(Bull) Market June 2021

[ducati916]

Weekly roundup:

BTC pretty boring:

Dr Burry:

Housing:

Inflation data:

Far broader look at the market:

jog on
duc

 

[ducati916]

With June coming to a close another meh day.

Sectors:

Chop.

As I scrolled through the news feeds what becomes quite apparent is that there is no central theme, meme or otherwise. Just really random stuff all mixed in together. This is being reflected in the quickfire trading through the sectors and stocks. Pretty much anything and everything is rising somewhat, only to fall back as something else rises a little more the next day.

To be sure, stepping back to weekly charts, possibly even monthly charts in some cases, is actually very beneficial cutting back on the noise of the daily. So with this in mind, actually I was also thinking about 'reversions', I thought I'd play around with some settings. This is what I came up with.

First I had a look at currencies: so currencies (generally) trend for long periods. They also tend to revert. Rather than price, I looked at performance to a 110 SMA.

Then I looked at a stock:

And finally a commodity:

And 2 Indices:

And even $VIX:

Using the EMA and I got quite a different look:

Anyway, the point of the exercise was to try and filter out excessive noise. A combination of performance against a more traditional price chart gives a different perspective. Personally, of the 2, I think I prefer the SMA as it correlates better (eyeball test) to a standard price chart. Either way it just adds something slightly different to the decision making process.

On crypto:

The silver market: as the chart indicates, physical supply is very tight. With Basel III fast approaching, there is great expectation in the silver market.

Personally I don't think there will be any great fireworks with an explosive move upwards, but I do think over time there will be a consistent move higher. The effect of paper suppression will recede allowing increased price discovery in the market.

So a pretty quiet start to the week.


jog on
duc

 

[ducati916]

Daily roundup:

So Risk On Factors at 52%:

Which is a coin toss. So markets remain pretty directionless, meh and risky if something unexpected happens.

And it's what you don't see, just around the corner that jumps out and crushes your position.

Well commodities, yes definitely. NG is a really dodgy one to trade.

Pet care? Really? Added to my list (an ETF).

Mr flippe-floppe-flye:

While I continue to be risk averse into this market. I continue 100% hedged, simply trading spreads and vol. I am also in the process of researching some commodity producer stocks for some new trades. As they are (can be) very volatile, I am trying to be reasonably selective in this space. An old favourite, CENX will probably make the list.


jog on
duc

 

[ducati916]

Approaching the end of June. We have some seasonality data.

Semi's ripping:

As is Tech. generally. Growth back in vogue as interest rates are going to stay very negative or just negative.

Commodities:

Credit:

We are (later chart) seeing a move from Junk to Treasuries, which is a signal of risk avoidance.

What's the difference?

Again, a risk on signal.

BTC:

Mr flippe-floppe-flye:

Options with unusual activity:

to be continued....

 

[ducati916]

So blogoland remains bullish on balance. Now the divergences:

Breadth remains weak and is simply not recovering as the index continues to hit new highs. Generally speaking, you need about 60% of stocks to safely drive indices higher. The current 52% is dangerous. Now of course capitalisation weights matter. But from the previous post we know that some of the mega-caps are neutral.

Now that could be bullish, they pick up some steam and they will lift the index.

So looking at the mega-caps:

Obviously they can continue to run etc. but, they have had a pretty good run recently.

NYMO:

VIX:

Junk to Treasuries:

None are filling we with confidence that there are significant gains ahead. Rather, caution, especially given that we are heading into the traditionally more dangerous half of the year.

Mr flippe-floppe-flye:

jog on
duc

 

[ducati916]

Last post of June:

Oil News:

Demand for gasoline, distillate, and jet fuel is on the rise in the U.S. as mobility increases.

- For the week ending June 18, the four-week average demand for gasoline was 94% of the four-week average for the same week in 2019, distillate was 98%, and jet fuel was 74%, according to the EIA.

- At their lowest points in 2020, gasoline demand fell to 56% of its corresponding 2019 level, distillate demand to 80%, and jet fuel demand to 31%.

Market Movers

- Total Energies SE (NYSE: TOT) is partnering with Uber (NYSE: UBER) to offer recharging points for drivers of EVs in France.

- ExxonMobil (NYSE: XOM) workers in Chad continue their strike.

- California Resources (NYSE: CRC) plunged by more than 8% after Goldentree Asset Management, which owns 10% of the company, sold shares.

Tuesday, June 29, 2021

Oil edged up on Tuesday after posting a loss on Monday due to demand concerns.

New Covid restrictions. The spread of the Delta variant is raising some red flags, with new restrictions on visits implemented in Hong Kong, Spain, and Portugal in recent days. New flareups in cases have occurred in the UK and Australia, among other places. The Delta variant could pose some oil demand risks, and oil prices have tapped on the brakes as a result.

OPEC+ optimistic ahead of meeting. OPEC+ says that the overall conditions in the oil market have significantly improved in recent months. The group was optimistic as this week’s meetings began, with a decision on whether they will ease the production cuts further expected on July 1.

U.S. shale still showing restraint. Despite WTI hitting a two-year high, shale drillers are not rushing back with a wave of new drilling. “I'm still confident the producers will not respond” to the run-up in prices, said Scott Sheffield, CEO of Pioneer Natural Resources (NYSE: PXD).

Anger in Texas after huge gas bills from February storm. Utilities across multiple states in the central U.S. are suffering losses related to the widespread blackout in Texas in February. Lawmakers and regulators in Minnesota, Oklahoma, Missouri, Arkansas, and Kansas have called for investigations into market manipulation and are exploring regulatory changes.

EU approved climate target into law. European Union countries on Monday gave the final seal of approval to a law to make the bloc's greenhouse gas emissions targets legally binding. The bloc will cut emissions by 55% by 2030.

VW to end ICE cars by 2035. German carmaker Volkswagen will stop selling combustion engines cars in Europe by 2035, but slightly later for its sales in the United States and China.

California approves 11.5 GW of new clean energy. California approved an 11.5 GW procurement package composed entirely of clean energy resources that will come online in the middle of the decade, marking its largest-ever capacity procurement ordered at once.

Shell buys BP’s stake in North Sea gas field. Royal Dutch Shell (NYSE: RDS.A) bought BP’s (NYSE: BP) stake in the Shearwater North Sea gas field, raising its stake in the field to 55.5%.

DUCs drop 27%. The number of drilled but uncompleted wells (DUCs) in the U.S. shale patch has declined by 27 percent since the peak in June 2020, the Energy Information Administration (EIA) has estimated.

Biofuels groups urge EPA not to issue waivers. After the Supreme Court handed a victory to oil refiners in their dispute with ethanol groups, the biofuels industry is hoping the EPA will nevertheless keep waivers limited.

Russia struggling to boost oil production. Russia is having trouble reversing an oil production decline it implemented under its agreement with OPEC+. Russia has been producing some 10.42 million bpd of crude oil and condensates since the start of the month, which is lower than May’s average of 10.45 million bpd.

Supreme Court rules in favor of Penn East. The U.S. Supreme Court ruled in favor of PennEast Pipeline Company in a high-profile case over eminent domain, overturning a lower court decision in favor of the state of New Jersey which sought to protect landowners.

Aramco bets on blue hydrogen. Saudi Aramco (TADAWUL: 2222) outlined plans to invest in blue hydrogen as the world shifts away from dirtier forms of energy but said it will take at least until the end of this decade before a global market for the fuel is developed.

Smaller oil sands keep pumping. Despite the push towards decarbonization, carbon-intensive oil sands operations are boosting cash flow and performing well in the short run.

Qatar: Peak gas around 2040. One of the world’s largest liquefied natural gas (LNG) exporters, Qatar, expects global natural gas demand to peak at some point around 2040. According to Qatar’s state-owned giant, worldwide natural gas demand still has two decades to grow.

Brazil’s oil boom continues. Latin America’s largest oil producer Brazil is one of the worst affected countries globally by the COVID-19 pandemic. By March 2021 petroleum and natural gas production was in decline with total hydrocarbon output falling by nearly 3% year over year to an average of 3.6 million barrels of oil equivalent per day. Nevertheless, by April operations began to recover and the country’s economically critical oil output was rising.

Natural gas prices soaring. A historic heatwave in the Pacific Northwest, along with other heatwaves in parts of the U.S., has contributed to a huge spike in natural gas prices. The August contract surged 7.3 cents higher in Monday’s session, a rally that analysts at EBW Analytics Group attributed to near-term heat and corresponding strength in the physical market.

Europe natural gas prices also soaring. TTF prices for natural gas shot above $11/MMBtu in recent days. On Tuesday, Russia declined to add more gas to its pipeline system through Ukraine, another bullish spark for European gas markets.

Sectors.

The Daily, again, pretty quiet with some gentle rotation.

For the month, Tech. has been the comeback story:

For the last 6 months:

The Bond edition:

To essentially summarise: all year the Bond market has been bullish for stocks. Now it is still so, however a few cracks are starting to emerge. Whether that worsens into an issue is impossible to say. What we can say is: the probabilities of it getting better is low. The probability of it getting worse is higher. The probability of no change is somewhere in the middle.

Today agricultural commodities had a big day:

Why? I have no idea. I do know that the US is in the middle of a heatwave, water is short, crops have been put-to-the-sword so to speak for lack of available water. Harvest time is Sept/Oct.

Gold as against DBC:

Mr flippe-floppe-flye:

BTC and cryptos seem to be stuck in a pretty broad range, which will frustrate everyone who are (slightly) longer term bulls or bears. The daytraders probably love it. From periods of extended nothing come big moves when they finally come. Because it is not really correlated to anything else, it can only be analysed to itself, a notoriously ineffective method, let's call it 50/50. What we can say with some certainty is that if it breaks down, it's headed to 20K. If higher, probably back to its highs and beyond.

Stocks are in a somewhat analogous situation. While it is true that they continue to wrack up new ATH with alarming regularity, the % increase in those new ATH is marginal. It is taking an increasing amount of effort to do so. Each new high comes with a struggle for days to get there. Meanwhile, the internals are haemorrhaging at an alarming rate and the patient is bleeding out from an undiagnosed wound.

In my afternoon travels through blogoland, the mood is largely festive and bullish. There are mentions of the internals from time-to-time, but mostly I come across bullish seasonality charts, everything from the time of day, to decades. While markets do rhyme, Mark Twain, often they do not. When markets are priced for only good news, as they are currently, bad news has a bad effect. Markets will climb higher in the face of bad news when they are already pricing in disaster, like last March/April.

Take 'Banks' as an example: in the depth of market despair last year banks were not allowed to (a) pay dividends and (b) buy back stock. Banks across the board have risen significantly. Now, they can pay dividends again and are set to buy back a couple hundred billion in shares. Why are bank stocks not off to the races? Already priced in. It will be interesting to see how bank stocks react to shares being repurchased, it does for sure put a bit of a floor under the price, will it do much else? The point being: when good news fails to ignite a bit of a rally, there are issues.

The FED's Reverse Repo reached almost $1 Trillion today. WTF. Banks are choking on cash. They are sending it back to the FED for 0.005% interest. They cannot lend it out more profitably. Corporations that a creditworthy enough to borrow, can float their own debt more cheaply to buy back shares. Meanwhile there are increasingly shortages of everything. Smaller businesses (those that are still there) obviously are not getting loans (assuming they are asking) from the banks as they must be poor credit risks.

Housing: not enough being built, those that have been built are now owned by Blackrock. Prices are going stratospheric again. This is no sub-prime bubble, Blackrock and the other Hedge Funds (one supposes) are well financed and can make payments. But you must wonder at the FED buying $40B MBS each month, for what purpose? Will they continue? Yanks moan to their Congress and Senatorial representatives continuously. If the FED yanks MBS support (as they should) what happens to markets?

Jog on
duc

 

[Smurf1976]

Stocks are in a somewhat analogous situation. While it is true that they continue to wrack up new ATH with alarming regularity, the % increase in those new ATH is marginal. It is taking an increasing amount of effort to do so. Each new high comes with a struggle for days to get there. Meanwhile, the internals are haemorrhaging at an alarming rate and the patient is bleeding out from an undiagnosed wound.

My far less scientific thought is that it is now July.

After July comes August.

After August come the months of September and October which don't have the best reputation.

That leads to thoughts of events of the "1987" variety as a possible scenario. Keep grinding higher with the internals falling apart until sometime in September - October when it's game on. Just my

 

[qldfrog]

My far less scientific thought is that it is now July.

After July comes August.

After August come the months of September and October which don't have the best reputation.

That leads to thoughts of events of the "1987" variety as a possible scenario. Keep grinding higher with the internals falling apart until sometime in September - October when it's game on. Just my

And october will see the start of winter aka flu season..which in covid time means another set of scares and lockdown..so if markets look ahead, a good time to have a reason to crash.

 

[ducati916]

Some internet issues.

All waiting on the Fed:

Markets, unless Mr Powell has a very benign message, will likely roil after the announcement.

Mr flippe-floppe-flye:

Essentially if the Fed moves to QT, how it drains the liquidity is also important. Banks are the crucial middle link that transmit Fed policy. Their Balance Sheets are at massive risk if the market does not like the message that the Fed delivers.

Proxy for BTC

US deficit continues to expand:

Further pressure on the Fed to monetise, which of course increases inflationary pressures.

Russia:

The risks of investing (trading) producers as against the physical:

Didn't have the reserves actually claimed. Of course on the upside for holders of the physical, a further reduction in supply.

The physical raid is on:

With COMEX deliverable at almost all time lows, BAC short (rumoured) 800 million ounces (taken over from JPM) things could become interesting.

With potential conflicts brewing with Russia, China and its own population, things don't look so good for the US. DXY hegemony is/will come under tremendous pressure from China and Russia who have already bypassed the SWIFT system and set up an alternate payments system. SWIFT is one of the major tools that the US has employed to hold DXY hegemony through the decades.

Bottom line: depending on what the Fed does (I'll plump for trying to thread the needle) support stonks or let stonks collapse, they are caught either way. The correct way is to let stonks collapse, have the Depression and try to move forward afterwards. If they try to save stonks and by extension the economy (which has been financialised) they will destroy DXY, which will take down the stonks and the economy in any case. The trouble is, as the primary Reserve Currency, they probably take down all fiats with them.

Godot is due to arrive shortly.

jog on
duc

 

[frugal.rock]

Any thoughts on the roil now @ducati916 ?

 

[ducati916]

Any thoughts on the roil now @ducati916 ?

So Mr Powell has tried to appease the market by talking Hawk but acting Dove. Mr Biden's ratings are below Mr Trump's, so there will be political pressure to control the inflation, without crashing the market.

I 'think' markets will move higher in the short term, a risk-on bounce. However, the Taper is still on. The mechanics of the taper cannot help but remove a support for stonks. I think the sell-off resumes shortly.

Meanwhile (currently) they are hammering gold/silver (COMEX expiry).

The roil will continue all week.

jog on
duc