits. I think it will be ok, but who really knows.
> 
> 
> Currently I am net short and have been all week. With the push of a button, I can be net long. I am short because (a) there has been positive news (vaccine) and other news stories, yet the market has gone nowhere, (b) all of my charts are suggestive of a bear move (hasn't eventuated yet), (c) the general vibe seems to be bullish, but ignoring the market evidence.
> 
> And Oil news:
> 
> Oil prices pared recent gains as investors nervously watch the spread of Covid-19, which has tempered bullishness following positive vaccine news. “It’s not good news,” Bill O’Grady, executive vice president at Confluence Investment Management in St. Louis, told Bloomberg. “This is probably going to be a disappointing travel holiday coming up, and that’s going to weigh on demand.” Still, there are signs of life in global oil demand visible beyond the near-term coronavirus wave.
> 
> *Asia’s oil demand looks strong. *While oil demand in Europe and the United States continues to disappoint, refiners in Asia are racing to procure crude from around the world, giving the oil market some hope that at least in one region, demand is strengthening in the fourth quarter.
> 
> *China’s oil binge to extend into 2021. *China stockpiled oil this year when prices were cheap, offering an extra bit of demand to the market. Reuters reports that China’s private refiners will stockpile an additional 100 million barrels in 2021.
> 
> *Oil demand primed for recovery. *Crude oil demand is likely to rebound next year following the promising news about a vaccine against the novel coronavirus, according to Fitch Ratings.
> 
> *Goldman Sachs: Structural bull market on the way. *Goldman Sachs said in a new report that not only will oil prices rise next year, but we could soon see a “structural bull market on par with the 2000s.” The bank says under-investment in new commodity supplies, fiscal stimulus to rebound from the pandemic, and the risk of higher inflation all point to a bull market in the 2020s.
> 
> *GM raises bet on EVs. GM (NYSE: GM)* told investors that it plans on spending $27 billion on electric vehicles through 2025, an increase over prior plans by 35%. The automaker intends to introduce 30 different models over the next four years, some of which will have a sticker price cheaper than $35,000. “We have everything in place to accelerate mass adoption of EVs,” GM CEO Mary Barra said at a Barclays auto conference. “We want to be No. 1 in EVs.” The company aims to cut the cost of manufacturing battery packs by 60%, which would mean reaching cost parity with gasoline vehicles by 2025.
> 
> *Iberdrola aims to dominate hydrogen. *Spanish utility *Iberdrola (BME: IBE) *is building a 200-megawatt electrolyzer and has plans for an additional 600 MW over the coming years.
> 
> *EU wants 300 GW of offshore wind by 2050. *The EU’s new “Offshore Renewable Energy Strategy” calls for increasing offshore wind from 12 to 300 GW by 2050. In the interim, the plan calls for 60 GW by 2030. Hitting the 2050 target will require $940 billion in investment.
> 
> *Libya’s oil to hit 1.25 mb/d.* Libya’s oil production has reached 1.25 mb/d, according to the country’s National Oil Corp. The cuntry's output could rise to 1.3 mb/d within a month.
> 
> *Natural gas prices fall on mild weather. *Natural gas prices fell below $2.70/MMBtu this week as the U.S. saw warmer weather. At the end of October, prices had surged close to $3.50/MMBtu. “November’s mild weather has flipped the script,” Gelber & Associates analysts said in a recent note.
> 
> *California considers a 90% EV target for Uber and Lyft. *California regulators are considering a rule that will require ride-hailing fleets to transition to 90% electric by 2030.
> 
> *California wants Imperial Valley to be “Lithium Valley.” *California’s Imperial Valley holds vast reserves of lithium. A report from earlier this year found that the Salton Sea could produce 600,000 tons of lithium per year, nearly 8 times the size of the entire world’s production in 2019. A growing number of mining companies and investors are looking at the region’s lithium potential.
> 
> *Solar group wants Biden to end solar tariffs. *The solar industry wants the Biden administration to use an executive order to repeal the Trump administration’s 2018 order that slapped tariffs on imported panels.
> 
> *Middle East oil producers drowning in debt. *Arab Gulf oil producers are losing billions of U.S. dollars from oil revenues this year due to the pandemic that crippled oil demand and oil prices. Because of predominantly oil-dependent government incomes, budget deficits across the region are soaring.
> 
> *UAE clarifies its position in OPEC. *Anonymous UAE officials claimed earlier in the week that the country was considering breaking away from OPEC, citing the difficulties it is facing due to the stringent production cuts it must adhere to. Now, the UAE’s Energy Minister has officially responded to the allegations.
> 
> *Enbridge to buy Spectra Energy for $3.3 billion. Enbridge (NYSE: ENB)* will buy the rest of *Spectra Energy Partners* for $3.3 billion in stock. Enbridge already owns 83% of Spectra.
> 
> *Investors shifting capital from fossil fuels to renewables. *According to Morningstar, investors funneled 1.9 billion euros into European renewable energy investments between July and September, up 11-fold from a year earlier. By comparison, conventional energy funds saw less than 115 million euros flowing in.
> 
> 
> 
> jog on
> duc



Thank you duc for your invaluable input


----------



## ducati916

So with more positive news, I closed hedges, taking me to 50% long. The reason:






The trend line may turn out to be valid. For it to be so (obviously no breaches higher) we need to move into a lower volatility band. So that would mean moving through the lower narrow band into the wider band below. ATM, things could move either way.

Positive news:






Non-profit supply of vaccine (assuming it works) will mean poor nations can also control their infection rates.






The 'Turkey Gods' are arriving shortly. Not a good idea to bet against them.






Looks (subjective) like a correction through time. Corrections (time/volatility) can sometimes only be distinguished (early) by your best guess.

Finally, Mr flippe-floppe-flye:






Re. the Turkey Gods, we are aligned.


jog on
duc


----------



## Knobby22

I am very wary of the USA causing a crash though the vaccine release is going to be a huge boost and we should always look 6 months in advance. If Trump crashes the economy deliberately it will be nasty but perhaps the Republicans won't let him. The Fed is resisting his efforts.

Trump is "salting the earth" for Biden , particularly within the small business sector.

The purpose for Trump is to damage Biden as much as possible and destroying the economy is just a side effect.









						Fed spat raises fears Trump wants to 'burn the house down'
					

Trump appears to be doing everything he can to undermine the incoming Biden administration and constrain its ability to govern effectively.




					www.theage.com.au


----------



## ducati916

Knobby22 said:


> I am very wary of the USA causing a crash though the vaccine release is going to be a huge boost and we should always look 6 months in advance. If Trump crashes the economy deliberately it will be nasty but perhaps the Republicans won't let him. The Fed is resisting his efforts.
> 
> Trump is "salting the earth" for Biden , particularly within the small business sector.
> 
> The purpose for Trump is to damage Biden as much as possible and destroying the economy is just a side effect.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> Fed spat raises fears Trump wants to 'burn the house down'
> 
> 
> Trump appears to be doing everything he can to undermine the incoming Biden administration and constrain its ability to govern effectively.
> 
> 
> 
> 
> www.theage.com.au





@Knobby22 agreed, POTUS looks to be pursuing a scorched earth policy. How much damage can he do in a month that he hasn't managed in 4 yrs? On other news:











Not everyone is happy about that one. I doubt the markets will care, probably applaud it, the Fed. after all is their BFF.










I know 1 chap that drastically cut the salaries of middle management (those he didn't fire) who moved out of the city permanently.

Inflation is just now indicating that it might be gaining some traction:










As POO (absent any production increases out of the Arabs) looks to be heading higher. Ironically, gold:






Looks to be falling.

My main man Mr flippe-floppe-flye rides the Turkey gods






I removed the last of my hedges, 100% long once again, at least into Thursday, when once again, the Turkey gods will vanish.

The US$ looks to be ready to move higher against the Euro






Which further muddies any analysis re. inflation. You would need to be comprehensive and look at all currencies to really come to any firm conclusions. But the analysis is confirmed by:






Which would need to be monitored if the inflation indicated above (because it is still low) catches any sustained traction.

jog on
duc


----------



## ducati916

In the aftermath of the US election, the numbers of voters relocating from San Francisco, Los Angeles, New York, Chicago are apparently astronomical and will change the allocation of the electoral college. Too late for Mr Trump, but, next time round, possibly an even crazier election. To such a point that serious people are calling for the US to split into 2 or more separate countries.

Income gap: which has the 'have nots' screaming to the point of burn it all the f**k down:






QE (no surprise here) does not help the lower incomes:






China on the move, which will drive US policy in this new cold war:






Echo's of the French Revolution.

jog on
duc


----------



## qldfrog

ducati916 said:


> In the aftermath of the US election, the numbers of voters relocating from San Francisco, Los Angeles, New York, Chicago are apparently astronomical and will change the allocation of the electoral college. Too late for Mr Trump, but, next time round, possibly an even crazier election. To such a point that serious people are calling for the US to split into 2 or more separate countries.
> 
> Income gap: which has the 'have nots' screaming to the point of burn it all the f**k down:
> 
> View attachment 115232
> 
> 
> QE (no surprise here) does not help the lower incomes:
> 
> View attachment 115233
> 
> 
> China on the move, which will drive US policy in this new cold war:
> 
> View attachment 115234
> 
> 
> Echo's of the French Revolution.
> 
> jog on
> duc



The Frenchman in me tells that the revolution will not happen with the reset,the rich 0.1% will remain rich and have even more wealth and power, the 99.9% will be poorer..but equals in outcome, vegan,   and happy in their total absence of freedom but endless streaming series, force fed propaganda, abysmal education and universal incomes.1984 was indeed yesterday. During that time, China is carrying on its expansion: cultural, economic and geopolitical.
Where do you place your bets/assets then looking 10y ahead?


----------



## ducati916

qldfrog said:


> The Frenchman in me tells that the revolution will not happen with the reset,the rich 0.1% will remain rich and have even more wealth and power, the 99.9% will be poorer..but equals in outcome, vegan,   and happy in their total absence of freedom but endless streaming series, force fed propaganda, abysmal education and universal incomes.1984 was indeed yesterday. During that time, China is carrying on its expansion: cultural, economic and geopolitical.
> Where do you place your bets/assets then looking 10y ahead?





There has been a lot of discussion on the merits of the 'Forever Portfolio': 25% in cash/gold/govt. bonds/equities. Covers all bases all eventualities.

Back to today: the inability to plot a trend line that (I consider valid) in equities has required that I construct a different view, at least for the time being: Corporate Bonds, specifically BBB rated are a flash-point for equities, which follow them:






So a valid trend line for Corporate BBB






Something worth a read: https://themarket.ch/interview/were-at-the-beginning-of-a-commodity-super-cycle-ld.3092

So Oil news:







-        In August 2020, U.S. offshore production fell by the most on a monthly basis since September 2008, due to several hurricanes.

-    Offshore output fell by 453,000 bpd, or a decline of 27%.

-    Production fell to 1.2 mb/d for the month, a seven-year low.

-    EIA expects output to recover to nearly 1.92 mb/d by December 2020.

*Market Movers*

-    *Noble Corp. (NYSE: NE)* is expected to exit Chapter 11 bankruptcy protection. The offshore driller declared bankruptcy in July.

-    *BP (NYSE: BP) *agreed to sell its London headquarters for $332 million.

-    The *S&P energy sector (XLE)* surged by nearly 5% on Tuesday as oil prices rallied. *Apache (NYSE: APA) *was up 8.8% and *Occidental Petroleum (NYSE: OXY)* was up 7.9%, but the entire sector posted gains.

*Tuesday November 24, 2020*

Oil prices rose to their highest levels since March, with WTI nearing $45 and Brent topping $47. Oil prices surged on the potential for a third highly-effective coronavirus vaccine. Also, the seeming end of the election drama also boosted sentiment, as investors hoped for more stimulus under the Biden administration. “By some time in the middle of next year, the economic environment should really move quite rapidly toward normalization, which ultimately means that demand for petroleum products should start to recover,” Bart Melek, head of global commodity strategy at TD Securities, told Bloomberg.

*Bakken struggling at $40.* Prices need to get “above $45/bbl for completion of drilled-but-uncompleted (DUC) wells, and we need to see $55/bbl oil, in general, to drill new wells and complete them,” Lynn Helms, director of North Dakota’s Department of Mineral Resources said, according to NGI.

*UAE eyes 5 mb/d.* The UAE said that recent discoveries from state-owned ADNOC could help boost oil production to 5 mb/d by 2030.

*India to double refining capacity.* India’s Prime Minister Narendra Modi said that India would double refining capacity within 5 years.

*China seeks to become the world’s largest refiner. *“China is going to put another million barrels a day or more on the table in the next few years,” Steve Sawyer, director of refining at energy industry consultancy Facts Global Energy, told Bloomberg in an interview. “China will overtake the U.S. probably in the next year or two.”

*Biofuels industry calls for clean fuels standard.* America’s largest biofuels companies are asking President-elect Biden to implement a nationwide clean fuels standard, as the existing renewable fuels standard nears expiration.

*Venezuela arrests oil workers.* Venezuela’s regime has recently arrested oil workers or retired oil workers who have dared to expose the corruption and mismanagement at its state oil firm PDVSA and its dire financial, operational, and working conditions.

*IMO to ban fuel oil in the Arctic. *The International Maritime Organization (IMO) approved on Friday a ban on the use of heavy fuel oil for ships in the Arctic, but environmental organizations slammed the new regulation as “riddled with loopholes.”

*EU pushes back on U.S. LNG.* A recent U.S. LNG deal with Europe was scuttled over concerns about methane emissions. It may not have been a one-off. Politico reports that U.S. LNG is running into trouble across the European Union. “There's a real sensitivity in the EU about fracked gas,” one industry executive told Politico. The incoming administration “would be well advised to prioritize that. If [customers] can't use U.S. gas, then they're using Russian gas and Mideast gas.” The Biden administration’s attempts to regulate methane may be unwanted by U.S. drillers, but it may help gas exporters access European markets.

*Oil companies commit to methane cuts. BP (NYSE: BP)*, *Royal Dutch Shell (NYSE: RDS.A)*, *Eni (NYSE: E)*, *Equinor (NYSE: EQNR)*, and *Total (NYSE: TOT) *have signed the *Oil and Gas Methane Partnership (OGMP)*, a voluntary commitment under the United Nations, the European Union and the Environmental Defense Fund aimed at slashing methane emissions from oil and gas wells. They aim to cut methane emissions by 45% by 2025. The group consists of 62 members, although American oil majors *Chevron (NYSE: CVX) *and *ExxonMobil (NYSE: XOM) *are not participating.

*Colorado regulators approve 2,000-foot setbacks. *Colorado regulators approved new rules for oil and gas drilling, including expanding setback distances from 500 feet to 2,000 feet for wells near homes and public spaces. The rule takes effect on January 15.

*GM does 180 on fuel economy standards. GM (NYSE: GM) *switched sides in the fight between California and the Trump administration over fuel economy standards. The automaker backed the Trump administration’s effort to water-down standards, but on Monday switched over to California’s side, better aligning it with the incoming Biden administration. Toyota suggested it may switch as well.

*CFTC released a report on the April flash crash.* The Commodities Futures Trading Commission (CFTC) released a report on the April crash in WTI prices into negative territory. One of the commissioners criticized the report as inadequately addressing the root causes.

*Williams restructures contracts with Chesapeake. Williams Companies (NYSE: WMB) *said it would take ownership of some of* Chesapeake Energy’s (OTCMKTS: CHK) *assets in exchange for lower gas gathering fees.

*Total to shut refinery. Total (NYSE: TOT)* will shut its Donges refinery due to the market downturn.

*Oil lobby says it will fight fracking restrictions.* The American Petroleum Institute will use “every tool at its disposal” to combat potential restrictions on federal lands for drilling under the Biden administration.

*Survey finds institutional investors switching to renewables. *Global institutional investors managing nearly $7 trillion said that they plan on doubling their investments in renewables over the next five years. The share of renewables in their portfolios may rise from 4.2% to 8.3% by 2025.

*Canada’s oil and gas sector sees record job losses.* A total of 37% of oil and gas companies in Canada resorted to permanent layoffs due to the pandemic-driven oil price and oil demand slump, a recent survey of energy labor market organization PetroLMI showed.

Last but not least, Mr flippe-floppe-flye:







jog on
duc


----------



## ducati916

So with the US markets closed for Thanksgiving, there is time to have a look at the carnage in the crypto markets.

This chart warned of trouble ahead:






Which has come to fruition:






The fall in gold was tracked by this chart:






Which are rising yields of the 10yr. Yields have been marching higher at a fair clip since September, where the 10yr is +25basis points. That is a pretty hefty move and even more if you count from the lows of Aug. Two questions: (a) where is it headed if unimpeded and (b) will the Fed. intervene and if so where? Well the answer to (a) is 1.22%. The answer to (b) is probably yes, but where is the unknown.

Therefore, in the short term, gold is likely to be toast. Which means that cryptos are also toast in this time frame.

Which rotates us to the really macro question: inflation or deflation. When I say deflation I mean deflation (debt destruction) and not disinflation. Deflation would very likely lead to the possibility (certainty according to some) of hyper-inflation, as the only way to really combat it (other than letting it run its course and that would be so destructive that those in power would try to combat it) is to move way past QE, which is the hyper-inflation that Schiff et al. fear. The current QE/monetary policy will not lead to hyper-inflation and without the type of laws that existed in the 1970's, probably will not even lead to an inflation. This is an inflation of the PPI, not the CPI. We have had CPI inflation forever and nobody cares. The only real risk of PPI inflation lies in just how badly damaged productive capability of the oil has been effected.

With the vaccine (assuming success) and economies re-opening, the global economy will start to fire again. Oil demand will ratchet back higher. The issue will be (a) how quickly will that demand return, (b) how high will that demand be and (c) can supply meet it. If supply is constrained (for whatever reason) then we will see a price spike. That is inflationary. Monetary policy will allow or actively raise interest rates. To a point, stocks will continue to rise. To a point. Probably circa 5%. After that, if rates are still rising, stocks go down...and probably a lot. Of course with valuations already sky high, possibly that 'point' is a lot lower.

The irony here is that in the shock of the C19, when at the bottom, the economy was turning to toast, stocks rallied hard into a V shaped recovery. Now that the economy is set to mend, the very inflation that the Fed. has being seeking, if it eventuates, will lead the market lower (into the improving economy), which will potentially catch as many wrong-footed as did the bottom of the market.

The challenge of 2021 will be to monitor closely the macro-fundamentals and watch for a change significant enough to reverse the market. This is a similar situation that existed after 2009. Many avoided the market and missed out. There were some scary moments. Either through luck or skill, the market however continued until we hit the C19 berg. This will likely be the scenario 2021 and beyond.

As to gold v BTC: gold everyday. BTC is trash. Why is it trash? Because anyone can make a digital currency. Look how many there are currently. They are the digital equivalent of fiat currencies. They trade against each other. They compete against each other. Prices, like all prices, fluctuate and are open to manipulation. As a speculation or trading instrument, absolutely, they move. As a hedge against a failure in the rule of law, they will fail or at most be very marginal players.

jog on
duc


----------



## qldfrog

ducati916 said:


> So with the US markets closed for Thanksgiving, there is time to have a look at the carnage in the crypto markets.
> 
> This chart warned of trouble ahead:
> 
> View attachment 115371
> 
> 
> Which has come to fruition:
> 
> View attachment 115368
> 
> 
> The fall in gold was tracked by this chart:
> 
> View attachment 115370
> 
> 
> Which are rising yields of the 10yr. Yields have been marching higher at a fair clip since September, where the 10yr is +25basis points. That is a pretty hefty move and even more if you count from the lows of Aug. Two questions: (a) where is it headed if unimpeded and (b) will the Fed. intervene and if so where? Well the answer to (a) is 1.22%. The answer to (b) is probably yes, but where is the unknown.
> 
> Therefore, in the short term, gold is likely to be toast. Which means that cryptos are also toast in this time frame.
> 
> Which rotates us to the really macro question: inflation or deflation. When I say deflation I mean deflation (debt destruction) and not disinflation. Deflation would very likely lead to the possibility (certainty according to some) of hyper-inflation, as the only way to really combat it (other than letting it run its course and that would be so destructive that those in power would try to combat it) is to move way past QE, which is the hyper-inflation that Schiff et al. fear. The current QE/monetary policy will not lead to hyper-inflation and without the type of laws that existed in the 1970's, probably will not even lead to an inflation. This is an inflation of the PPI, not the CPI. We have had CPI inflation forever and nobody cares. The only real risk of PPI inflation lies in just how badly damaged productive capability of the oil has been effected.
> 
> With the vaccine (assuming success) and economies re-opening, the global economy will start to fire again. Oil demand will ratchet back higher. The issue will be (a) how quickly will that demand return, (b) how high will that demand be and (c) can supply meet it. If supply is constrained (for whatever reason) then we will see a price spike. That is inflationary. Monetary policy will allow or actively raise interest rates. To a point, stocks will continue to rise. To a point. Probably circa 5%. After that, if rates are still rising, stocks go down...and probably a lot. Of course with valuations already sky high, possibly that 'point' is a lot lower.
> 
> The irony here is that in the shock of the C19, when at the bottom, the economy was turning to toast, stocks rallied hard into a V shaped recovery. Now that the economy is set to mend, the very inflation that the Fed. has being seeking, if it eventuates, will lead the market lower (into the improving economy), which will potentially catch as many wrong-footed as did the bottom of the market.
> 
> The challenge of 2021 will be to monitor closely the macro-fundamentals and watch for a change significant enough to reverse the market. This is a similar situation that existed after 2009. Many avoided the market and missed out. There were some scary moments. Either through luck or skill, the market however continued until we hit the C19 berg. This will likely be the scenario 2021 and beyond.
> 
> As to gold v BTC: gold everyday. BTC is trash. Why is it trash? Because anyone can make a digital currency. Look how many there are currently. They are the digital equivalent of fiat currencies. They trade against each other. They compete against each other. Prices, like all prices, fluctuate and are open to manipulation. As a speculation or trading instrument, absolutely, they move. As a hedge against a failure in the rule of law, they will fail or at most be very marginal players.
> 
> jog on
> duc



Quick apprentice question:
Why would the 10y yield head to 1.22%?
Great post BTW


----------



## qldfrog

ducati916 said:


> So with the US markets closed for Thanksgiving, there is time to have a look at the carnage in the crypto markets.
> 
> This chart warned of trouble ahead:
> 
> View attachment 115371
> 
> 
> Which has come to fruition:
> 
> View attachment 115368
> 
> 
> The fall in gold was tracked by this chart:
> 
> View attachment 115370
> 
> 
> Which are rising yields of the 10yr. Yields have been marching higher at a fair clip since September, where the 10yr is +25basis points. That is a pretty hefty move and even more if you count from the lows of Aug. Two questions: (a) where is it headed if unimpeded and (b) will the Fed. intervene and if so where? Well the answer to (a) is 1.22%. The answer to (b) is probably yes, but where is the unknown.
> 
> Therefore, in the short term, gold is likely to be toast. Which means that cryptos are also toast in this time frame.
> 
> Which rotates us to the really macro question: inflation or deflation. When I say deflation I mean deflation (debt destruction) and not disinflation. Deflation would very likely lead to the possibility (certainty according to some) of hyper-inflation, as the only way to really combat it (other than letting it run its course and that would be so destructive that those in power would try to combat it) is to move way past QE, which is the hyper-inflation that Schiff et al. fear. The current QE/monetary policy will not lead to hyper-inflation and without the type of laws that existed in the 1970's, probably will not even lead to an inflation. This is an inflation of the PPI, not the CPI. We have had CPI inflation forever and nobody cares. The only real risk of PPI inflation lies in just how badly damaged productive capability of the oil has been effected.
> 
> With the vaccine (assuming success) and economies re-opening, the global economy will start to fire again. Oil demand will ratchet back higher. The issue will be (a) how quickly will that demand return, (b) how high will that demand be and (c) can supply meet it. If supply is constrained (for whatever reason) then we will see a price spike. That is inflationary. Monetary policy will allow or actively raise interest rates. To a point, stocks will continue to rise. To a point. Probably circa 5%. After that, if rates are still rising, stocks go down...and probably a lot. Of course with valuations already sky high, possibly that 'point' is a lot lower.
> 
> The irony here is that in the shock of the C19, when at the bottom, the economy was turning to toast, stocks rallied hard into a V shaped recovery. Now that the economy is set to mend, the very inflation that the Fed. has being seeking, if it eventuates, will lead the market lower (into the improving economy), which will potentially catch as many wrong-footed as did the bottom of the market.
> 
> The challenge of 2021 will be to monitor closely the macro-fundamentals and watch for a change significant enough to reverse the market. This is a similar situation that existed after 2009. Many avoided the market and missed out. There were some scary moments. Either through luck or skill, the market however continued until we hit the C19 berg. This will likely be the scenario 2021 and beyond.
> 
> As to gold v BTC: gold everyday. BTC is trash. Why is it trash? Because anyone can make a digital currency. Look how many there are currently. They are the digital equivalent of fiat currencies. They trade against each other. They compete against each other. Prices, like all prices, fluctuate and are open to manipulation. As a speculation or trading instrument, absolutely, they move. As a hedge against a failure in the rule of law, they will fail or at most be very marginal players.
> 
> jog on
> duc



About crypto, let me differ: anyone can indeed create A crypto, but no-one can create BTC again.
Bitcoin is limited in number so cannot really replace gold: i agree, but only because there is not enough supply: people can not get excited owning 0.0001 btc, and this is enough to limit its rise.
i believe Bitcoin, not cryptos in a generic way, will play a gold like role.
Not the others, even whatever amazon, the chinese, croatian or other government released/approved ones.
Some like Ethereum will be used as tool: like POO in the industry, should they become too dear, they will be replaced and will fluctuate
So imho, BTC will be similar to gold, the only threat is government regulations: becoming illegal.the risk is real
there was such a push a year ago, with media campaign labelling it as a crook tool, making dark web links etc etc
Should BTC remain nimble enough,the powers in charge might not bother and so is my hope 
I plan to own a few.buying bits at every fall opportunity. long game.i own now, have not set my limit but it will be nowhere near as big as my gold target


----------



## ducati916

qldfrog said:


> About crypto, let me differ: anyone can indeed create A crypto, but no-one can create BTC again.
> Bitcoin is limited in number so cannot really replace gold: i agree, but only because there is not enough supply: people can not get excited owning 0.0001 btc, and this is enough to limit its rise.
> i believe Bitcoin, not cryptos in a generic way, will play a gold like role.
> Not the others, even whatever amazon, the chinese, croatian or other government released/approved ones.
> Some like Ethereum will be used as tool: like POO in the industry, should they become too dear, they will be replaced and will fluctuate
> So imho, BTC will be similar to gold, the only threat is government regulations: becoming illegal.the risk is real
> there was such a push a year ago, with media campaign labelling it as a crook tool, making dark web links etc etc
> Should BTC remain nimble enough,the powers in charge might not bother and so is my hope
> I plan to own a few.buying bits at every fall opportunity. long game.i own now, have not set my limit but it will be nowhere near as big as my gold target




So first off, just some recent missives on BTC:









						Bitcoin price plunges over 10% to stage Thanksgiving correction
					

Bitcoin prices on Friday trade in correction territory after suffering a Thanksgiving tumble, with the asset pulling back sharply just at it was on the verge...




					www.marketwatch.com
				












						6 reasons bitcoin is trading at its highest level since 2017 --- and 1 warning
					

Bitcoin, the digital currency that is arguably one of the most polarizing assets in financial markets, is approaching heights not seen since a frenzied rush...




					www.marketwatch.com
				












						Ray Dalio Admits He May Be Wrong About Bitcoin But Still Concerned of Government Ban – News Bitcoin News
					

Billionaire hedge fund manager Ray Dalio has admitted that he may be wrong about bitcoin after stating that governments will ban the cryptocurrency if it "becomes material." Dalio founded Bridgewater Associates; his hedge fund is the largest in the world.




					news.bitcoin.com
				




None of which really address the issues:

1. The issue of what blockchain is itself. When someone says they are running something “on a blockchain,” what they usually mean is that they are running one instance of a software application that is replicated across many other devices. That is an issue.

2. The required storage space and computational power is substantially greater, and the latency higher, than in the case of a centralized application. Blockchains that incorporate “proof-of-stake” or “zero-knowledge” technologies require that all transactions be verified cryptographically, which slows them down. Blockchains that use “proof-of-work,” as many popular cryptocurrencies do, raise yet another problem: they require a huge amount of raw energy to secure them. That is an issue.

3. Speed. Consider the many schemes that rest on the claim that blockchains are a distributed, universal “world computer.” That claim assumes that banks, which already use efficient systems to process millions of transactions per day, have reason to migrate to a markedly slower and less efficient single cryptocurrency. This contradicts everything we know about the financial industry’s use of software. Financial institutions, particularly those engaged in algorithmic trading, need fast and efficient transaction processing. For their purposes, a single globally distributed blockchain such as Ethereum would never be useful. A second issue around speed: Furthermore, unlike base-level protocols, blockchains are “stateful,” meaning they store every valid communication that has ever been sent to them. As a result, well-designed blockchains need to consider the limitations of their users’ hardware and guard against spamming. This explains why Bitcoin Core, the Bitcoin software client, processes only 5-7 transactions per second, compared to Visa, which reliably processes 25,000 transactions per second.

4. Computer languages: Another false assumption is that blockchain represents something akin to a new universal protocol, like TCP-IP or HTML were for the Internet. Such claims imply that this or that blockchain will serve as the basis for most of the world’s transactions and communications in the future. Again, this makes little sense when one considers how blockchains actually work. For one thing, blockchains themselves rely on protocols like TCP-IP, so it isn’t clear how they would ever serve as a replacement.

5. Has the scaling issue been solved? Just as we cannot record all of the world’s transactions in a single centralized database, nor shall we do so in a single distributed database. Indeed, the problem of “blockchain scaling” is still more or less unsolved, and is likely to remain so for a long time.

6. A third false claim concerns the “trustless” utopia that blockchain will supposedly create by eliminating the need for financial or other reliable intermediaries. This is absurd for a simple reason: every financial contract in existence today can either be modified or deliberately breached by the participating parties. Automating away these possibilities with rigid “trustless” terms is commercially non-viable, not least because it would require all financial agreements to be cash collateralized at 100%, which is insane from a cost-of-capital perspective.

7. Moreover, it turns out that many likely appropriate applications of blockchain in finance – such as in securitization or supply-chain monitoring – will require intermediaries after all, because there will inevitably be circumstances where unforeseen contingencies arise, demanding the exercise of discretion. The most important thing blockchain will do in such a situation is ensure that all parties to a transaction are in agreement with one another about its status and their obligations, vis-a-vis contractual obligations.

Now gold, requires none of these things, particularly when the need truly arises, where possibly all of the electronic based advantages of a BTC will simply vanish in the nuclear cloud or bacterial/virus plague. What we are truly talking about is an ironclad, 100% guaranteed, insurance policy, with zero counter-parties: only physical gold, buried in your garden, provides this.

If you are looking for a speculative product to trade, that has huge volatility, then absolutely BTC or any of the other coins are viable trading vehicles. As a do or die (investment) insurance, a waste of time.

jog on
duc


----------



## ducati916

qldfrog said:


> Quick apprentice question:
> Why would the 10y yield head to 1.22%?
> Great post BTW





So nothing esoteric:






I haven't drawn it, but simply draw a resistance line under the red squiggly line and it hits +/- 1.22%.

jog on
duc


----------



## ducati916

Stepping back for a more macro-view:

The inflation trade:

Stocks are through their Sept/Oct pullback (seasonality) and are now getting involved in the Presidential cycle. Good news for the Bulls. The issue is that we are technically extended, which means that when a pullback occurs, it will likely be fast without too much warning.






Gold remains (until further notice) caught in weakness and will likely continue lower.






Which means cryptos are likely not finished pulling back.






The US$ also looks to be breaking down as against the Euro. This supports an inflationary environment building some traction.






Oil moving up faster than yields, inflation PPI style. Too early to be a problem and is probably welcomed. That of course will change if POO continues past $70/barrel and yields are capped by the Fed. Yields (are on my reckoning) on the 10yr are firmly headed to 1.2% and higher, depending on what POO actually does.






Early warning. BBB rated bonds offering an early signal of instability in the SPY.






Confirmed in the Junk (really dire Bonds) market.






On the other hand, Mr flippe-floppe-flye is still confident.






And wrapping up with a little history of vaccines:






Necessity...the mother of?

jog on
duc


----------



## Dark1975

ducati916 said:


> So with the US markets closed for Thanksgiving, there is time to have a look at the carnage in the crypto markets.
> 
> This chart warned of trouble ahead:
> 
> View attachment 115371
> 
> 
> Which has come to fruition:
> 
> View attachment 115368
> 
> 
> The fall in gold was tracked by this chart:
> 
> View attachment 115370
> 
> 
> Which are rising yields of the 10yr. Yields have been marching higher at a fair clip since September, where the 10yr is +25basis points. That is a pretty hefty move and even more if you count from the lows of Aug. Two questions: (a) where is it headed if unimpeded and (b) will the Fed. intervene and if so where? Well the answer to (a) is 1.22%. The answer to (b) is probably yes, but where is the unknown.
> 
> Therefore, in the short term, gold is likely to be toast. Which means that cryptos are also toast in this time frame.
> 
> Which rotates us to the really macro question: inflation or deflation. When I say deflation I mean deflation (debt destruction) and not disinflation. Deflation would very likely lead to the possibility (certainty according to some) of hyper-inflation, as the only way to really combat it (other than letting it run its course and that would be so destructive that those in power would try to combat it) is to move way past QE, which is the hyper-inflation that Schiff et al. fear. The current QE/monetary policy will not lead to hyper-inflation and without the type of laws that existed in the 1970's, probably will not even lead to an inflation. This is an inflation of the PPI, not the CPI. We have had CPI inflation forever and nobody cares. The only real risk of PPI inflation lies in just how badly damaged productive capability of the oil has been effected.
> 
> With the vaccine (assuming success) and economies re-opening, the global economy will start to fire again. Oil demand will ratchet back higher. The issue will be (a) how quickly will that demand return, (b) how high will that demand be and (c) can supply meet it. If supply is constrained (for whatever reason) then we will see a price spike. That is inflationary. Monetary policy will allow or actively raise interest rates. To a point, stocks will continue to rise. To a point. Probably circa 5%. After that, if rates are still rising, stocks go down...and probably a lot. Of course with valuations already sky high, possibly that 'point' is a lot lower.
> 
> The irony here is that in the shock of the C19, when at the bottom, the economy was turning to toast, stocks rallied hard into a V shaped recovery. Now that the economy is set to mend, the very inflation that the Fed. has being seeking, if it eventuates, will lead the market lower (into the improving economy), which will potentially catch as many wrong-footed as did the bottom of the market.
> 
> The challenge of 2021 will be to monitor closely the macro-fundamentals and watch for a change significant enough to reverse the market. This is a similar situation that existed after 2009. Many avoided the market and missed out. There were some scary moments. Either through luck or skill, the market however continued until we hit the C19 berg. This will likely be the scenario 2021 and beyond.
> 
> As to gold v BTC: gold everyday. BTC is trash. Why is it trash? Because anyone can make a digital currency. Look how many there are currently. They are the digital equivalent of fiat currencies. They trade against each other. They compete against each other. Prices, like all prices, fluctuate and are open to manipulation. As a speculation or trading instrument, absolutely, they move. As a hedge against a failure in the rule of law, they will fail or at most be very marginal players.
> 
> jog on
> duc



Hey duc 
Just a question,  u state here that there is a possibility of a market reversal in 2021 ? Is this a technical view ? Just curious cause atm I'm 30% in the big 4 asx banks , and looking to pull before Xmas end


----------



## ducati916

Dark1975 said:


> Hey duc
> Just a question,  u state here that there is a possibility of a market reversal in 2021 ? Is this a technical view ? Just curious cause atm I'm 30% in the big 4 asx banks , and looking to pull before Xmas end





I am talking about simply a pull-back in the ongoing bull market. The inflation issue, if it develops, will take at least 1yr, probably 3yrs, to become an issue. So no rush to sell banks, they have a ways to run, unless you believe FinTech is about to eat their lunch.

So banks:






Are in my estimation, ready to outperform. Why?

(i) Steep yield curve. Banks borrow short, lend long, earn the spread. The greater the spread, the better their profitability. The spread is good and getting better. So while certain sectors of the market are interest rate sensitive in a negative way, banks are not. Banks love a rising yield environment. The 10yr going to 1.2% would see bank stocks catch fire.

(ii) Generally speaking, Bank's balance sheets are far stronger than they were after 2008. There are issues: commercial RE could be an area where things are not so great and many will worry about residential mortgages. Residential mortgages are bundled into securities and sold...fast. Your average bank, after 2008, does not want to eat their own cooking. So mortgages are someone else's problem if they become an issue (again).

(iii) The financial system is critical to the economy (any developed economy) and they are gatekeepers to transactional business. As economies re-open, their earnings will start to surprise to the upside as valuations are still really LOW.

Now the caveats are:

(a) Bank financials are truly an operation in opaqueness. Trying to decipher where they have hidden the dead bodies is a true undertaking. I would not hold Banks individually, only as part of an ETF.

(b) Because of the above, banks can blow up and depending on their size and importance to the financial system, may or may not, be the recipient of a bail out. I don't like trying to guess if they are or are not systemically important: there are some obvious candidates, JPM, BAC, GS, etc. If you are holding Australian banks, the big 4 would probably be bailed out if they failed, NAB etc, but smaller ones would be quite risky unless you were intimate with their financials.

jog on
duc


----------



## Dark1975

ducati916 said:


> I am talking about simply a pull-back in the ongoing bull market. The inflation issue, if it develops, will take at least 1yr, probably 3yrs, to become an issue. So no rush to sell banks, they have a ways to run, unless you believe FinTech is about to eat their lunch.
> 
> So banks:
> 
> View attachment 115489
> 
> 
> Are in my estimation, ready to outperform. Why?
> 
> (i) Steep yield curve. Banks borrow short, lend long, earn the spread. The greater the spread, the better their profitability. The spread is good and getting better. So while certain sectors of the market are interest rate sensitive in a negative way, banks are not. Banks love a rising yield environment. The 10yr going to 1.2% would see bank stocks catch fire.
> 
> (ii) Generally speaking, Bank's balance sheets are far stronger than they were after 2008. There are issues: commercial RE could be an area where things are not so great and many will worry about residential mortgages. Residential mortgages are bundled into securities and sold...fast. Your average bank, after 2008, does not want to eat their own cooking. So mortgages are someone else's problem if they become an issue (again).
> 
> (iii) The financial system is critical to the economy (any developed economy) and they are gatekeepers to transactional business. As economies re-open, their earnings will start to surprise to the upside as valuations are still really LOW.
> 
> Now the caveats are:
> 
> (a) Bank financials are truly an operation in opaqueness. Trying to decipher where they have hidden the dead bodies is a true undertaking. I would not hold Banks individually, only as part of an ETF.
> 
> (b) Because of the above, banks can blow up and depending on their size and importance to the financial system, may or may not, be the recipient of a bail out. I don't like trying to guess if they are or are not systemically important: there are some obvious candidates, JPM, BAC, GS, etc. If you are holding Australian banks, the big 4 would probably be bailed out if they failed, NAB etc, but smaller ones would be quite risky unless you were intimate with their financials.
> 
> jog on
> duc



Thank you duc , for your invaluable input


----------



## ducati916

So a whole bunch of charts and data:



































The above is particularly useful for day-traders. You know which stocks could move, outside of an earnings environment and (usually) the initial reaction, is the reaction that holds for the rest of the session.






For the Bond chaps (combined with the TED spread [above] a very useful gauge).






Should be with the other insider charts/data.






For those whom dividends are part of the decision making process.

So a bunch of data points that I will normally review over the w/e combined with numerous cups of coffee. This is not so much the macro-data, although I have that as well, more the day-to-day stuff that makes better reading in preparation for the coming week. 

jog on
duc


----------



## Beaches

As always Duc, the depth of your research is impressive.
Thanks again for taking the time.
.


----------



## ducati916

End of November for the US and heading into December:

Potentially some weakness, which we may be starting to see today.






The overall market not looking great today.






So I have now added a trend line, which has today been violated. I have put back on 75% hedges. I'm turning into flippe-floppe-flye myself. So now there are potentially 2 trend lines, of which the older one may not even actually be valid any longer. The new one is - the problem is that it is valid for the breach, it is also now (potentially) invalid.







So gold: on a seasonality basis, moving into a better area.






My concern is that it is not (currently) in a bull trend. Will seasonality break the bear trend? It will need to break through the trend line.






Finally, Mr flippe-floppe-flye, all out for December (which will only last about the length of time it takes me to type this).






jog on
duc


----------



## qldfrog

ducati916 said:


> End of November for the US and heading into December:
> 
> Potentially some weakness, which we may be starting to see today.
> 
> View attachment 115618
> 
> 
> The overall market not looking great today.
> 
> View attachment 115617
> 
> 
> So I have now added a trend line, which has today been violated. I have put back on 75% hedges. I'm turning into flippe-floppe-flye myself. So now there are potentially 2 trend lines, of which the older one may not even actually be valid any longer. The new one is - the problem is that it is valid for the breach, it is also now (potentially) invalid.
> 
> View attachment 115614
> 
> 
> 
> So gold: on a seasonality basis, moving into a better area.
> 
> View attachment 115619
> 
> 
> My concern is that it is not (currently) in a bull trend. Will seasonality break the bear trend? It will need to break through the trend line.
> 
> View attachment 115616
> 
> 
> Finally, Mr flippe-floppe-flye, all out for December (which will only last about the length of time it takes me to type this).
> 
> View attachment 115615
> 
> 
> jog on
> duc



between own feelings, the fact we have had a good run and the fact i expect the xmas positive to go to crash early january after virus scare ramping with more cases and biden starting his reset, I thought I would go back to cash and conservative/treasury on my US portfolio yesterday night.
Did not want to wait for the open..I probably should have..sleep is costly, I sold early this morning before reading Mr Ducati of flip flop Joe ;-)
Am now 50% cash and the rest mostly treasury and gold, even unloaded some of my XOM/LMT pet plays.Most of the sales were on healthy gains
I also started building on TMF : leveraged bull 20y treasury bonds..will see..market is psyche and this is my psyche right now


----------



## ducati916

Today is about divergence: a number of metrics are indicating lower, yet, the market gapped higher at the open.

So if you remember, yesterday's chart signalled a breach. It faded back through the day. Today, we have still a signal, but on its own, not terribly convincing. You could easily argue that the trend line has held and vol. is heading lower. That may well turn out to be the case, except for the fact that currently a number of others are indicating otherwise.






So this is my 'tie-breaker'. They are not live, hence yesterday's date. However, today's gap higher (I doubt) will send us back through the trend-line. Thus, while the market signals higher, the x-rays indicate a stress fracture. You can play on for a while with a stress fracture, but too long and it becomes a full fracture.






Again, yesterday's chart. Increased PUT buying. Today, again, it will drop back to CALL buying, but not a lower low and we are already at the wrong end of the range.




















The run to safety is already on: Gold/Silver, out of speculative Crypto, the anomaly being yields on the 10yr jumping higher. Equities haven't received the email yet.

Mr flippe-floppe-flye is of no aid currently, he is yet to form an opinion and remains basking in his own prowess.






So I have hedged the a further 50% to sit at 125% hedged or 25% short.


jog on
duc


----------



## ducati916

Stocks remain in a wait and see:

We have stuff happening in the US$, Oil and Interest rates (10yr).






And Oil/Interest rates:
















Difficult to say where it is all heading.

However, if my call of 1.2% in the 10yr pans out and oil stays within $60/barrel then the US$ should strengthen somewhat, even if that means it just stops falling and remains in a trading range, which means that stocks remain nicely in their bull market. Currently the oil market is waiting on OPEC to confirm deny supply. We then have the potential stimulus package, which will have an effect on interest rates (possibly) and also possibly gold/BTC.

In a time of flux and some uncertainty, there is of course 1 constant:






jog on
duc


----------



## ducati916

We've had a couple of weeks now of really reduced vol. and quite boring markets. A bit of intra-day drama, only to return to essentially flat for the day. These are the markets (unless you are day trading) it is probably best just to mostly ignore, the tendency is to churn the account.

So we have the dribble sideways vol. We have breached 1 trend line and look set to meander to the next, where, who knows.






The SPY trend has now broken out of the August - Oct. seasonality doldrums and we should be into the (new) Presidential cycle, after the initial new trend was called into question.






Gold still remains weak, although having a bounce. For gold to resume its bull move, we need it to break the trend line. The question of course is the low of 2/3 days ago, the bottom and therefore an excellent entry point?






To answer that, the US$ continues to weaken as against the Euro. So on that basis, assuming continued weakness of the dollar, yes, gold should be a buy. The dollar looks to be heading at least to that support point, so gold should do well in the short term. After that it depends whether the dollar bounces or collapses.






Which is also confirmed by POO, which underlines the inflation meme.






Finally, Mr flippe-floppe-flye






I have closed hedges and return to 100% long, becoming a flippe-flopper myself.

jog on
duc


----------



## ducati916

From a 'news' perspective, the only news that will move markets (significantly) lower in the short term: stimulus package:










Assuming this comes through, the markets will jump higher. If it fails, we could see a pullback. The pullback would only be a pullback, it would not create a bear market.

Interest rates heading fast for that 1.2%






Banks, of course loving that:






Whereas the market's darlings, are yesterday's news.






But an impressive run nonetheless.

Just a roundup of the sectors:


















Energy on fire. The problem is (not yet and quite a ways away) this is your inflation. The trouble is that the Fed. does not really control this market. OPEC does (again) after essentially destroying the US Shale industry. Will OPEC, if POO runs to $100/b step in for lower prices? I doubt it. Now its not the 1970's and significant industries (Tech) are arguably less exposed to high POO, so, potentially the inflation issue would be far less damaging in any case. COLAs are dead, gone and never coming back and they had a tremendous impact on driving inflation, so inflation 1970's style is probably never coming back either.

Monetary policy (the Fed.) does not drive 1970's style inflation either because the new money leaks primarily into financial assets, which for those with access, is a good thing. However it does create CPI inflation, which does contribute to the wealth gap. That wealth gap is now so large that it is creating (as evidenced) significant social unrest. The risk comes more from social unrest and a collapse of a number of institutions, than a hyper-inflationary scenario. On that basis, I think a stimulus package to the masses gets done. It is the uncertainty that is contributing to this really wishy-washy market currently: the bulls are wary, not bidding prices too (much) higher and the bears are just plain scared of being short and the stimulus being passed (typically) over a w/e. and being flayed on a Monday open.

Finally, Mr flippe-floppe-flye:






jog on
duc


----------



## Skate

ducati916 said:


> *That wealth gap is now so large that it is creating (as evidenced) significant social unrest.*




All the woes of the world "nailed in one sentence".

Skate.


----------



## qldfrog

Skate said:


> All the woes of the world "nailed in one sentence".
> 
> Skate.



I actually do not believe the wealth gap is that much larger, when the Rockefeller where rebuilding castles in the last century while 8 y old kids where working, it was bigger.
And comparing wealth of Bill Gates based on the share price and ownership percentages of company owners is a bit artificial.
I believe the real issue is that people are now aware, and have an entitlement and expectations.
The great reset will sort it out and it will be a great shock for the first world so called "poors" aka 99% to realise that outcome equality means they are going to get even poorer by sharing with the 6 billions or so other citizens of the world living on a few dollars a day...
But the wheel is turning and the reset pushing..how are we going to save ourselves?
One of the fundamental of this change is the loss of value of the fiat currencies.deflation/inflation or not initially, it will end up with a debasing of the usd euro aud


----------



## ducati916

Weekend data:


































Commercials trading against gold. That last bar down is ominous, which means that they have increased their short position. The other relevant factor is that the commercials a counter-trend traders. They buy in falling markets, sell in rising. When they trade with the trend, that is not a good sign. I have gold's support points at $1600/1400 and $1200. I would expect to see $1600.






Again (although not to the same extent and in fact reducing rather than increasing) the commercials are trading with the trend in the 10yr. We see 1.2% no doubt.






Without a doubt, the market is toppy and precarious. There have been two occasions where we could have pulled back and didn't. That means that when the correction does come, it will be deeper because of it. The article (above) is interesting because it does articulate the Rothschild philosophy of buy on the sound of the guns, sell on the sound of the trumpets. The vaccine represents the trumpets and its actual arrival may trigger a wide spread of profit taking across all sectors, because there is no doubt (from few, if any body) that this is a high priced, speculative market with lots of froth.

The puzzle is gold. The yield, 1.2% is really nothing in the face of CPI inflation (which we know the market is indifferent to). And if commodities are breaking out on the back of a weak dollar, driving PPI inflation, which looks plausible 2yrs +/- down the road, then gold should be stronger. At least consolidating at the $1800 level. Maybe it still does. If it falls, $1600, $1400, $1200, what is the message and how will the cryptos play out?

jog on
duc


----------



## qldfrog

Realy interesting time Duc.
When you take a step back and look at the AVERAGE P/E you have in your post, absolutely crazy even with low inflation, etc etc and i understand these pretty well: right now, i would be ready to do a go cash all,wait 3 months and start again but even cash or bonds are not safe.
As i am not unique, based on risk aversion, some want to get the few extra % and go higher fangs,etc while other go gold crypto or just keep their finger on the sell all trigger button.
Even more that before, we are in a time where whiplashes can be expected sudden jump or crash at the sheer vague notion of a pretext


----------



## qldfrog

Let this not spoil your weekends 😊


----------



## Smurf1976

qldfrog said:


> Realy interesting time Duc.
> When you take a step back and look at the AVERAGE P/E you have in your post, absolutely crazy even with low inflation, etc etc and i understand these pretty well: right now, i would be ready to do a go cash all,wait 3 months and start again but even cash or bonds are not safe.



Tops usually take longer to arrive than rational logic says they ought to. My thinking:

20th January = new US President sworn into office. Politics aside, that ends any uncertainty surrounding that assuming it goes smoothly.

March - April = seasonal effects on COVID become more favourable to the northern hemisphere countries.

Add in the COVID vaccine rolling out on significant scale and presumably being seen to work.

Combined that sounds like a recipe for peak euphoria but we're not quite there yet in my view, there's still a bit further to go.


----------



## ducati916

I would definitely agree that 'tops' take time to form, even the C19 'top' in Jan/Feb took time to form. It was only really the depth and speed of the sell-off that really caught people out.

Given that this is true, it should be easy to spot a top forming, even where there is a high level of speculation in the market that dulls some of the more traditional indicators.

Here is an ECG of the market:






You want to see it essentially on your zero line. Zero line = nothing to see here. Interestingly, in Jan.2020, is when the real warning of what was about to hit came. The bounce, was sitting on the zero line, which makes sense if you know the inputs. Now this is not a tool for picking the exact highs or lows, it is more about signalling something is amiss in the market. You then look at other metrics to figure out more specific timing. This is also an EOD data chart, which is fine as it signals (really) early in most cases (but not all).

This next chart is not mine, but it is interesting:






The theory espoused is that now that the trend line has been broken to the upside, the market is at risk of topping. Below is better. Now that is kinda contrary to more traditional methods, but given that on a fundamental basis we are bubblelicious and with a fundamental change approaching with the rollout of the vaccines, it kinda makes sense.

And a weekend missive from Mr flippe-floppe-flye:









jog on
duc


----------



## Smurf1976

ducati916 said:


> Here is an ECG of the market:



Very interested to understand more about that chart if you're willing to explain?

As in how that line is calculated. What's the input? It's a chart of ???

Perhaps it's obvious but it's gone over my head as to the detail.......


----------



## qldfrog

Great post 👍


----------



## qldfrog

Smurf1976 said:


> Very interested to understand more about that chart if you're willing to explain?
> 
> As in how that line is calculated. What's the input? It's a chart of ???
> 
> Perhaps it's obvious but it's gone over my head as to the detail.......



If i can help
NYSE Percent of Stocks Above 50 Day Moving Average $NYA50R
Divided by
nyad 
Ny decline advance issue
See https://www.google.com/amp/s/seekingalpha.com/amp/article/4124142-nyad-challenging-myth

Mr Duc is very much into these kinds of A/B indicator charts which obviously based on the components can put things in perspective

The other chart on the graph is just the stock market spx


----------



## ducati916

Smurf1976 said:


> Very interested to understand more about that chart if you're willing to explain?
> 
> As in how that line is calculated. What's the input? It's a chart of ???
> 
> Perhaps it's obvious but it's gone over my head as to the detail.......





Mr Frog is quite correct: S&P stocks above their 50 day moving average/advancing issues. Both (obviously) are looking at market breadth. A strong market has advances in both so that they stay in balance. This is the zero line (one cancels out t'other). A market that favours one or t'other, is a market out of balance. Something is not quite right. Now that doesn't mean that something will immediately happen (although sometimes it does) it just means that you need to look more closely at other metrics and primarily be PREPARED for something. You may lighten up, taking some profits, you may rebalance into defensives, you may hedge or you may just instead of looking at the market once a week, look everyday.

jog on
duc


----------



## ducati916

Hmmmm,















So (excepting cryptos) we have a bit of a run to safety (perceived). Anything more than a 1 day deal? 






Vol. is picking up. This has been threatening for about 2 weeks now and nothing has eventuated yet. Is today the day? Your choices are: (a) watch and do nothing (the bull trend is intact until trend line is broken) or (b) act early and hedge a portion of exposure. The last couple of weeks I have hedged and been wrong. I will hedge 50%. I hate giving back profits, this is (hedging) simply a cost of doing business.

The market:






Still (potentially) has room to run to the upside, but, we have had a pretty good run and vol. has been crushed.

When all is lost, there is always 1 constant:






jog on
duc


----------



## qldfrog

ducati916 said:


> Hmmmm,
> 
> View attachment 116017
> View attachment 116018
> View attachment 116019
> View attachment 116022
> 
> 
> So (excepting cryptos) we have a bit of a run to safety (perceived). Anything more than a 1 day deal?
> 
> View attachment 116020
> 
> 
> Vol. is picking up. This has been threatening for about 2 weeks now and nothing has eventuated yet. Is today the day? Your choices are: (a) watch and do nothing (the bull trend is intact until trend line is broken) or (b) act early and hedge a portion of exposure. The last couple of weeks I have hedged and been wrong. I will hedge 50%. I hate giving back profits, this is (hedging) simply a cost of doing business.
> 
> The market:
> 
> View attachment 116021
> 
> 
> Still (potentially) has room to run to the upside, but, we have had a pretty good run and vol. has been crushed.
> 
> When all is lost, there is always 1 constant:
> 
> View attachment 116016
> 
> 
> jog on
> duc



Thanks, and by now BTC is at -2%.first thing i checked this morning after looking at the usual down day.
Is BTC becoming an edge on market fall or not ?
This is a long term game and so far unsure as to what the answer will be.gold silver up as expected.
I seem to detect a change in silver over a while back, decade? Silver had a dual role, a bit of safehaven but also had an industrial side so you could have silver up with market up, i have a feeling this has lessened.
So a bit unsure on BTC and silver as edge. Mr Duc might have a more informed view.
May i ask: when you edge 50%,do you actually add edge onto unchanged portfolio or do you sell a 3x bull and buy a 3xbear etf instead.
what is your edging mecanism?
Only if it is not a trade secret


----------



## ducati916

qldfrog said:


> Thanks, and by now BTC is at -2%.first thing i checked this morning after looking at the usual down day.
> Is BTC becoming an edge on market fall or not ?
> This is a long term game and so far unsure as to what the answer will be.gold silver up as expected.
> I seem to detect a change in silver over a while back, decade? Silver had a dual role, a bit of safehaven but also had an industrial side so you could have silver up with market up, i have a feeling this has lessened.
> So a bit unsure on BTC and silver as edge. Mr Duc might have a more informed view.
> May i ask: when you edge 50%,do you actually add edge onto unchanged portfolio or do you sell a 3x bull and buy a 3xbear etf instead.
> what is your edging mecanism?
> Only if it is not a trade secret





Monsieur Frog, j'achète simplement des Put sur l'indice.






The majority are still buying CALLS, so premiums are reasonable. I don't fanny about trying to be too cute with various ETFs (unless 1 of them really drops far more than the index), if necessary I just buy more than might otherwise be required. The big advantage is that your losses (if you don't sell them) are capped and your longs (after some underperformance) just carry on their merry way. If you close them out, then a cheap way to hedge the common.

And we are twitching:






Usually (assuming it drops a bit further) there is some lead time. Not shown, the VIX has also turned higher (close) and looks a little ominous, as if there is some bad news ready to break over the next day or two. Market is super twitchy...when it moves higher, just fractions of a percent, not inspiring a lot of confidence.

jog on
duc


----------



## qldfrog

ducati916 said:


> Monsieur Frog, j'achète simplement des Put sur l'indice.
> 
> View attachment 116036
> 
> 
> The majority are still buying CALLS, so premiums are reasonable. I don't fanny about trying to be too cute with various ETFs (unless 1 of them really drops far more than the index), if necessary I just buy more than might otherwise be required. The big advantage is that your losses (if you don't sell them) are capped and your longs (after some underperformance) just carry on their merry way. If you close them out, then a cheap way to hedge the common.
> 
> And we are twitching:
> 
> View attachment 116035
> 
> 
> Usually (assuming it drops a bit further) there is some lead time. Not shown, the VIX has also turned higher (close) and looks a little ominous, as if there is some bad news ready to break over the next day or two. Market is super twitchy...when it moves higher, just fractions of a percent, not inspiring a lot of confidence.
> 
> jog on
> duc



Merci Monsieur Le Duc😊


----------



## peter2

Gomez loved to lose when day trading, but he rarely did and sooked when he won. 
A little french from 'Morticia and he'd be quickly distracted.


----------



## ducati916

The action in stocks is a holding pattern. They are waiting to see what eventuates in (I believe primarily) the dollar and bond markets.

The dollar (as against the Euro) has halted for the moment, but looks set to continue its fall lower. This will (if it continues lower) drive the inflationary trade, PPI, that does matter to the market.






As a result, bond vol. is picking up: once again, due to vol. being absolutely crushed from the last dip, I don't really have a definitive trend line and so it's a bit of a guessing game.






The movement back to bonds (falling yields) is counter-intuitive if (as we are) postulating (a) PPI inflation due to a (i) rising commodity prices due to a falling dollar.






The bond vol. however is confirmed by price movements against current trends in the commodity markets:






Risk on, Oil/Copper in the red. Risk off: Gold/Silver in the green.

BTC....meh:






Overall, there is no clear message. There would seem to be simply a slightly more defensive posture which is seen simply in ultra-defensives (bonds & gold) as inflation if/when it arrives, is a long way off.

The stimulus package (posited at $900B) is having issues passing the Senate and Trump seemingly has lost interest. Now stocks are very interested in when and how much. This would explain a rotation back to Treasuries and gold, with an expectation of a bad outcome being priced in. 

Meantime:






jog on
duc


----------



## ducati916

There are a number of new IPOs coming to market. IPOs (when there are lots) can often signal short term tops and in 2000, major tops:









Gold looks set to resume its downtrend after that little bounce. Treasuries are again adding yield. The question will ultimately become: will the Fed cap yields? If so where? If that becomes the reality and let's pick an arbitrary figure of 2% for the 10yr...what happens? What I think happens is that the dollar sells off hard, which, should then be bullish for gold and or BTC.

In 1933, FDR defaulted on the dollar. In 1971 Nixon defaulted on the dollar and inbetween in 1944 at Bretton Woods, the framework was created for the 1971 default. Now, the default cannot be as blatant as the previous two, but freezing the yield if inflation kicks off is essentially a default.

Inflationary forces are gathering, but they are really weak. The current greater risk by some magnitude is a deflation: a mass of bankruptcies of corporate debt, due to losses. The Fed. would backstop it, at least the major corporations who wield some political power, but this would be a strange mix of deflation and followed rapidly by a counter-inflation netting out to what?











There is an argument that BTC becomes the anchor to the myriad other digital currencies as gold was to the fiats. That is an argument I can accept. The problem for me and this is obviously an age thing...I could not trust the internet with kinda the end of the world holding, especially when you are relying on the internet for paper wealth of shares accessed by computer (albeit nominally by your broker) which you hope adds some accountability, I would need the actual physical as a hedge.

BTC seemingly correlates with gold, at least until more recently when we had a bit of a divergence. I would expect that gap to close. We are essentially dealing with the same psychology. BTC is also in the news:






Stocks as I speak are looking toppy. I increased my hedge early this morning.

The reason?












jog on
duc


----------



## ducati916

So on the close, vol. ramped up and the market fell.

















So we'll see if the trend line contains the rise in vol.

Mr flippe-floppe-flye:






jog on
duc


----------



## peter2

Looked through a list of SPACs and FFF is right, they've gone gangbusters over the past few weeks. A monkey with a dart could have made money. Now where's that monkey, oh he's on my back.


----------



## ducati916

The commodity theme and arguments continue for an impending bull market that is (now) underway:

First up: Canadian dollar, Canada being a major resource producer.







Oil as against food products, really highlighting the PPI component.







Credit spreads between Treasuries/Corporate BBB. When economies recover, less risk in BBB and higher returns.






This is a new one on me: chemical usage has been pretty reliable (2 negative positives signalled by red line).






The overall commodity market.






So early days. Obviously it could (and might) be derailed by a further macro-event. However, the probabilities are starting to lean towards an inflationary type of market and away from a deflation event. Also, the disinflationary forces that were operating are now exerting far less influence than they were prior to C19. To me, that is possibly the big takeaway from C19 - the disinflationary forces have been blunted, opening the door to a return (although weaker currently) to the inflationary forces that operated in the 1970's.

One prediction, if it were to come to pass, could add some further impetus to the inflationary forces:









						Universal basic income decimates big cities
					

The new UBI drives changes in the attitude toward work and life balance and the professionals and the marginal workers in big cities also begin to leave, as job opportunities dry up.




					www.home.saxo
				




Now my thinking is that a UBI provides something similar to the COLAs that previously existed and was 1 component (an important one) in the 1970s style inflation.

Of course, Mr flippe-floppe-flye is all over this:






I'll consider gold later. I'm on my other computer and cannot access my normal library.

jog on
duc


----------



## ducati916

EOW and the market is still teetering.






It's down, but not necessarily out: we are only just seeing a ratchet up in vol. Now the market could rally hard into the close and that VIX reading will come down and fall under the trend again. I have an (new) additional trend to add to the chart, which suggests higher vol. to go, but I'll wait until the close for the w/e.






Across in Bond land:






A golden cross for the 10yr. Does it actually mean anything? Well (a) yes if the Fed doesn't cap it and (b) no, if the Fed caps it. If it continues to rise into 2021, I think the Fed caps it. You cannot have the current situation with credit becoming more expensive (potentially a lot more) therefore the Fed will step in. Which means that gold/BTC are potential winners in waiting, although BTC has already had a big move.

Rotation into value has been all over the newswires, so just confirming really.








Emerging markets, meh. Which means at some point, they could catch fire.







SPACs on fire.







And finally the 'natural' emotions one has to overcome in the market.






Or just follow the Master:






jog on
duc

* And a late addition:






Not what the market wants to hear. In the US a decision from the FDA is expected next Friday.


----------



## ducati916

Start with oil news:

*Friday, December 11th, 2020*

Brent hit $50 per barrel on Thursday for the first time since March, edging higher on optimism surrounding vaccinations, the OPEC+ deal, plus strong demand in Asia. However, prices eased a bit on Friday as demand in Europe and the U.S. remains subdued and Covid-19 cases continue to spread. The EIA also reported a surge in crude inventories for last week, up 15.2 million barrels.

_*Signs of demand rebound in Europe.*_ Many European countries went back into lockdown in November, but are loosening restrictions again. Bloomberg says that road usage is on the rise, hitting a two-month high.

_*Pemex suspends work with Vitol. *_Pemex suspended business with Vitol after the oil trader paid $160 million to settle bribery charges. Vitol settled charges for paying bribes in Brazil, Mexico and Ecuador.

_*Exxon makes Suriname discovery. *_*ExxonMobil (NYSE: XOM)* and its partner Petronas announced a discovery in offshore Suriname, the first in the country for the partnership. The discovery adds to Exxon’s already large footprint in neighboring Guyana.

_*SEC to vote on disclosures.*_ The Securities and Exchange Commission will vote on December 16 on whether or not to approve new disclosure rules for oil, gas and mining companies related to payments to foreign governments. It is the third iteration of the rule and stems from the 2010 Dodd-Frank law.

_*BLM fast-tracks Uinta Basin land sale. *_The Trump administration is fast-tracking a proposed 2,100 lease sale in Utah for tar sands developers. 

_*Germany hopes to insulate Nord Stream 2. *_Germany is looking for ways to insulate the Nord Stream 2 project from U.S. sanctions. The pipeline is more than 90% finished but has been held up by sanctions. 

_*EU clinches deal on tougher CO2 targets.*_ The European Union has agreed to tighten climate targets to 55% reduction in CO2 by 2030 (from a 1990 baseline), ramping up ambition from the current 40% reduction. Carbon prices in Europe rose to 31 euros per tonne, an all-time high.

_*Texas regulator banned from waiving environmental rules. *_The Texas Railroad Commission has been banned from enforcing a string of environmental rule waivers after a judge ruled the agency had failed to provide the public with adequate advance notice of such moves, first proposed in the spring.

_*Top shale gas basin continues to bleed cash.*_ Frackers in the top shale gas basin, the Appalachia, continue to bleed cash, despite the deep cuts in capital expenditures this year as a result of the plunge in gas prices in the first half of 2020 due to mild winter early in the year and depressed demand later on with the pandemic.

_*Investors turn to SPACs. *_Burned by shale, investors are increasingly turning to clean energy SPACs, according to the Wall Street Journal. Private equity has done more deals in clean energy than oil and gas in 2020. Special-purpose acquisition companies (SPACs) are a new popular vehicle – SPACs raise money, go public, and only then do they merge with a startup company. The number of SPACs has skyrocketed this year. 

_*Some companies could benefit from a pipeline shortage. *_Some pipeline operators with pipes already in the ground will see the value of their existing pipelines rise amid a looming scarcity of infrastructure, analysts say.

_*Shell executives resign over the pace of transition. *_Some top executives at *Royal Dutch Shell (NYSE: RDS.A) *resigned over a disagreement over how quickly the company would pursue its clean energy transition. 

_*Consolidation in Canada’s oil industry. *_*Whitecap Resources (TSE: WCP) *said it would buy rival *TORC Oil & Gas Ltd (TSE: TOG)* in an all-stock deal worth C$552 million. It’s the latest sign that the downturn is forcing consolidation in the industry.

_*Oil majors take advantage of tax havens.*_ Reuters published an investigation detailing how the oil majors shift billions of dollars in profits to tax havens, often in island nations in the Caribbean. From Reuters: “In 2018 and 2019, Shell earned more than $2.7 billion - about 7% of its total income in those years - tax-free by reporting profits in companies located in Bermuda and the Bahamas that employed just 39 people and generated the bulk of their revenue from other Shell entities.”

_*UAE awards contract to Occidental. *_*Occidental Petroleum (NYSE: OXY)* won a contract for exploration in the UAE.

_*New York to divest from fossil fuels. *_The New York State Common Retirement Fund said it would divest itself from the riskiest oil and gas stocks by 2025. The $226 billion pension fund is the largest yet to divest from fossil fuels. 

_*Oilfield services lost more than 91,000 jobs.*_ The U.S. oilfield services sector lost 91,680 jobs since the market downturn started last March.

_*D.E. Shaw pushes Exxon to cut CAPEX deeper. *_D.E. Shaw & Co., which owns a sizable portion of *ExxonMobil (NYSE: XOM)*, is pressuring the oil major to cut its spending in order to protect the dividend. The shareholder argues that Exxon is overspending and posting poor returns, resulting in its position slipping below that of *Chevron (NYSE: CVX)*. D.E. Shaw says Exxon should slash CAPEX to $13 billion, down from a planned $23 billion this year.

_*WoodMac: 77% of LNG projects at risk.*_ A new report from Wood Mackenzie says that 77% of new LNG projects are at risk in a 2-degree climate scenario. In other words, climate policy will result in renewables outcompeting LNG. 

_*LNG gaining traction in shipping. *_Recently enacted IMO rules are forcing the shipping industry to use alternative fuels to slash emissions. LNG is gaining traction as a fuel source, the Wall Street Journal reports.

*Tesla’s shares “dramatically overvalued.” *JPMorgan said that *Tesla (NASDAQ: TSLA) *was “dramatically overvalued.” The company’s shares have climbed 800% in the past two years.

This week's market data:

The market is still overwhelmingly bullish.










From very subjective to more objective:





Those are pretty high for NYSE, but the NASDAQ has come off the boil, which is the rotation. However as the IPO data will demonstrate, that rotation, growth to value, is likely to be (a) reversion to the mean and (b) more importantly, growth into a gradually re-opening economy. So growth will likely re-dominate, just a different set of hot stocks.











As can be seen from above, there have been some pretty big IPOs this week. The biggies moving way past their offering price. Comparisons have inevitably been drawn to 1999. Also highlighted as distinguishing this crop is that unlike 1999, these actually have earnings. Earnings or not, when an IPO lists and jumps 100% in an hour or so, that is a frothy market. Frothy markets are dangerous markets because they are volatile markets.






Too many issues here: look at the increase in money supply %. This is in part to finance government deficit spending which is now x2 tax revenue. We have the MMT crowd who maintain that this is never an issue. The fact is: to this point it has not been an issue. It does not automatically follow that it will never be an issue.

Which brings me to gold:






The commercials (Bullion Banks) are selling gold hard. There are all manner of reasons why. One of those reasons is that their accounting is end of November and at 1 point, there were 150,000 CALL contracts, which if the POG fell, would expire worthless and flow to their bottom line. So we have the market makers trading against gold.

We have also had the fundamental macro-picture of rising rates trading against gold. This past week has been a real will they, won't they picture re. continuing rising yield. The fluctuations away from trend have reduced, leading one to speculate that possibly a change in trend is coming, ie: higher POG or the resumption of the gold bull.






Looking at the miners rather than gold itself, is not a slam dunk trade either way. They also sit at somewhat of a midpoint.






Just a straight price chart and I would be saying lower, which is why I would never look at this in isolation. From the 2 above charts we know that the current trend is potentially at an inflection point. For that reason, the time was perfect (for me) to place a substantial market neutral trade and simply let the market move me to a profit, given that either (a) trend continues or (b) trend reverses. Both potentially carry the promise of a significant move (and therefore profits).






Finally, Mr flippe-floppe-flye:






Final word re. $VIX: which pulled back from its intra-day high reading of +9% to a +3.6% increase. That places it, you guessed it, right on the trend-line. Which means (a) the pullback is over or (b) next week the trend is breached and stocks have further to fall. I'll do a summation possibly later, but everything else says lower stock prices: the bear move has only just begun. So essentially, I agree with Mr fff.

Next week I'll be looking (well today actually) for another market neutral position that is poised for glory. I'm thinking biotech, but will need to research it today.

jog on
duc


----------



## qldfrog

ducati916 said:


> place a substantial market neutral trade and simply let the market move me to a profit, given that either (a) trend continues or (b) trend reverses.



Mr Ducati @ducati916 
How do you place a market neutral and hope for profits ?
Your apprentice is lost...
I could buy share, protect with options? But then either i win or loose just a bit..can not win both way?


----------



## ducati916

qldfrog said:


> Mr Ducati @ducati916
> How do you place a market neutral and hope for profits ?
> Your apprentice is lost...
> I could buy share, protect with options? But then either i win or loose just a bit..can not win both way?





Mr Frog,

There are a number of ways. The easiest is to (a) go long a stock and (b) buy a PUT of the same stock. Using the BS model you adjust for delta and volatility the number of shares you hold (this is also known as gamma scalping). If your volatility (IV) is lower than realised vol. you will turn a profit on adjustments to the delta through time (therefore you need to choose the correct time frame also). Market direction then becomes irrelevant. There is an alternative way using Convertibles, which essentially takes time out of the equation. A third way is to use the long/short ETFs and readjust (weighting or delta) either (a) at turning points (which requires being able to pick reasonably accurately turning points) or (b) based upon a calculation or (c) a combination of (a) + (b). I use (c) when using this method, which is the method I am currently using for my gold position.

Looking at the vol. going forward:

So I have added a new trend line and extended the older one. Intra-day on Friday, we extended right through the older trend line when vol. was at 9%. As we dropped back to 3%, so the trend line contained it.

I think come Monday, vol. ramps back up and we move (again) through that trend line and the market falls.






In part because of the supporting evidence:

We have had a topping pattern, followed now by a move lower.






We've had renewed PUT buying:






And






There is some funky s**t going on under the hood.

Obviously there is and has been loads of news coming out: (a) vaccines, (b) economic news, (c) Senate race concluding, (d) infection rates, (e) IPOs last week, (f) inflation/deflation, (g) etc. The market has been churning (at the top) as players take their positions. The internals rather suggest that the outcome will be lower.

Meanwhile, Mr flippe-floppe-flye






jog on
duc


----------



## qldfrog

ducati916 said:


> Mr Frog,
> 
> There are a number of ways. The easiest is to (a) go long a stock and (b) buy a PUT of the same stock. Using the BS model you adjust for delta and volatility the number of shares you hold (this is also known as gamma scalping). If your volatility (IV) is lower than realised vol. you will turn a profit on adjustments to the delta through time (therefore you need to choose the correct time frame also). Market direction then becomes irrelevant. There is an alternative way using Convertibles, which essentially takes time out of the equation. A third way is to use the long/short ETFs and readjust (weighting or delta) either (a) at turning points (which requires being able to pick reasonably accurately turning points) or (b) based upon a calculation or (c) a combination of (a) + (b). I use (c) when using this method, which is the method I am currently using for my gold position.
> 
> Looking at the vol. going forward:
> 
> So I have added a new trend line and extended the older one. Intra-day on Friday, we extended right through the older trend line when vol. was at 9%. As we dropped back to 3%, so the trend line contained it.
> 
> I think come Monday, vol. ramps back up and we move (again) through that trend line and the market falls.
> 
> View attachment 116304
> 
> 
> In part because of the supporting evidence:
> 
> We have had a topping pattern, followed now by a move lower.
> 
> View attachment 116305
> 
> 
> We've had renewed PUT buying:
> 
> View attachment 116307
> 
> 
> And
> 
> View attachment 116306
> 
> 
> There is some funky s**t going on under the hood.
> 
> Obviously there is and has been loads of news coming out: (a) vaccines, (b) economic news, (c) Senate race concluding, (d) infection rates, (e) IPOs last week, (f) inflation/deflation, (g) etc. The market has been churning (at the top) as players take their positions. The internals rather suggest that the outcome will be lower.
> 
> Meanwhile, Mr flippe-floppe-flye
> 
> View attachment 116308
> 
> 
> jog on
> duc



Thanks for your answer/time.
gamma scalping is well above my intelligence/data and tool access..for me to be neutral, at best, i will bear the option premium cost.and with leverage etf, you have to be good at timing.definitively well above my level.
Appreciate the market analysis, confirmation bias maybe as my systems have been reasonably bear since last week.
While Mr Skate @Skate  definitively reignited my system building desires last year, following you has been an opening on the US market and revived a dormant US share account,which was only used for years as a currency exposure/insurance
Much appreciated 😃


----------



## Warr87

qldfrog said:


> following you has been an opening on the US market and revived a dormant US share account,which was only used for years as a currency exposure/insurance
> Much appreciated 😃




I'll add on here. I enjoy reading this thread and learning more about the US market as well. a lot to learn from this thread!


----------



## ducati916

So a little something news wise:






Which would explain why the market was struggling to go higher, but the vol. stayed quite within range. If you are (forced) to sell to rebalance and not as a fire-sale, then as a larger institution you can place larger blocks of stock, but drip feed it in. The MM will aid you in this endeavour. This so neatly explains the drift of vol. the last 2 weeks.

Are they finished? Who knows. However, if they are not and now they are running out of time, liquidity is thinning out...possibly we saw the start last week of a move lower. It is very likely to be a buy the dip, just not quite yet.

Futures are currently optimistic:






And the gold miners (specific) vol. is actually coming to an end (still a little way to go, but closer to the end than the start), where quite possibly the SPY is just getting started:






This week could be interesting!

jog on
duc


----------



## ducati916

So I have to be pretty quick today, I have an early start at work:

So a bit of a sell-off after a gap open. Vol. isn't doing much yet (next chart) but it could go either way.






That longer term trend (repeated in other VIX charts) seems to be holding. I remain sceptical. We'll see.






Moving to the inflation meme: Dr Copper still seems to be indicating higher inflation as do TIPS.








Which means lower gold prices:






My gold trade:






My target that lower trend line. Will it hit? Looks promising at least.

And my main man, flippe-floppe-flye:






jog on
duc


----------



## ducati916

Markets are sending mixed messages. As such, they are prone to quick reversals. Part of this is that market participants are aware that this market is seriously overvalued, but, what other options are there?






The Bond market is sending quite a different message than the Stock market. Growth (green) heading lower; inflation (red) heading higher and yields (blue) heading higher. There are still strong disinflationary forces at work; globalisation (China); debt (keeping a significant number of zombie companies alive and producing at a loss) and technology.
















The US dollar (again) seems to be heading lower (inflationary) and is not that far away from a major support area. What happens there could unleash quite significant moves in Bond/Stock/Commodity markets.






Currently the Stock market is shaking off Bond market concerns and should continue with its bull run. It will simply be choppier and less certain.






Gold & mining stocks also seem to be finding a bottom and could potentially re-enter an uptrend if this bounce higher can break through the trend line. The gist being that real yields are falling below nominal yields hence the return is ZIRP or less.






For pure stockpickers have a look at these stocks. Too many to go through myself, but, if you see any promising ones, let people know.






This is what they may look like:






Meanwhile, Mr flippe-floppe-flye:






jog on
duc


----------



## ducati916

So leading into Christmas markets remain twitchy. This is largely due to the various markets, currencies, commodities, bonds and stocks all watching the others. They are watching because 2 major macro-forces are vying for dominance: inflation v deflation (with disinflation blunting the effects of inflationary forces). 

If 1 of the above has to win, we are rooting for inflation. Deflation (debt default on a significant scale) would potentially lead to the hyper-inflation that Schiff et al warn about. Inflation however can be easily (although not painlessly) controlled through higher interest rates. However, with the housing market bubble world wide, a rise in mortgage rates world wide would create significant issues for those unable to have a fixed rate.

Returning to the CAPE chart posted yesterday: valuations are high, which means at some point returns will be low. Obviously the market can move significantly higher. And it will continue to move higher until something happens in 1 or more of the other markets, which is why we must be alert for the first signs of trouble.

The difficulty is that we become complacent. Year after year of a rising market dulls our senses to the other markets and their signals.






So the US dollar: it looks to be resuming its down trend as against the Euro. Obviously checking as against the Yen and Yuan would be prudent. A falling dollar is inflationary as commodities are mostly priced in dollars and as the reserve currency, that translates into inflationary pressures world wide as the Fed. will at some point intervene via monetary policy (rising yields). Nothing to worry about currently.






Which of course means we watch Treasuries: so they have moved above their 50day. Bullish. Are they heading towards 2%? My model says no, not yet. 1.3% is about where I see them settling for the moment. That could change. A further weakness in the dollar could start that push to 2%.







What's on fire? Crypto.






Speculation or fundamentals? I say speculation. A valuation model based on social network effects values BTC at $12K:






On this valuation model, 21 million BTC = $75K/coin. So potentially plenty of upside, just also significant volatility should be expected.

Growth stocks or IPOs: getting richer and frothier, recalling memories of 1999.






Why would you bother? Mainly in the hope of catching the next AMZN: So the squiggly lines below are the aggregate estimates of all the analysts following AMZN. The horizontal bars are the actual earnings. Clearly, AMZN crushed consensus earnings. That is the dream: find another AMZN today for the rewards tomorrow.






All that remains, my main man: flippe-floppe-flye






Which is a good message: sit tight and be vigilant.

Thought for the day: true or false?






jog on
duc


----------



## ducati916

So news from the oil markets:






   In 2019, the average monthly electricity bill for households declined to $115 per month, down by 1.8% compared to 2018.

-    That came despite rising prices – average electricity prices rose by 12.87 cents per kWh. Lower bills were the result of lower consumption. 

-    Hawaii has the highest electricity bills in the country, while Alabama, South Carolina and Mississippi had the lowest.

*Market Movers*

-    *New Fortress Energy (NASDAQ: NFE) *said it would offer $250 million in debt at 6.75% on senior secured notes due in 2025.

-    *Ecopetrol (NYSE: EC) *announced a 2021 CAPEX plan of $3.5-$ billion, with 80% of that focused on Columbia, and the remaining 20% in Brazil and the U.S.

-    *Royal Dutch Shell (NYSE: RDS.A)*, *Eni (NYSE: E), *and other partners in the Karachaganak oil project paid $1.3 billion to Kazakhstan to settle a longstanding dispute over revenue sharing.

*Tuesday, December 15, 2020*

Brent rose above $50 per barrel in recent days and has held there at the start of this week. The beginning of widespread vaccinations in Western Europe and North America has led to a surge of optimism. At the same time, the Covid-19 wave is at its worst. “Brent is continuing to defy all the negative news,” said Carsten Fritsch, an analyst at Commerzbank. “More and more countries in Europe and states in the U.S. are tightening the corona restrictions over Christmas and the new year, which is likely to weigh on demand.”

*IEA cuts 2021 forecast.* The IEA cut its 2021 demand forecast by 170,000 bpd, largely due to a downgrade in jet fuel demand. 

*Oil tanker attacked in Jeddah.* An “explosive-laden” boat struck a fuel tanker at the Saudi port of Jeddah. There were no casualties and no disruptions to fuel supplies, the Saudi government said. 

*LNG prices skyrocket. *Spot LNG prices in Asia – JKM – fell below $2/MMBtu earlier this year, but have recently spiked as demand picks up. Prices spiked above $12/MMBtu.

*Venezuela’s environmental nightmare.* Venezuela’s oil industry has collapsed and as Bloomberg Green reports, it is resulting in an environmental disaster.

*Exxon’s Guyana venture is paying off. *The growing oil boom in the offshore Guyana-Suriname Basin continues to gain pace. Exxon’s latest discovery in neighboring Suriname adds even more momentum.

*Exxon announces a carbon-intensity plan.* *ExxonMobil (NYSE: XOM) *is not exactly willing to cut emissions on an absolute basis, but under withering pressure from investors, activists, and civil society, the oil major announced plans to lower carbon intensity. Exxon said it would cut emissions per production 15% to 20% below 2016 levels. But emissions could still rise if production rises. The move comes weeks after several European buyers balked at U.S. LNG shipments over concerns about methane emissions from U.S. shale.

*Exxon cuts 700 jobs.* *ExxonMobil (NYSE: XOM) *cut 700 jobs in its Houston office.

*Bombshell report pours cold water on global LNG.* Wood Mackenzie is warning that global energy transition goals could threaten more than two-thirds of the world’s supply of liquefied natural gas, leaving trillions of cubic meters of gas in resources stranded.

*Parsley Energy lays off workers ahead of Pioneer merger.* *Parsley Energy (NYSE: PE) *will lay off most of its workforce in Austin as part of its sale to *Pioneer Natural Resources (NYSE: PXD)*.

*Canada to hike carbon price to $170/tonne by 2030. *Canada will put a carbon price of as much as $170 per tonne by 2030, up from $30 currently. The tax will rise by around $15 per year to reach that higher threshold at the end of the decade. The result could be gasoline prices that are 37 cents per gallon higher by 2030.

*Canada’s oil sands back in favor. *Morgan Stanley and Goldman Sachs each issued notes to clients highlighting Canadian oil sands producers for their ability to generate cash flow. They singled out *Suncor Energy (NYSE: SU), Canadian Natural Resources (NYSE: CNQ) *and *MEG Energy Corp. (TSE: MEG).* The eight largest oil sands producers generated $1.4 billion combined in free cash flow in the third quarter.  

*UK to end fossil fuel financing overseas. *The UK said it would halt all financing for overseas fossil fuel projects as part of its latest climate initiative. 

*Germany aims for 65% renewables by 2030. *Germany tightened its energy law, hiking its renewables goal to 65% by 2030.

*Tesla hikes output amid rising demand. Tesla (NASDAQ: TSLA) *said demand for its vehicles is so high that it would try to ramp up production this month. “We are fortunate to have the high-class problem of demand being quite a bit higher than production this quarter,” Elon Musk wrote in an email to staff.

*Australia to subsidize refineries.* Australia will pay a subsidy to struggling refineries to keep them open.

*European heavy-duty trucks to phase out ICE engine.* Heavy-duty truck makers in Europe announced plans to phase out the internal combustion engine by 2040. 

*EV sales to grow by 50% in 2021. *Global sales of EVs could rise by as much as 50% next year, with ICE sales growing by just 2% to 5% (although from a much larger base), according to Morgan Stanley. 2021 “is shaping up to be a critical year for EV adoption and (internal combustion engine) de-adoption that will dictate the pace of multiple expansion, contraction, consolidation, and proliferation” among the stocks, Morgan Stanley analyst Adam Jonas said in the note.

*Forest Service approves Mountain Valley Pipeline. *The U.S. Forest Service issued an environmental impact statement supporting the Mountain Valley Pipeline’s route through the Jefferson National Forest. The document allows the pipeline to clear a key hurdle in the project’s completion.

*Bakken no growth through at least 2022. *North Dakota officials do not see any production growth from the Bakken through 2022 as companies reel from the latest downturn.

_*China hopes to boost shale gas.*_ China is looking to attract investments in shale gas developments by easing restrictions on foreign entities and subsidizing costs in a bid to boost its natural gas production while its demand continues to grow.  

*Scotiabank rules out Arctic oil. *Scotiabank became the fifth major Canadian bank to prohibit financing oil in Alaska’s Arctic National Wildlife Refuge. Most major banks in both the U.S. and Canada have now blocked financing in ANWR, but the Trump administration is hoping to finalize a lease sale before January 20.

*Clean energy provisions tucked into spending bill. *U.S. House and Senate leaders have agreed to include some clean energy innovation measures into a major omnibus spending bill. The bipartisan measures promote nuclear power, energy storage, carbon capture, and direct air capture.

*EV models to triple in three years. *The number of electric vehicle models available to consumers is expected to more than triple in the next three years, from roughly 40 to 127 in the United States.

*Solar installations soaring 43%. *U.S. solar installations shot up 43% this year to over 19 GW, shrugging off the pandemic. 

And an interesting article on pipelines, I still hold AMZA:









						Why Warren Buffet Is Betting Big On Oil & Gas Pipeline Companies | OilPrice.com
					

Pipeline companies have seen their values crash in recent years, but as it gets harder and harder to build new pipelines, markets are overlooking the real value of these vital companies




					oilprice.com
				











						Was Buffett Right About Energy In 2020? | OilPrice.com
					

Warren Buffett, America's most legendary investor has a long track record trading energy companies, so when he makes a move, the markets pay attention




					oilprice.com
				




jog on
duc


----------



## ducati916

So the newswires are full of stories regarding (a) stimulus package, (b) vaccines and (c) Fed. policy. The market is still only slightly higher. The dollar is down and the 10yr higher as are commodities pretty much across the board. There will continue to be this trade off between inflationary forces and disinflationary forces. While economies stay in lockdown or partial lockdown, inflationary forces will likely predominate. 









Deflation lives here:









While the Fed. continues to have their backs, nothing to worry about:






Crypto continues to be red hot: so on a purely chart based analysis (and really what else is there) a move to $30K is on the cards. 






It is certainly correlated with both the US dollar and Gold, which suggests an inflation thesis.






So an inflation of the PPI can be hedged via Gold/Commodities (obviously) and we should add BTC to that list. Stocks on-the-other-hand do not like PPI inflation (they love CPI inflation). A rising commodity inflation combined with or caused by a dollar weakness, isn't going to feel the love from stocks (unless you are a commodity producer). This is now an area to pay attention to.

Fully endorsed by flippe-floppe-flye:






Meanwhile the actual mechanics of trading, not overly important to anyone trading over a 1 day time frame are (a) the Options market and (b) the HFT chaps.

Options first:









And the HFT chaps:









						High-Frequency Traders Push Closer to Light Speed With Cutting-Edge Cables
					

The use of so-called hollow-core fiber to convey data can give firms nanoseconds of advantage when they execute their rapid-fire trades in stocks, options and futures.




					www.wsj.com
				




I have added a further commodities position to my gold miners position in Natural Gas, using BOIL/KOLD x2 ETFs. Now NG is one crazy commodity, however, through this week I have been 'backtesting' a methodology which on paper returned an annualised 30% with tiny risk. Tiny risk and NG simply do not belong in the same sentence. We'll see.

The market meanwhile, on tons of good news, creeps marginally higher. That (to me) is a concern. Returning to yesterday's post on IPOs and growth stories (AMZN), for the market to continue higher we need (a) growth in earnings, (b) the denominator to stay at ZIRP and (c) just enough, but not too much inflation. Well (b) we shall have. Whether we get (c) we're in the process of finding out. The issue really will be (a). I haven't really paid too much attention to the slew of IPOs. This I think is an area that merits closer study. How many (there are lots to look at) will continue to generate growth in earnings? What are their current multiples? How do they compare to the (so called) value stocks? 






More questions than answers.

jog on
duc


----------



## Smurf1976

ducati916 said:


> average electricity prices rose *by* 12.87 cents per kWh.



I expect that's rose "to" not "by" - it's a truly massive price jump if it's "by". 

Incidentally US electricity pricing commonly includes direct pass-through of fuel costs. So utilities aren't hugely exposed to coal or gas prices, there's a direct pass through straight to consumers written into the contract typically, the only issue being there's typically some time lag and averaging involved.


----------



## ducati916

Talking about 'growth' stocks and looking for the next AMZN: is TSLA an AMZN? I don't think so.


















Which revives the argument from a few months back where Mr @Chronos-Plutus was making essentially this argument. Looks as if he was closer to the truth (reality) than many gave him credit for.

Would I short TSLA? No TSLA is a narrative stock. Until that narrative crumbles, it remains pretty much untouchable. Musk has just issued $50B in new stock. So TSLA has $50B in cash to fund it through next year...although small as against its market cap. that is still a significant chunk of change.

jog on
duc


----------



## ducati916

So Monday is when TSLA gets added to the S&P500. 

The Nifty Nine: playing on the Nifty Fifty of the late 1960's. TSLA is a narrative stock. When the story (and part of that story is contained within its stock rise) ends or slows down, the stock becomes a short.






Why?






Because it is a bubble.






For TSLA to grow into its valuation is simply not going to happen. There is too much competition.

However, as far as the index is concerned:









TSLA's inclusion will create underperformance for TSLA. Will it pop the bubble? Not sure. Will it impact the index (TSLA will be 1.5%)? It will have an impact, but probably not an outsized one.

The others












Moving onto the dollar:






Part of this is the run back to risk assets outside of the US. due to the release of the vaccine. If the dollar continues to fall, obviously Gold/BTC/Commodities (Oil) will continue to rise, driving a rise in the PPI. The question is: these massive Tech. firms who use enough electricity to supply a small country in their data farms: does a rise (significant) in power costs cause a dent, even a tiny one? Or is it immaterial to their cost structure. Through the 1970-1980 and even into the 1990s, an oil crisis was bad news for the market. 

Fiscal policy, currently still available for stimulus payments etc.






Which really (even if you doubt the Fed.) suggests that low interest rates are here for a looooooong time. Which must then cause a second look at the dollar to continue to move lower, as low rates combined with a rising rate of inflation is essentially a default. Who wants to hold a defaulting currency?

Moving to flippe-floppe-flye:









Now I ran out of space for charts. I'll have to make a part ii.

jog on
duc


----------



## ducati916

Part deux:

Just finishing off TSLA:






Now, missed BTC? Second chance?






Overall markets:






Yields continue to tick higher. The 10yr is going to 1.3%. Where will the Fed. step in? Not at 1.3%. Possibly 2% based on the 'Taper Tantrum'.






Commodities running hot. Gold/Silver as against yield, not so much. For Gold to explode, you will need the Fed. to cap yields. Gold could therefore have a long period of nowhere or even (much) lower prices until that happens. Which it will. No way the US government can run deficits the size of which they have with yields at 3%+.






And BTC is correlated with Gold and yield.

VIX is subdued and looking contained. I'm still not convinced. I'm still expecting fireworks. As such, a significant portion of the portfolio is now market neutral in gold and gas. 






So these are the Mining stocks x2 leverage. They look set technically to fall lower, which fits with the thesis of rising rates. Given that they are an alternative to 'money' of the fiat kind, they separate themselves from other commodities.






Which is the (lunatic) commodity of Natural Gas. Energy and energy stocks are on fire. Will gas be towed along? Not sure. It is northern hemisphere winter and a cold winter usually means higher prices, but a warm winter, C19 issues, whatever, could have gas drop way lower. I have no idea. ATM, it looks like higher.






The dollar looks to be breaking down. Hardly surprising given its fundamental picture. But as a reserve currency, funny s**t can happen. Which is why I don't (unless I am monumentally bored) trade currencies.






jog on
duc


----------



## ducati916

The w/e data.

In no particular order:






Sentiment remains bullish. However (as we shall see later, therein lies a warning). Dollar falling against Euro (which I track) and the Yen, which more or less mirrors the Euro. Obviously has inflationary implications.





With gold highs/lows since 1999.






There are some interesting numbers in here. All the manufacturing/production/inventory numbers are down. If/when demand picks up, which one would expect if the vaccinations control the C19, then (look right to the Inflation data) the ECRI number, already showing signs of heating up, could get a lot warmer. Add that falling dollar and we are already seeing in commodities, that they are rising (pretty much) across the board.






Just reinforcing 'sentiment'. The PUT/CALL ratio however is demonstrated bullishness.





Companies continue to float new debt. Money supply going ever higher. Combine that with low inventory levels and you can see that potentially that can flow into CAPEX, which drives commodity prices higher. The other use of course is the repurchase of your own stock, pumping your earnings/share. It also places a nice bid under the market.






Speaks for itself.






A year ago, unknown to many, the market was already in dire straits. The collapse came in Feb. The bears were right. Currently we are 50% of that total. This is a number worth keeping an eye on, because:






There is a major divergence. We have had some really minor declines in the last 2+ weeks, but nothing that has taken hold. As you can see, sometimes it takes a little while for the divergence to work itself out and result in a market fall. Under-the-hood, something is going on. What, might only come out after the fact and a market decline.

We have also had a couple of false starts in the VIX. 

Final word: flippe-floppe-flye:






jog on
duc


----------



## qldfrog

ducati916 said:


> The w/e data.
> 
> In no particular order:
> 
> View attachment 116777
> 
> 
> Sentiment remains bullish. However (as we shall see later, therein lies a warning). Dollar falling against Euro (which I track) and the Yen, which more or less mirrors the Euro. Obviously has inflationary implications.
> 
> View attachment 116778
> 
> With gold highs/lows since 1999.
> 
> View attachment 116779
> 
> 
> There are some interesting numbers in here. All the manufacturing/production/inventory numbers are down. If/when demand picks up, which one would expect if the vaccinations control the C19, then (look right to the Inflation data) the ECRI number, already showing signs of heating up, could get a lot warmer. Add that falling dollar and we are already seeing in commodities, that they are rising (pretty much) across the board.
> 
> View attachment 116780
> 
> 
> Just reinforcing 'sentiment'. The PUT/CALL ratio however is demonstrated bullishness.
> 
> View attachment 116781
> 
> Companies continue to float new debt. Money supply going ever higher. Combine that with low inventory levels and you can see that potentially that can flow into CAPEX, which drives commodity prices higher. The other use of course is the repurchase of your own stock, pumping your earnings/share. It also places a nice bid under the market.
> 
> View attachment 116782
> 
> 
> Speaks for itself.
> 
> View attachment 116783
> 
> 
> A year ago, unknown to many, the market was already in dire straits. The collapse came in Feb. The bears were right. Currently we are 50% of that total. This is a number worth keeping an eye on, because:
> 
> View attachment 116775
> 
> 
> There is a major divergence. We have had some really minor declines in the last 2+ weeks, but nothing that has taken hold. As you can see, sometimes it takes a little while for the divergence to work itself out and result in a market fall. Under-the-hood, something is going on. What, might only come out after the fact and a market decline.
> 
> We have also had a couple of false starts in the VIX.
> 
> Final word: flippe-floppe-flye:
> 
> View attachment 116776
> 
> 
> jog on
> duc



Remember how you mentionned tesla as a narrative stock?
Based on numbers and facts, covid is also a narrative and with vaccines, the narrative changes.So within a months or two, the inflation will start:
Market will so be able to get bullish, and gold commodities will win: pushed by both demand and inflation.
As i see it, a last limited drawback with a few more alarmist headlines to ensure government control, then a serious bull market with inflationary forces until such time that central banks need to rise rates so stalling the bull move.
I would look at the sign of the drawback in the coming weeks..usually post NY, or just ride it looking at the 6 months or year at least of blue sky beyond.
also feel confident with gold and so BTC in the near /medium term which could be a smoother ride.
Am i off track?
Have all a great week end and thanks for providing these data gems


----------



## qldfrog

qldfrog said:


> Remember how you mentionned tesla as a narrative stock?
> Based on numbers and facts, covid is also a narrative and with vaccines, the narrative changes.So within a months or two, the inflation will start:
> Market will so be able to get bullish, and gold commodities will win: pushed by both demand and inflation.
> As i see it, a last limited drawback with a few more alarmist headlines to ensure government control, then a serious bull market with inflationary forces until such time that central banks need to rise rates so stalling the bull move.
> I would look at the sign of the drawback in the coming weeks..usually post NY, or just ride it looking at the 6 months or year at least of blue sky beyond.
> also feel confident with gold and so BTC in the near /medium term which could be a smoother ride.
> Am i off track?
> Have all a great week end and thanks for providing these data gems



The above for the US market and northern hemisphere, as we will go into Autumn and will have no acquired immunity here in AUS/NZ, our story might be different...


----------



## ducati916

Just looking at gold:

So Mr Rederob's chart:







My chart:






In the short term interest rates are to rise. 10yr is currently 0.95%. My model puts it at 1.30% currently. That is a 35 basis pt. move to the upside. That is pretty major. If that occurs, unless inflation of the PPI variety ratchets up even more, giving a negative real return, gold is set to fall.

I don't think the Fed. become involved before 2%, if then.

My position is market neutral. I turn a profit either way, so I'm really unconcerned which way it moves, as long as it moves. My call however is for gold & gold miners to trade lower into 2021.

jog on
duc


----------



## ducati916

Some 2021 forecasts:
















jog on
duc


----------



## ducati916

So do markets recover into the late day or resume their sell-off?






My guess, resume their sell-off. VIX is elevated (no surprise there) but of more concern was the divergence posted a couple of days back. Divergences are a nasty signal. The sell-off in TSLA may have been the catalyst, but there is something a bit nastier lurking under the hood. Markets in general seemed to move to risk off:






Reinforcing the inflation meme (down the road):






This was (obviously) a huge disinflationary force, which is now topped out? We would also need for real inflation to take hold a falling dollar and rising pressure for higher wages (a real 70's thing when Unions had more power).

Meanwhile:






While I think VIX goes higher (stocks lower) the correction will be short and sharp.

Mr flippe-floppe-flye:






jog on
duc


----------



## ducati916

Markets all over the place:

In stocks, Tech. is strong again, everything else meh.






Bond yields lower. Run to safety?






Commodities generally lower. No run to gold however.






A run to crypto?






Here lies the dichotomy twixt the 'economy' and the market:






But the markets can access:






The various sectors:






Banks have some positive news:






Vol. is up. The trend lines (past) are all over the place, so any prediction or anticipation of where they are going is just a best guess: The best guess is higher. Could be nothing more than holding in a Christmas week with so much potential news is just not that attractive.









The decider for me is the Bond vol. When Bonds get volatile I get a bit nervous as they often lead stocks. Now this is not anything more (if it even eventuates) than a dip. Yesterday we saw that there are plenty of dip buyers out there and they will continue even if we get further weakness, unless it breaks badly.

Most likely, this is mostly a repositioning (dollar/bonds/commodities) over developments in Europe. If the vaccine is not effective on the new strains of virus, things could accelerate. If it is effective, then probably things will return largely to trend.

We are therefore sitting at an inflection point news wise and the market is simply reflecting on the current uncertainty. As the insiders get the news first, we'll see the market start to reposition. We will always be behind the initial curve but ahead of the wave as news is released to the general public.

Mr flippe-floppe-flye has discovered a 'new' something (LIDAR). I have not come across these latest whatever's so can't help there.









jog on
duc


----------



## qldfrog

ducati916 said:


> Markets all over the place:
> 
> In stocks, Tech. is strong again, everything else meh.
> 
> View attachment 116962
> 
> 
> Bond yields lower. Run to safety?
> 
> View attachment 116961
> 
> 
> Commodities generally lower. No run to gold however.
> 
> View attachment 116960
> 
> 
> A run to crypto?
> 
> View attachment 116959
> 
> 
> Here lies the dichotomy twixt the 'economy' and the market:
> 
> View attachment 116953
> 
> 
> But the markets can access:
> 
> View attachment 116952
> 
> 
> The various sectors:
> 
> View attachment 116963
> 
> 
> Banks have some positive news:
> 
> View attachment 116956
> 
> 
> Vol. is up. The trend lines (past) are all over the place, so any prediction or anticipation of where they are going is just a best guess: The best guess is higher. Could be nothing more than holding in a Christmas week with so much potential news is just not that attractive.
> 
> View attachment 116957
> View attachment 116958
> 
> 
> The decider for me is the Bond vol. When Bonds get volatile I get a bit nervous as they often lead stocks. Now this is not anything more (if it even eventuates) than a dip. Yesterday we saw that there are plenty of dip buyers out there and they will continue even if we get further weakness, unless it breaks badly.
> 
> Most likely, this is mostly a repositioning (dollar/bonds/commodities) over developments in Europe. If the vaccine is not effective on the new strains of virus, things could accelerate. If it is effective, then probably things will return largely to trend.
> 
> We are therefore sitting at an inflection point news wise and the market is simply reflecting on the current uncertainty. As the insiders get the news first, we'll see the market start to reposition. We will always be behind the initial curve but ahead of the wave as news is released to the general public.
> 
> Mr flippe-floppe-flye has discovered a 'new' something (LIDAR). I have not come across these latest whatever's so can't help there.
> 
> View attachment 116954
> View attachment 116955
> 
> 
> jog on
> duc



Yesterday saw my worst trading day for my systems and i lost 20pc of my profit since july outch...one system reverted to bear,another got out of bull..but did not go bear..ahhh the beauty of systems.
LIDAR..in my world, this is the use of laser and image technology to discover /map the 3d environnement as used in self driven cars, robots and ai driven/automated mining equipments..any link?never saw the term used in finance


----------



## ducati916

First up Oil

Demand for transportation fuels (gasoline, distillates, and jet fuel) was down 11% during the Thanksgiving holiday compared to the holiday week a year earlier.

-    Jet fuel, however, was down by nearly half, or a decline of about 0.9 mb/d.

-    There were about 107,000 flights during the week of Thanksgiving, down about 45% from 2019 levels.

*Market Movers*

•    *ConocoPhillips (NYSE: COP)* announced a significant oil discovery in the Norwegian Sea.

•    *Diamondback Energy (NASDAQ: FANG)* announced a double deal to buy two rivals for a combined $3.2 billion. It will purchase *QEP Resources (NYSE: QEP)* and also Guidon Operating LLC. Enverus analyst said it is “a realization among small producers how difficult it is to deliver on returns expectations.”

•    *Royal Dutch Shell (NYSE: RDS.A) *sold a 26.25% stake in Queensland Curtis LNG for $2.5 billion.

*Tuesday December 22, 2020*

Oil sentiment turned negative as near-term problems with demand have finally moved to the front burner after weeks of increasingly bullish sentiment. Dozens of countries cut off travel to the UK over fears of a coronavirus mutation. Lockdowns have also grown tighter in multiple places in December. “The nightmare before Christmas scenario has set in, with a combination of the ‘mutant virus’ compounded by Brexit angst,” said Stephen Innes, chief market strategist at Axi.

_*Goldman sees $65 oil.*_ Despite the current challenges, Goldman is bullish on oil, expecting Brent to average $65 a barrel next year.

_*Congress’ Covid stimulus includes energy provisions.*_ The $900 Covid-19 stimulus, combined with the omnibus spending bill, contained an array of energy-related provisions. The bill authorized $35 billion on a variety of renewable technologies over the next five years, and it extended tax credits. The U.S. Chamber of Commerce called it the most significant energy bill since 2007. The legislation also included a phase out of hydrofluorocarbons (HFCs), a highly potent greenhouse gas found in refrigerants. With little fanfare, the U.S. legislated the most significant action on climate change in years. 

_*Russia backs another 500,000 bpd increase.*_ Despite renewed fears about oil demand due to the new coronavirus strain, the leader of the non-OPEC group in the OPEC+ pact, Russia, is still in favor of another 500,000 bpd increase in the alliance’s oil production from February.

_*Trans Mountain Expansion work temporarily halted.*_ The long-distance Trans Mountain Expansion pipeline project, which would add a twin line to carry oil from Alberta to Canada’s Pacific Coast, has run into some trouble in recent weeks. Several safety mishaps, including the death of a worker, have forced the company to suspend work for the rest of the year.

_*Contractor at Line 3 construction dies. *_*Enbridge (NYSE: ENB)* confirmed that a contractor working on Line 3 construction in Minnesota died in an accident on Friday.

_*Cushing inventories declining.*_ Oil inventories at the Cushing hub declined to around 60 million barrels recently, heading towards normal levels.

_*Shell announced a $4.5 billion write-down.*_ *Royal Dutch Shell (NYSE: RDS.A)* signaled that it would report its third consecutive loss in the fourth quarter, and that it would take a $4.5 billion write-down, much of which was related to its Appomattox project in the Gulf of Mexico.

_*Northeast states unveil cap-and-invest for cars. *_Northeast and mid-Atlantic states unveiled the Transportation & Climate Initiative, a coalition of states that cap emissions on the transportation sector and use the proceeds to invest in a variety of programs. The program is modeled after the Regional Greenhouse Gas Initiative (RGGI), which has been in place for years and caps emissions on major polluters. However, several states said they wouldn’t sign on for now.

_*Norwegian court opens up Arctic to more drilling. *_Norway’s top court dismissed a lawsuit from climate activists to halt Arctic oil exploration.

_*Saudi Arabia keeps oil flowing.*_ The massive 5-mb/d East-West pipeline that carries Saudi oil to the Red Sea has been undergoing repairs since an attack in 2019. But oil continues to flow through a backup pipeline system. S&P Global Platts takes a look at Saudi oil infrastructure.

_*U.S. shale’s horrible year; pain is not over.*_ U.S. shale will start 2021 producing about 7.5 mb/d, down 20% from the start of 2020. As demand begins to recover, OPEC+ will add supply back onto the market, raising questions about how much room there is for shale to recover. IHS Markit estimates that shale capex will total $54 billion in 2021, down by half compared to 2019, and up only slightly from 2020 levels. Also, some analysts say production could fall by another 1 mb/d next year.

_*Russia’s oil minister warns Biden. *_Joe Biden’s presidency will hopefully not interfere with OPEC+ actions taken to rebalance oil markets, Russian Deputy Prime Minister and former Energy Minister Alexander Novak said this week. “We can see that the new U.S. administration is making statements contradictory to the country’s policy from the last four years,” Novak said. “We hope that the changes to the policy of the U.S. administration will not have an impact on the joint actions, which, first of all, are designed to play a positive role for the global economy and energy markets.”

_*Iran woos Russian oil companies.*_ Iran has stated its interest in attracting investments from Russian oil companies to help develop its oilfields, Russia’s TASS news agency said on Monday.






Next up: Santa Claus

​

It was *Yale Hirsch* who discovered and named the now popular “Santa Claus Rally” back in 1972. The way he explained it was,

*"If Santa Claus should fail to call,
 bears may come to Broad and Wall."*

His point was, and for us remains, that if Santa doesn’t show, that historically precedes a period of weakness for stocks. _(If you’ve never been, the New York Stock Exchange is located on the corner of Broad St. and Wall St.)_

To be clear, the Santa Claus Rally is not a December thing. The “SCR” period represents the *last 5 trading days of the year and the first 2 of the following year*. This 7 day period has returned an average of 1.3% for the S&P500 since 1969, and an amazing 1.7% average gain since 1928. And while that’s fine and dandy, when this regularly scheduled rally does NOT occur, that’s when we want to pay attention. Because this no-show normally precedes a flat or down year for stocks.

According to the Stock Traders Almanac, Santa failed to show 6 times since 1994. In other words, on only 6 occasions did the market not rally during this 7-day period. Of those, we saw 3 flat years (’94, ’04 & ’15), 2 very nasty bear markets (’00 & ’08) and a mild bear that didn’t end until February of 2016. Needless to say, they weren’t good times for shareholders.


​

You can see the whole list here directly from the Almanac on the below.

This year, the clock *starts on Thursday December 24th and doesn’t end until Tuesday January 5th.* Because of the way the weekends and holidays line up, this year’s SCR Period is going to last longer than others.
Historically, stocks during this 7-day period do MUCH better than all the other 7-day periods throughout the year. According to Oppenheimer, *since 1928, the S&P500 is up 78% of the time, averaging a 1.7% return*. This is compared to all other 7-day periods up only 57% of the time, and averaging a return of just 0.2%.









​

The focus here, however, is *If Santa Fails to Call*. According to that same Oppenheimer study, 6 months into the new year the S&P500 is up on average of 5.3% when Santa shows up (if stocks rally during this 7-day period). However, when Santa doesn’t show, the S&P 500 is down an average of -0.3%.

I hope this sheds some light on what exactly it means and why we should care.
Forget all the stuff you hear about it. This is what’s important.

Shoutout to Yale & Jeff Hirsch for being so consistent with providing this data for so many years.
We’re standing on the shoulders of giants, and Yale is certainly one of those!

jog on
 duc


----------



## ducati916

So once we get through the Santa Claus rally (assuming he turns up) we'll head into the Presidential cycle. So we had C19 and a market crash. In 2003 we had President Bush's 1'st term at the culmination of the Tech. Wreck.

In 2009 we had President Obama's 1'st term at the end of the housing/banking crisis.

This is what happened in the various markets:









Stock market higher. Dollar traded lower. Commodities traded higher. Bonds fluctuated but went pretty much nowhere. Of note, when the dollar paused, commodities carried on higher. Eventually the stock market paused (went sideways).









Here we had a rising stock market (the Presidential effect) a market tantrum, that resulted in lower yields, higher commodities, but a dollar doing its own thing.

On that basis: (a) low interest rates are important, (b) the dollar is less so, it will do its own thing and (c) commodities rising to a point (difficult to say what that point exactly is) is also fine.

The Santa rally should launch the market nicely into 2021.

jog on
duc


----------



## ducati916

Everyone positioned for the Santa rally?






Historically:






The current market:












Commodities and yields higher. The inflation trade. Cryptos, kinda all over the place. BTC remains the leader.

Sectors:






Some interesting ETFs:






I didn't realise there was a crypto ETF:






Now I just need to figure out a strategy to trade this.

From Mr flippe-floppe-flye:






So gold. I'm much more interested in gold again and will have a follow up post to this one on gold.

So Merry Xmas

jog on
duc


----------



## ducati916

So this chart has been analysed as bullish for gold:






Bull market? Maybe, maybe not. Any other evidence to support the claim?

The other PMs including Gold:
















Only palladium is also in a bull market and I'm guessing that's more to do with TSLA and batteries than straight out PM investing. The lack of confirmation from (particularly silver) the other PMs is always a point of concern. The bull case rests on the expansion of fiat money, which it is agreed is out of control. However, against that we have rising rates. Only if the real return is negative (as it was in the 1970's) will gold enter a true bull phase. If the Fed. caps rates at say 2% and inflation does rise above that (PPI not CPI) then gold goes bull.

Currently:









Gold itself suggests lower prices or extended sideways and the miners, lower. The miners give the appearance of slowly rolling over after failing to breach that overhead resistance.

Miners index:






Moving in the wrong direction currently. The miners fluctuate more than the commodity itself however.






Interest rates trending higher. Bad news for gold, unless, inflation really gets going.






It's trying, but we'll have to see how that pans out.

jog on
duc


----------



## qldfrog

Nice find these crypto currency trusts, the numerous times i looked for BTC ETF s, i never got any result inc a few months ago when i just bought BTC directly.
So maybe need to do a bit of investigation before jumping in.
On the other end, it says BTC in the name and is listed so that could be enough..😉
Have all a great Christmas break.


----------



## ducati916

To trade cryptos:

ETHE correlates with Gold (currently). I used the x3 leverage Gold ETF because the ETHE is so much more volatile. As you can see the correlation  (just from an eyeball) is pretty good.






Therefore you can create a market neutral strategy using the x3 short Gold ETF as against ETHE. There is of course an obvious risk: Gold and Crypto generally or specifically un-correlate. That would be a problem.

Other than that, this pair would work really well.

On the chart you'd have to be looking long ETHE having just reached its all time high and breaking out of that area of consolidation, which would also mean higher gold. The thing is, gold just does not look that bullish to me currently. Therefore the correlation might be set to break or reset already.






Two straight currency ETFs, US dollar and Japanese Yen as a diversification away from pure stocks. Now these do not have the vol. of a crypto, but you can improve that with a x4 leverage ETF, which unfortunately I cannot access. The best I can do is a x2 leverage in the Yen. Dollar is just x1 and would be far too boring.

So the Yen looks really interesting. Of course the correlation is 100% and will remain 100% (you would expect although 'never' just does not apply to markets with negative oil this year) which removes one area of risk.

Yen looks to be in a trading range, which means when it eventually breaks out, the move will likely be substantial. Definitely looking higher atm. Anyway, that is irrelevant with a market neutral position.











So I'll be adding a Yen position after Christmas is over based purely on the extra leverage available.

Some market data to end the year:

So bulls still hold sway on Wall St. and for the start of the Santa rally to year end. Some $250B coming to market next week for the Fed. to snap up.











IPOs this past week....meh.






Other sentiment indices, cooling slightly. Obviously don't believe in Santa Claus.











Margin debt. This is an interesting metric to follow as almost by definition, market tops correlate with highs in margin debt. As can be seen, leverage is increasing in the market, which is not really a great thing. It rather suggests some vol. ahead.

The insiders unloading on Tech. ZM, POS.

From house flippe-floppe-flye:






jog on
duc


----------



## ducati916

Inflation and the Market. So I have a number of charts concerning inflation. First a definition: an increase in the money supply, including credit, that causes a loss in purchasing power of the money.

So:

First up PPI data.  Topped out at 208. Measuring from 1990 at 120 to 2020 and 198 (current figure +/-) = 1.68% compounded.









Same 1990 start point at 140 to 2020 at 270 = 2.2% compounded.









So that gives us 2.2% - 1.68% = +0.52% compounded. That is the spread that the market (S&P 500) companies earn and why on aggregate their stock prices go up. Add to that their other major costs, employees and you have essentially the COG line in the Income Statement.

As investors (traders) we are buying that spread: ie. increased earnings growth exemplified through that compounded spread between PPI and CPI.

Below we have the consumer, who is losing purchasing power as the dollar falls relentlessly in the face of 'inflation'.









However, the market is only interested in the profitability of companies that can stay ahead through leveraging the spread between costs of production and selling products to the consumer.

The PPI used to be caught largely by commodity prices and cost of labour. This is less true today, where obviously intellectual capital and its costs can have a far larger impact on a company selling software etc, than in production of an automobile.

Labour costs:

If we take the same 1990 starting point as +/- 80 and 2020 as 115 then we have a 1.2% compounded growth in wages, which falls far below our CPI figure of 2.2%.









When you look at the 1970-1980 data, you can see how we had 'inflation' of a type that hurt the market. Wages went 7.7% compounded in that time period. Commodities went 9.5% compounded while CPI went 7.1%. There was a loss of the spread for companies, hence they became less profitable on aggregate.

Today, wage earners have no pricing power. Unions are largely meek and ineffective, high unemployment provides easy replacement in most cases, highly skilled positions being the exception and increasing use of technology all combine to keep rising wage costs low.

The markets are booming on stimulus because stimulus creates CPI inflation and to a lesser extent PPI inflation, so the positive spread remains, while purchasing power continually erodes. Hence, owning stocks (and real assets) is the way to ride the curve and preserve purchasing power.

Gold & Silver:

If you are contemplating owning the physical or the mining company:






You want the physical.

Gold or Silver?






In a true PPI inflation, silver. Look at the 1940-1950, 1970-1980 data, the 1990-2010 data. However, the 1920-1940 data, which includes the Great Depression is interesting. Gold far outperformed Silver in that time period, which, is analogous to our current time period which is more about a monetary event (a true deflation = implosion of debt) than a commodity inflation. The last scenario is a hyper-inflation, being the total collapse of the fiat currency, which in many ways is analogous to debt implosion. A debt implosion would drive the Fed. to monetise to such a degree that it would create the hyper-inflation that Schiff et al. warn against.

Gold/Silver v Crypto currencies.

The jury is out on this one. There simply isn't the history. However, would you prefer to own gold/silver coins, sitting in your home safe or BTC in your electronic wallet located somewhere on the 'net'? Myself, easy choice.

The doom portfolio: (a) land that can grow food/support livestock, (b) water/electricity supply independent of suppliers, (c) guns to defend, (d) some gold/silver to use as money for stuff required, (d) some form of sustainable transport.

Absent armageddon, holding great wads of cash, outside of daily needs, is not a great idea. It definitely should be somewhere earning a return that outpaces that CPI 2.2% compounded inflation rate, which isn't that high a hurdle. The issue is how much to allocate to non-armageddon assets v armageddon assets. One has happened consistently year-in-year-out, the other might never happen in our lifetime.

jog on
duc


----------



## qldfrog

ducati916 said:


> Inflation and the Market. So I have a number of charts concerning inflation. First a definition: an increase in the money supply, including credit, that causes a loss in purchasing power of the money.
> 
> So:
> 
> First up PPI data.  Topped out at 208. Measuring from 1990 at 120 to 2020 and 198 (current figure +/-) = 1.68% compounded.
> 
> View attachment 117174
> View attachment 117175
> 
> 
> Same 1990 start point at 140 to 2020 at 270 = 2.2% compounded.
> 
> View attachment 117176
> View attachment 117177
> 
> 
> So that gives us 2.2% - 1.68% = +0.52% compounded. That is the spread that the market (S&P 500) companies earn and why on aggregate their stock prices go up. Add to that their other major costs, employees and you have essentially the COG line in the Income Statement.
> 
> As investors (traders) we are buying that spread: ie. increased earnings growth exemplified through that compounded spread between PPI and CPI.
> 
> Below we have the consumer, who is losing purchasing power as the dollar falls relentlessly in the face of 'inflation'.
> 
> View attachment 117178
> View attachment 117179
> 
> 
> However, the market is only interested in the profitability of companies that can stay ahead through leveraging the spread between costs of production and selling products to the consumer.
> 
> The PPI used to be caught largely by commodity prices and cost of labour. This is less true today, where obviously intellectual capital and its costs can have a far larger impact on a company selling software etc, than in production of an automobile.
> 
> Labour costs:
> 
> If we take the same 1990 starting point as +/- 80 and 2020 as 115 then we have a 1.2% compounded growth in wages, which falls far below our CPI figure of 2.2%.
> 
> View attachment 117180
> View attachment 117181
> 
> 
> When you look at the 1970-1980 data, you can see how we had 'inflation' of a type that hurt the market. Wages went 7.7% compounded in that time period. Commodities went 9.5% compounded while CPI went 7.1%. There was a loss of the spread for companies, hence they became less profitable on aggregate.
> 
> Today, wage earners have no pricing power. Unions are largely meek and ineffective, high unemployment provides easy replacement in most cases, highly skilled positions being the exception and increasing use of technology all combine to keep rising wage costs low.
> 
> The markets are booming on stimulus because stimulus creates CPI inflation and to a lesser extent PPI inflation, so the positive spread remains, while purchasing power continually erodes. Hence, owning stocks (and real assets) is the way to ride the curve and preserve purchasing power.
> 
> Gold & Silver:
> 
> If you are contemplating owning the physical or the mining company:
> 
> View attachment 117182
> 
> 
> You want the physical.
> 
> Gold or Silver?
> 
> View attachment 117183
> 
> 
> In a true PPI inflation, silver. Look at the 1940-1950, 1970-1980 data, the 1990-2010 data. However, the 1920-1940 data, which includes the Great Depression is interesting. Gold far outperformed Silver in that time period, which, is analogous to our current time period which is more about a monetary event (a true deflation = implosion of debt) than a commodity inflation. The last scenario is a hyper-inflation, being the total collapse of the fiat currency, which in many ways is analogous to debt implosion. A debt implosion would drive the Fed. to monetise to such a degree that it would create the hyper-inflation that Schiff et al. warn against.
> 
> Gold/Silver v Crypto currencies.
> 
> The jury is out on this one. There simply isn't the history. However, would you prefer to own gold/silver coins, sitting in your home safe or BTC in your electronic wallet located somewhere on the 'net'? Myself, easy choice.
> 
> The doom portfolio: (a) land that can grow food/support livestock, (b) water/electricity supply independent of suppliers, (c) guns to defend, (d) some gold/silver to use as money for stuff required, (d) some form of sustainable transport.
> 
> Absent armageddon, holding great wads of cash, outside of daily needs, is not a great idea. It definitely should be somewhere earning a return that outpaces that CPI 2.2% compounded inflation rate, which isn't that high a hurdle. The issue is how much to allocate to non-armageddon assets v armageddon assets. One has happened consistently year-in-year-out, the other might never happen in our lifetime.
> 
> jog on
> duc



Great post:
Missing legend on graph


ducati916 said:


> If you are contemplating owning the physical or the mining company



But you gave the answer.so physical it will be.
Like the doom portfolio, going there..not kidding:
My view is, for someone getting out of the workforce, you need to set aside some doom portfolio, but as you pointed, this is an insurance which we can hope never to use so you will not end up in a line of a salvos soup.
the drawback is that it also means these assets will prevent you doing a killing and having a jet and a mansion merx etc..but also paying far less taxes if you remain in Oz NZ.
So a balanced mix if you can
Nearly an ideological choice


----------



## ducati916

Just continuing the real macro view for a moment:

Something that has driven prima facie the political spectrum, but with pretty much zero effect. Those with money seek to control or at the very least, align with and thereby control or influence power. This of course is not capitalism but corporatism, which is a version of socialism.






How (much) further can that horse run?









Well according to a Kondratiev analysis, we're already on our way down.

A chart from Dalio, essentially agrees with the above analysis. Arguing that the banking crisis, which was massively deflationary on top of already disinflationary forces (technology, off-shoring of labour, demographic shifts) pushed us over the edge into a cyclical transition point. C19 is an interesting interruption. The reason is that C19 is likely (especially in the shorter time frame) inflationary. Supply chains disrupted. Politicians cognizant of issues re. the trend to off-shoring has had in supplying the basics. The initial crushing of demand (energy) leading to potential structural issues in the longer term supply: and this holds true for a number of commodities, I see uranium is entering supply based issues.






So inflation requires a number of variables to fall just right: (a) an increase in the total money supply, (b) a shortage of labour, (c) a supply shock in commodities (usually energy), (d) a default or significant devaluation, (e) slowing of technological innovation and for a hyper-inflation a (f) Sovereignty crisis.






Well the money supply has gone through the roof. We may see reverse-shoring and an end to the forces of globalisation. Demographics are definitely on the move. C19 will potentially create a supply shock across a number of commodities re. supply through a shortage of capital investment through the last 10yrs and a drawdown of inventory. I'll just use Dr Copper as an example:








We know shale oil has been devastated from the trade war launched by the Arabs.

Therefore, if we start to see commodity price rises (PPI inflation) which hurts non-technological components of the S&P500, does the Fed. allow rates to rise? How far? Corporate debt is through the roof and will push into liquidation huge swathes of the market. Real Estate debt. Rising mortgage rates world wide? Wholesale liquidation of zombie companies are massively inflationary once you get past the deflationary aspect of debt default, again a supply chain issue. Therefore, I think the Fed. comes in to control the yield curve somewhere around the 3% mark, which, is low enough that the other global forces combined can drive a PPI style inflation.

IP:






Thin edge of the wedge? Looking at the current IPO market and what has come to market recently, are these types of technology likely to be disinflationary in a significant way, in the same manner as that which has preceded?

Therefore, in time, I think C19 will be seen as a uniquely an inflationary event, despite the effect that GDP has been crushed short-term. Therefore, moving into 2021, inflationary forces which have previously resulted simply in an asset price inflation, will creep into the supply chains creating a PPI based inflation, which could have quite negative effects on stock and bond markets depending on whether the Fed. moves to a yield curve control as it did in the 1940's. 

Monetary policy, unless you move into NIRP, is stuck at ZIRP and the only stimulus that can be forthcoming are Fiscal policy deficits even greater than we currently have. For that, the Fed. must move to yield curve control, which is inflationary and is essentially a devaluation.

In short, most, if not all of the disinflationary forces that have been predominant, are now reversing, increasing the probability that we could see a 1970s style inflation moving into 2021 and beyond.

jog on
duc


----------



## ducati916

The late 1940s is probably the closest market to the current market.

Looking at debt and deficits caused by WWII












We can see that the structural debt/deficit levels most closely resemble todays levels. It took 20 years from 1950 through 1969 to create the inflationary storm that consumed the 1970s. That is because of the starting point (valuation) of the market at the end of 1948










The market (technically) was well off of its lows, but earnings driven by inflationary forces were set to expand significantly.

Our current market, valuation wise:






Will likely mean that the returns in an inflation that incorporates commodity based inflation will have less tolerance to this due to a higher valuation than a lower valued market. Which simply (could/should) mean that if inflation turns up, rather than 20 years to create an issue, we might have 5 years (or less) before valuations tumble.

jog on
duc


----------



## ducati916

A headline and some data:

So the stimulus package...go/no go?






I guess we'll find out Monday what the market makes of that.

Meanwhile gold is in outflow mode from ETFs:









Foreigners dumping Treasuries, which drives interest rates higher.






Which (in part) is why the Fed. balance sheet looks the way it does.

And BTC:






What if.

The vol. is off the chart. The 1-way trade is impressive. If there was something that you could short it with, I'd be in the game. When it's long or nothing, that is just too risky.

jog on
duc


----------



## qldfrog

The btc rise is incredible, i bought some (bits) just last month at $22k AUD per BTC and sold a little bit yesterday night above $36k AUD a BTC.
Enough to pay back my purchase cost of last month and still keep more BTC in my wallet.the BTC rise is as impressive vs AUD as it is vs USD.
I do own..not enough...


----------



## ducati916

qldfrog said:


> The btc rise is incredible, i bought some (bits) just last month at $22k AUD per BTC and sold a little bit yesterday night above $36k AUD a BTC.
> Enough to pay back my purchase cost of last month and still keep more BTC in my wallet.the BTC rise is as impressive vs AUD as it is vs USD.
> I do own..not enough...





Monsieur Frog;

The BTC phenomenon is the South Sea speculation, John Laws' America's speculation and the Dutch Tulip speculation rolled into one. I look at it and wonder whether I am really dumb for missing it or others are really dumb for buying into it and I'm looking at it from an investment perspective rather than a pure speculation. As a speculative instrument, it is beyond compare, the vol. is huge. If there were (as I said) a way to short it, I would have been playing this space ages ago. A purely directional bet, with the level of vol. displayed, is simply too high risk for me. 

As an investment, I simply don't buy it. I may well in time be proven incorrect. The intangibility of it, simply lends itself to manipulation/theft/collapse/etc.

Returning to the inflation meme:

Lots of bullishness in the net.






An analysis grid:

So if you are bullish, you will sit on the right hand side of the grid. You then will need to decide: bullish inflationary or bullish disinflationary?






A growth indicator, based on economic activity, which is really an expression of the economic data; has turned positive.











Below are a blend of commodity prices, interest rates and bond prices.





Last, but not least, the velocity of money is ticking higher.






Historically, this illustrates very clearly the enormous inflationary pressures coming out of the 1949 period, all the way through to the 1980 period and with some dips, into the 2008 crisis, where we went into free-fall.

This is where all of those macro-economic factors now potentially come into play: the drawdown in inventories, the collapse of CAPEX spending by many producers, the receding of globalisation and ongoing disruption of supply chains, a huge build up in cash holdings by the peasants, courtesy of handouts etc with likely more to come and potential US dollar weakness/default due to the running of tremendous Fiscal deficits, monetised by the Fed. Add into that a (potentially) significant infra-structure build, like the Great Society of the early 1950-1960 period (and even higher deficits) and all the pieces are on the table for an inflationary run.

jog on
duc


----------



## ducati916

Santa rally starting well:

Stocks up.






Bonds down or yields up:






Commodities higher, except NG.






Crypto: disengaging from PMs?






Vol. is trending lower, all is well currently in stock index land.

Inflation expectations rising:






So I have been talking about inflation for a few posts. I have one last post on inflation today. Needless to say, the Bond yields convey the Bond market's concerns. The disconnect twixt PMs and cryptos is more concerning.

Which leaves Mr flippe-floppe-flye






So a list of 'crypto' plays for any interested.









jog on
duc


----------



## ducati916

This will be my last post on inflation and macro for a while as the markets are now re-opened for the New Year.

Europe is increasing their money supply significantly. Not to financial firms, but to the man in the street, via government guaranteed loans for all manner of items, not least real estate. Banks will (which has been absent since the 2008 crisis) now lend to the man on the street. This is an increase in money/credit that will become inflationary when combined with other variables.







US savings rate. Historically high due to (a) stimulus cheques and (b) nowhere to really spend it, other than paying down debt, which has accounted for the drop already. When the US and world re-opens, the man-in-the-street will have cash and the ability in Europe, to get more.






Inventories are low. We have a supply/demand mismatch going forward.











US Banks are also loosening up. The higher the number, the tighter credit. US Banks are going to expand credit to our chap-in-the-street. Inflationary.






Again, many of these are government backed. There is still $600B waiting to be loaned out to small businesses.






Wage growth is critical. The election was about Blue Collar. Both parties need to create wage growth (inflationary) and will do so via policy.











China is potentially set to implode. The Yuan is a managed currency. To be so, China must attract capital inflows. Given that their export machine has hit a glitch, they need capital inflows from an alternative source. Will it happen? Too early to tell, but if it does not, China will have some really major issues.






With the new Cold War heating up, China is in a quite precarious position. Their position is now vis-a-vis the West, one of a gigantic bluff. By ostracising China, a very potent disinflationary force is reversed. The result: increased inflationary pressures.

Capital controls are coming. They have a new name: Macro Prudential Regulation. They are yield curve caps. This is also highly inflationary. Counter-intuitively, I see the US$ strengthening. Europe and the Euro are at odds internally. German debt is 200% of GDP, French debt at 400% of GDP. How can that be reconciled? There will (I think) be capital flight out of the Euro into the US$. China wants those capital inflows, but I don't think they will go to the Yuan denominated assets.

Which leaves Gold/Crypto.

jog on
duc


----------



## ducati916

Some late day thoughts:

The stimulus passed at $2000/person. Nice and inflationary.






BTC. Starting to drive me a bit nuts. It's a trade. It is not the solution to the world's problems. Anyway, nice correlation here:






Which offers up potential strategies using the inverse of SOXL which is SOXS and/or SOXL itself as a form of a pairs trade.

Stocks still looking a bit iffy:






True we gapped higher, true it is the Santa Claus rally, true VIX is trending lower. I just don't like the divergence above, nor below:






NG ran riot today:






This trade is already profitable, but with it breaking support, I'll give it some rope to run and see if it breaks down during the week. Might be a weather thing, unusually warm or some-such.

Meanwhile Mr flippe-floppe-flye






jog on
duc


----------



## peter2

ducati916 said:


> Might be a weather thing, unusually warm or some-such.




Yes, nat gas prices slumped after news of mild winter weather forecast for the next two weeks.


----------



## Smurf1976

peter2 said:


> nat gas prices slumped after news of mild winter weather forecast for the next two weeks



Something to remember about gas is that it's still largely a regional commodity not a global one. Trade exists but prices do vary considerably from one region to another due to the high cost of liquefaction and shipping.

Compared to say gold which has a similar price pretty much anywhere.


----------



## ducati916

Smurf1976 said:


> Something to remember about gas is that it's still largely a regional commodity not a global one. Trade exists but prices do vary considerably from one region to another due to the high cost of liquefaction and shipping.
> 
> Compared to say gold which has a similar price pretty much anywhere.





I chose NG specifically for its unpredictability. It is all over the place price wise. Being a commodity, it tends to trade in both directions. Although, from this chart, the last 10yrs has been relentlessly lower.






I'm guessing it will re-test the low.

Margin debt at high's:






Not an issue, until it's an issue. It can go higher. When (and if) it reverses, it reverses fast.

IPOs in 2020






Not to the dot.com boom, but with more planned into 2021, another metric to track.

BTC






Total value $420B. On that basis you'd have to say higher if it goes even slightly mainstream. By mainstream I mean Hedge Funds, Corporate Treasurers, Pension Funds, etc. So the $2T is AAPL and the $12T is Gold.

The 'public' seem less involved this time round:
















Hmmmm.

Surprises for 2021:

From Doug Kass:

*Here are my *_*15 Surprise for 2021:*_



> Surprise #1 *Tesla's Stock Declines By Two Thirds* *-* Elon Musk loses his liberal audience. Tesla's mistreatment of customers, suppliers, employees, subsidy providers and safety regulators and the general population hits a wall. A movement to kick Tesla out of ESG Indices gains steam, as proponents give Tesla the lowest possible rating in S and G. The Chinese retaliate over Musk's racist comments, where he blames Chinese drivers for a series of accidents. A high profile celebrity or athlete dies while using autopilot. Under new leadership, the National Highway Safety Administration (HTSA) orders recalls for suspension problems, computer screen failures, battery fires, sudden acceleration. Regulators put a stop to so called Full Self Driving due to predictable abuse. Tesla announces it will be transitioning its Fremont, California manufacturing to Austin, Texas in 2022, but after years of union busting, Austin workers vote to join the UAW. Meanwhile, Tesla's market share collapses under an avalanche of new entrants. Rivian and GM (GM) beat the cybertruck to market with better products. VW (VLKAF) becomes the leading global manufacturer of electric cars. GM, Waymo and Zoox become the leaders in self-driving. Toyota (TM) demonstrates a solid state battery making them the leader in batteries. Tesla stock falls by almost -70% -- Greenlight's David Einhorn jokes that "it's like an unannounced stock split." John Bogle rolls over in his grave as "passive" investors lose most of their "investment" in Tesla. Congress conducts an investigation into Tesla's inclusion in the S&P Index.






> Surprise #2 *Political Normalcy Is Not Obsolete and Biden is The Calm After the Storm -* Biden breaks the party deadlock in Washington and governs with a centrist coalition of key Senators and Congressmen - to the frustration of the far left. There are several Republicans like Romney, Murkowski, Collins, Ernst, Perdue and Tillis that realize they have a ton of power (and control of the Senate) to support a centrist agenda. They join Democrat centrists including Warner, Bennet, Carper and Shaheen to drive a bipartisan agenda. There will be no bold Green New Deal (though a more moderate deal is delivered), confiscatory tax law changes, defunded police, mass forgiveness of student loans or single payor health. There will not be two new states or Supreme Court packing - even if the senate goes 50-50. There will be an infrastructure bill (with Green energy emphasized), changes to taxes on foreign corporate earnings, police reform, immigration reform and other attempts to reduce institutional racism, limited forbearance on hardship student debt, and fixes to Obamacare.






> Surprise #3 *Former President Trump No Longer Remains A Dominant Political Force in the U.S. - *The Republican party comes to the realization that Trump is a liability at the same time the Democrats realize that the far left hurts their party. Trump proceeds with "_Trump TV"_ (he is in "pre-production" already!). Launched in the spring, he recruits Sean Hannity, Roger Stone, Mike Flynn and Joe Kernen to become the enterprise's primary commentators. By year-end it is clear that this is but another one of Trump's multiple business failures and _"Trump TV"_ closes almost before it started. Facing numerous lawsuits and a sweeping State of New York indictment, Donald Trump declares personal bankruptcy by year-end. There is no cliffhanger this time and, disgraced, Trump sells Mar A Lago and liquidates several of his other properties.






> Surprise #4 *Stocks Experience Their Least Volatility Ever in the First Half of 2021 and the Most Volatility Ever in the Second Half of 2021 - *The S&P Index is tightly range bound between 3600-3800 over the first six months of the year - but, under the weight of regulatory assault of technology, and higher inflation and interest rates, falls to under 3300 later in 2021.
> Surprise #5 *Bottlenecks Multiply and Inflation Surges -* There are bottlenecks everywhere in 2021 and inflation in places beyond financial assets. As the economy reopens, there are shortages of almost everything. Commodities boom, but so do service prices. It seems that prices of everything from shipping to manicures are on the rise. The infrastructure bill sends construction material prices through the proverbial roof. Pent up savings are unleashed in robust consumer demand. Concerts, sporting events reopen with limited capacity and tickets are in hot demand. Residential real estate (single and multi family) soar in price, as people put stimulus, the recovery and stock market winnings into real estate. By mid-year, even the badly manipulated CPI is running up +4%.






> Surprise #6 *Inflation and Interest Rates Rip Higher Leading to A Valuation Reset (Lower) For Equities in 2021* *-* At first, the bond market reacts "normally" to rising inflation. The 10 year yield breaks 2% (to the upside). The stock market has a late spring/early summer wobble in response to rising rates and the possibility that target inflation will force higher rates. A mid-year Treasury auction goes poorly. The Federal Reserve, faced with the dilemma of choosing between a lower stock market and higher inflation, chooses to accept higher inflation. The Fed announces a cap on the 10 year yield at 1.5% and expresses its willingness to do whatever it takes to enforce it. In effect, the Fed becomes_ the Treasury buyer of first resort_. This sends stocks, commodities and most everything briefly higher (towards the upper end of the 3600-3800 S&P trading range) - except the dollar, which falls 10%-15%. Though temporarily ignored by infinite liquidity and easing financial conditions at all costs, it grows clear that Covid-19 spurred a dangerous leveraging up in the global economy that has been almost constantly in place since _The Great Decession of 2008-09_. Higher inflation and interest rates bring the "bond vigilantes" out of their long hibernation. Stocks fall by -15% over the last six months of the year as price earnings multiples contract in the face of the highest level of corporate defaults in over a decade (led by companies in the retail space and others that were already struggling prior to the virus). Credit spreads (now at record lows), widen dramatically, the CLO market collapses and private equity companies are among the worst market performers of the year.






> Surprise #7 *A Decline in the U.S. Dollar Spurs an Advance In Gold (to $3,000/oz) and a Ramp of +50% in Bitcoin (to $40,000) - But Silver Is The Big Winner As It Doubles to Over $50/oz - *Over easy policy, excessive liquidity, higher inflation and a rapid rollout in the Covid-19 vaccine powers the prices of cryptocurrencies and precious metals higher. Silver, however, is the league leader as the rapidly rising demand for silver in industrial applications creates a supply crunch late in the year. Another challenge on the supply side for silver is that more than half of mined silver supply is a by-product of zinc, lead and copper mining, making it tough for miners to meet the surging excess proportional demand for silver. Precious metals and crypto currency prices peak in the third quarter.






> Surprise #8 *Congress Acts On the SALT Deduction* *-* Congress either repeals the SALT deduction limit or raises the cap from $10,000 to $25,000. Centrist Ray McGuire wins the June Democratic primary for New York City Mayor and, upon his election in November initiates bold moves to revitalize NYC. Residents move back and housing activity and prices fall in the suburbs under the weight of those initiatives and stretched home affordability.






> Surprise #9 *The Fallout From Brexit Causes Trade and Other Chaos in Europe - Badly Shaking the UK and European Economies*






> Surprise #10 *France's Economy Approaches The Financial Brink -* Weighed down by one of the worst debt to GDP ratios in Europe and sub zero interest rates, two of the country's largest banks fail. In a desperate position, in which France actually faces systemic risk, the country begs for assistance from Germany in order to get the ECB to print enough currency to posture a bailout of France's banking system. President Emmanuel Micron steps down.






> Surprise #11 *Broad Regulatory Actions Against Big Tech Results In A More Rapid Pivot From Growth to Value - FANG Becomes GATFAT! - *Antitrust actions against Facebook (FB) , Alphabet (GOOGL) and Amazon (AMZN) become a genuine worry. In response to Derek Chauvin being acquitted in the George Floyd case, rioting ensues and the social media platforms are blamed for fanning the literal flames as Minneapolis is all but burned to the ground. The Rule 230 exemption is repealed. Meanwhile Europe begins imposing punitive taxes on U.S. internet giants. Finally, China retaliates to Biden continuing Trumps policy of going after Chinese companies with its own claims about Apple (AAPL) (illegal monopoly) and Tesla (TSLA) (unsafe cars). Google, Apple, Twitter (TWTR) , Facebook, Amazon and Tesla get redubbed GATFAT, as the impact of their prior overblown markets caps on portfolios is broadly felt by the Indexers and other investors.






> Surprise #12 *China's Economy Sputters Under Massive Debts and Crackdown on Tech Giants - Leading To Some Moderation In Xi's Policies*






> Surprise #13 *Despite Strong 4Q2020 Performance, Bank Stocks Lead the Market in The First Half of the Year* *-* As tech falters under the weight of an existential antitrust threat, financials prosper. Citigroup (C) trades at $75, Wells Fargo (WFC) and Bank of America (BAC) trade at $35 and JP Morgan's (JPM) price approaches $140/share by the early summer.
> 
> Surprise #14 *Goldman Sachs Goes Private In 2Q2021 - *The announcement marks a high-water mark for equities in 2Q2021.
> 
> Surprise #15 *Trump Is Barred From Twitter - *Within one week after President-Elect Biden's inauguration, Twitter suspends former President Trump's Twitter account for tweeting false claims about the "stolen" Presidential election. Upon the news of the Twitter suspension announcement, Twitter's shares fall by over -$7 to $8/share (or by about -15%) in one day. (The shares bottom in the high $30s, where I load up!)




I'm on board with inflation & China having issues.

jog on
duc


----------



## ducati916

Some odds & sods:

First up oil news:

*Market Movers*

-    *Gazprom (OTCPK: OGZPY)* expects to produce 452 bcm of natural gas this year, which it said has been a “challenging” year. That would be a 10% decline in output.

-    *Occidental Petroleum (NYSE: OXY) *was picked by Bank of America as a top stock pick, with a Buy rating.

-    Mild weather sent natural gas prices tumbling more than 10%. *The United States Natural Gas ETF (UNG) *fell by a similar percentage. 

*Tuesday December 29, 2020*

Oil has seesawed back and forth over the past week, sandwiched between very strong bullish and bearish forces on each side. Covid-19 is at its worst in many parts of the world, but vaccinations are picking up in earnest as well. Brent edged back above $51 per barrel after the house passed a major stimulus bill on Monday evening. “Markets feel very rangy into the New Year but should find support today from broader risk markets as stocks are soaring on the prospects of larger stimulus checks,” said Stephen Innes, chief global market strategist at Axi.

_*OPEC+ deal could be tweaked. *_The terms of the OPEC+ production pact could be revised if oil demand recovers next year faster than currently expected, Russian Deputy Prime Minister Alexander Novak, who is still in charge of coordinating Russia’s oil policy with OPEC, told Rossiya TV news channel in an interview on Monday.

_*U.S. LNG set for strong 2021.*_ Rising JKM prices for LNG in Asia brighten the outlook for U.S. LNG exports. “We assume near-max utilization rates of US LNG export facilities next year,” Bank of America said.

_*Oil and gas write-downs largest in over a decade. *_Oil and gas companies in North America and Europe wrote down around $145 billion in assets in the first three quarters of 2020, the most since 2010. Prices are rebounding, but the write-downs also reflect long-term concerns. “They are coming to grips with the fact that demand for the product will decline, and the write-downs are a harbinger of that,” KPMG’s Regina Mayor told the WSJ.

_*Japan to phase out ICE vehicles.*_ Japan said it would end sales of gasoline vehicles by the mid-2030s, the latest major economy to chart a course away from the internal combustion engine. 

_*Exxon’s emissions higher than thought. *_Internal planning documents reviewed by Bloomberg Green reveal detailed emissions projections for individual projects from *ExxonMobil (NYSE: XOM)*. For instance, the Golden Pass LNG project would emit 3.1 million metric tons, and the liquefaction process would emit as much as a coal-fired power plant. Investors are growing increasingly concerned that carbon-intensive projects will be subjected to future regulation or taxation, and they are pressuring Exxon to detail more of their risk.

_*The worst-performing energy stocks of 2020. *_*Schlumberger (NYSE: SLB)*, has rallied 23 percent in Q4. Nevertheless, the oilfield service provider has lost nearly half of its market valuation year to date, its shares are down 47 percent this year. Here are a few other of the worst-performers of the year.

_*Dominion plans 2.6 GW of offshore wind.*_ *Dominion Energy (NYSE: D)* filed for the construction of 2.6 GW of offshore wind in Virginia.

*Oil demand won’t recover until 2022. *Global oil demand will likely take another year or so to return to pre-pandemic levels—by late 2021 or early 2022, according to IHS Markit. Other analysts see something similar. A “full-fledged demand recovery is shaping up to be a 2022 story, with the 2021 exit rate getting close but not quite at pre-COVID levels,” Raymond James wrote in a note. Developing countries will face structural hurdles to vaccination programs, resulting in a drawn-out recovery.

*BP well in Australia comes up empty.* “BP Australia can confirm that no significant hydrocarbons have been found at the Ironbark exploration well in Western Australia,” the company said in an email to Reuters. The result is a disappointment for a project that hoped to supply the North West Shelf LNG plant.

*UK grid shows rapid decarbonization.* The carbon intensity of electricity generation in the UK fell 60% in the six years to 2019. In 2019, renewables accounted for 37% of electricity generation. More recently, on December 26, wind accounted for more than half of the total. The UK grid will be coal-free by 2025 at the latest. 

_*Is the energy transition creating an investment bubble? *_*NextEra (NYSE: NEE)*, the solar power firm, overtook *ExxonMobil (NYSE: XOM) *as the most valuable energy company in the United States, albeit just briefly. Everyone is talking about hydrogen. The energy transition narrative is hogging energy headlines. But what if it turns out to be one huge bubble?

_*Oil tanker market in for long recovery. *_Overcapacity for ships and a questionable outlook for demand means that the market for crude oil tankers remains difficult, according to consultancy Drewry. 

*Goldman: Exxon is oversold. ExxonMobil (NYSE: XOM)*, _*Chevron (NYSE: CVX)*_, and _*ConocoPhillips (NYSE: COP)*_ have returned an average of -36% this year, a dreadful result. “That said, the stock that appears most dislocated relative to negative revisions is XOM, with shares down 40% relative to our cash flow per share estimate down 19%,” Goldman Sachs wrote in a note. The investment bank recently upgraded Exxon to a Buy rating.

*Continental Resources upgraded by KeyBanc. *KeyBanc Capital upgraded *Continental Resources (NYSE: CLR) *to Overweight from Sector Weight on Tuesday, noting higher future Bakken activity and also upside to oil in Oklahoma. Continental will see “improved leverage next year, significant FCF generation in 2021, and nice exposure to higher oil prices,” according to KeyBanc.

*China’s Yahua to supply Tesla with lithium. *Sichuan Yahua Industrial Group signed a five-year deal to supply battery-grade lithium hydroxide to *Tesla (NASDAQ: TSLA)*.

*U.S. restricts CNOOC trading.* The U.S. Treasury Department barred American investors from trading shares of *CNOOC (NYSE: CEO) *beginning in February. The Trump administration blacklisted CNOOC over ties to the Chinese military.







Lots of demand to come from China for both oil and NG.






Meanwhile in Texas they are flaring






BTC






Trading is still tiny. Could change.

Some stocks with unusual vol.






So they bought the dip today






Is that a good idea? I'm not convinced:






The VIX also looking possibly to break higher again.








And Mr flippe-floppe-flye






jog on
duc


----------



## ducati916

The Santa Claus rally continues:





Vol. is dropping into the more normal ranges from the elevated ranges that have characterised most of the year. Now I think we just get garden variety pull-backs and a gradually rising market until the next issue.

I'm thinking that issue could (likely) be inflation. Now it won't be until later in the year (if at all), so best to keep an eye on it: inflation if it arrives will arrive via oil.






With the other factor being interest rates: which are currently moving higher. In the immediate future, 1.3% is on the cards. The question is: will they move higher than 1.3% and if so, will the Fed. cap them? I think yes and yes. If so, inflation will pick-up when combined with the other already enumerated variables.






For the meantime, the Bull rumbles forward and higher. 

Mr flippe-floppe-flye:









jog on
duc


----------



## Knobby22

ducati916 said:


> I chose NG specifically for its unpredictability. It is all over the place price wise. Being a commodity, it tends to trade in both directions. Although, from this chart, the last 10yrs has been relentlessly lower.
> 
> View attachment 117365
> 
> 
> I'm guessing it will re-test the low.
> 
> Margin debt at high's:
> 
> View attachment 117355
> 
> 
> Not an issue, until it's an issue. It can go higher. When (and if) it reverses, it reverses fast.
> 
> IPOs in 2020
> 
> View attachment 117363
> 
> 
> Not to the dot.com boom, but with more planned into 2021, another metric to track.
> 
> BTC
> 
> View attachment 117357
> 
> 
> Total value $420B. On that basis you'd have to say higher if it goes even slightly mainstream. By mainstream I mean Hedge Funds, Corporate Treasurers, Pension Funds, etc. So the $2T is AAPL and the $12T is Gold.
> 
> The 'public' seem less involved this time round:
> 
> View attachment 117359
> View attachment 117360
> 
> View attachment 117361
> View attachment 117362
> 
> 
> Hmmmm.
> 
> Surprises for 2021:
> 
> From Doug Kass:
> 
> *Here are my *_*15 Surprise for 2021:*_
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> I'm on board with inflation & China having issues.
> 
> jog on
> duc



It will be interesting to see how many he gets right. I don't think any of the predictions would have a probability of less than 20% of coming true.


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## qldfrog

Knobby22 said:


> It will be interesting to see how many he gets right. I don't think any of the predictions would have a probability of less than 20% of coming true.



I believe reading the full article he is putting these at the 50pc threshold before pushing these .and yeap fair.


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## qldfrog

We always have to remember that a single powerful solar flare could wipe out the world as we know it, frying electronic in half of the world.then covid will be seen as the spec it is.
So predictions are just predictions within an assumed continuity.this is the best we can do..


----------



## Smurf1976

ducati916 said:


> I chose NG specifically for its unpredictability. It is all over the place price wise. Being a commodity, it tends to trade in both directions.



Agreed, no issue there.

I’m just drawing attention that a natural gas producer with its physical production located anywhere other than the place any particular price or price chart refers to may be in a very different situation.

For example NZ, WA and the eastern states of Australia are three separate markets unrelated to each other and none of them directly linked to US prices.

It’s a situation where someone unaware of that could be 100% correct about price movement but stuff up the trade if they didn’t reaise the relevance of location. Just drawing that bit to attention.

Versus say gold where location isn’t overly relevant unless due to risk of theft etc but price is consistent.


----------



## ducati916

Last data of 2020:
























Market will continue to move higher. Nothing currently jumps out as a major risk moving forward into January. Seasonally, we have the Presidential Cycle as a tailwind.

Valuations are being 'justified' through new metrics (Shiller et al.) with an inverted CAPE and low interest rates, thus essentially stating that the market is not 'overvalued'. This is similar to the 'eyeballs' valuation of the 2000 market. The market is horribly overvalued, but it won't matter until it matters.

We definitely have PPI inflation of +24% YoY. Some other stuff needs to happen, primarily something major with the US$ before we see inflation of the 1970's variation, but the other variables are building up some pressure.

Last word to Mr flippe-floppe-flye:









jog on
duc


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## qldfrog

Thanks Mr Le Duc for your daily updates.priceless.
Have a great 2021 and looking forward to reading your data and analysis in the new year


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## Telamelo




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## divs4ever

few dare  talk about it  , unless it be banned as well


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## Student of Gann

Hello here are a few Charts I prepared for Bitcoin .
The first Chart is an updated bar Chart including Angles and time Counts .
The Second Chart is a Price Curve containing three turning dates extending out towards the end of June and the last Chart is an overview of trend structure including some Time and price calculations that may be of interest .
Regards Grant
Student of Gann at twitter


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## ducati916

Since you have placed your post here, just a couple of comments.

Since 1920, every 3 step raise in the FFR has resulted in a market dislocation. The next Fed FFR raise is June 15. If the markets have not already blown up by then, they will (historically) on the 3'rd FFR hike.

My daily post https://wordpress.com/view/mrromulus789137764.wordpress.com summarises the driving forces that you can watch out for.

jog on
duc


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## Stockbailx

_ASX 200 has been holding up well…it looks like the low of the correction isn’t in yet…and more…_


Many key markets around the world are neatly poised on a knife edge.

The US dollar looks like it is itching to bust out to multidecade highs. The US 10-year bond yield is heading towards 3.25%, which is the highest yield in a decade. A spike in yields above there could see the selling accelerate.

The S&P 500 is testing the low of the correction of the past four months, and if the support can’t hold, stocks could fall another 15%.


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## Student of Gann

Bitcoin Forecast containing three dates extending out till early July . There are two Curves presented indicating main Low for the 7th June . As we move into this point we should be able to determine if the market is following the Curve and setting up for Low . From this point trend could be up till X June then down till the X July where a secondary Low is indicated . At this point I am just waiting for the Cycle date to come in and the direction into this date will give us a better indication .


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## ducati916

So US futures looking not so good.

SPY down 7%






If that is correct and not an error, tomorrow is going to be a rough day.

jog on
duc


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## Skate

@ducati916 , on my calculations (which I could be wrong), should be -1.7%

I currently have it down (-66) not (-288)

(-288) is for the last 5 days.

Skate.


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## Warr87

ducati916 said:


> So US futures looking not so good.
> 
> SPY down 7%
> 
> View attachment 142836
> 
> 
> If that is correct and not an error, tomorrow is going to be a rough day.
> 
> jog on
> duc




yikes!

that is average, at best lol. I am still trading CFDs on Soy and Corn and I've taken a big hit last week. I imagine it'll be the same this week.


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## ducati916

Skate said:


> @ducati916 , on my calculations (which I could be wrong), should be -1.7%
> 
> I currently have it down (-66) not (-288)
> 
> (-288) is for the last 5 days.
> 
> Skate.





That would certainly make sense as NASDAQ and Dow are off by 2%.

Another crypto coin bites the dust:







jog on
duc


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