(Bull) Market April 2021

[Smurf1976]

There are some really big numbers being projected for oil

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

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

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

November 2019 (pre-pandemic = $6.72

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

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

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

 

[ducati916]

The market had a fast spike lower:

Why?

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

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

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

Mr flippe-floppe-flye:

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

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

Current:

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


jog on
duc

 

[qldfrog]

The market had a fast spike lower:

View attachment 123166

Why?

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

View attachment 123164

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

View attachment 123165

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

Mr flippe-floppe-flye:

View attachment 123163

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

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

Current:

View attachment 123167

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


jog on
duc

What do you read in this?

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

 

[ducati916]

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

Essentially yes.

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

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

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

jog on
duc

 

[qldfrog]

Essentially yes.

View attachment 123169

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

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

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

jog on
duc

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

 

[ducati916]

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

Yes there is.

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

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

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

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

jog on
duc

 

[qldfrog]

Yes there is.

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

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

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

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

View attachment 123170


jog on
duc

Thank you

 

[Dr.Stock]

As always thank you duc for your effort and analysis

 

[ducati916]

Start with the oil news:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

At week end:

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

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

Reflected:

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

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

On the weekly, not so much:

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

BTC:

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

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

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

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

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

So examining this for a moment:

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

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

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

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


jog on
duc

 

[qldfrog]

Start with the oil news:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

At week end:

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

View attachment 123236

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

View attachment 123229

Reflected:

View attachment 123230
View attachment 123231View attachment 123232

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

View attachment 123233

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

View attachment 123234

On the weekly, not so much:

View attachment 123235

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

BTC:

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

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

View attachment 123226

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

View attachment 123227
View attachment 123228

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

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

So examining this for a moment:

View attachment 123237

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

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

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

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


jog on
duc

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

 

[ducati916]

Some interesting data:

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

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

Again, history providing some perspective.

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

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

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

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

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

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

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


jog on
duc

 

[Skate]

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

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

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

Skate.

 

[Smurf1976]

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

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

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

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

USA (Louisiana) = $3.35 AUD / GJ

Melbourne = $6.41 AUD / GJ

Adelaide = $11.00 AUD / GJ

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

 

[qldfrog]

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

I wish you were right Mr Skate

 

[qldfrog]

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

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

with the equity curve:

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

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

with equity curve:

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

with equity curve:

Hope this is useful to some

 

[Gunnerguy]

Start with the oil news:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

At week end:

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

View attachment 123236

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

View attachment 123229

Reflected:

View attachment 123230
View attachment 123231View attachment 123232

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

View attachment 123233

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

View attachment 123234

On the weekly, not so much:

View attachment 123235

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

BTC:

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

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

View attachment 123226

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

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

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

So examining this for a moment:

View attachment 123237

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

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

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

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


jog on
duc

Great post, analysis and comments !!

 

[ducati916]

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

Then the wild ride in Dodgy:

BTC looks absolutely responsible next to this shite.

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

Now the more normal stuff.

The 'Tax' scare:

Short Interest data:

Takeaway:

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


Retail volume declining. Not sure why.

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

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

The current PE is 40+

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

Gold: make of that what you will.

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

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

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

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

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

To be cont.


jog on
duc

 

[ducati916]

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

Pretty reasonable:

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

Examples of commodity ETFs:

Lots of ways to play these.

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


jog on
duc

 

[ducati916]

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

jog on
duc

 

[ducati916]

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

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

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

And the Hedge Funds are leveraged up:

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

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

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

Insiders selling:

And BTC:

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


jog on
duc