Trading the Trend

[ducati916]

So just a bit of a teaser as I don't currently have time to download and comment on the charts atm, tomorrow looks like the bears will come out and play (successfully) again tomorrow.

jog on
duc

 

[ducati916]

So here are the charts:

So we see that the SPY is at resistance on both 20/50EMA. Whereas the QQQ still has a little further to rise due to current weakness relative to DIA/SPY.

We also know that the VIX has a tendency to bounce back to resistance at or about these levels. SPY is at resistance on the price chart.

So I'm suggesting weakness in SPY/DIA and relative strength in QQQ with a big jump in volatility, which, should not cross/breach resistance (for any appreciable time) and potentially, SPY takes a shot at resistance (again) towards the end of the week.

In addition, we have credit issues bubbling in the background. This is far more concerning than the purely technical issues already discussed. It is a twitch, but it is the second twitch this week. This is not yet a signal. It may become one. Watch this space.

jog on
duc

 

[over9k]

We also have the curveballs of the vaccine info out just last night plus stimulus due very soon.

 

[ducati916]

We also have the curveballs of the vaccine info out just last night plus stimulus due very soon.

Well re. vaccine, I think you know my position.

However re. the stimulus. That is a far more pertinent point. I'm expecting amongst other things, the Fed. to potentially lower the Fed Funds Rate, potentially below ZIRP. I am not a fan of this at all.

jog on
duc

 

[over9k]

They're already effectively negative if they're below inflation.

Just read that all this vaccine carryon is just the ability to move to the next trial - which won't complete until march 2021.

So a storm in a teacup until then really.

 

[ducati916]

They're already effectively negative if they're below inflation.

Just read that all this vaccine carryon is just the ability to move to the next trial - which won't complete until march 2021.

So a storm in a teacup until then really.

Real rates are negative. Nominal rates are not. I suspect the Fed (post JPM earnings and Mr Dimon's comments) will lower the Fed Funds Rate to negative. This will (of course) help banks which operate on the spread, and increase their earnings going forward. Long term however it is not a great idea.

I'm totally indifferent to the vaccine argument. I have followed it on ASF and you can see where that has led.

jog on
duc

 

[ducati916]

Mr Dimon's comments:

Big banks are economic bellwethers. Investors should be concerned about what JPMorgan Chase had to say in its second-quarter earnings report.

The largest U.S. bank by assets on Tuesday signaled that the worst of the recession sparked by the coronavirus pandemic still lies ahead. That’s evident through ballooning loan-loss reserves, or the additional $8.85 billion JPMorgan put aside during the quarter to cover potential losses on loans to borrowers hurt by the pandemic. From the first quarter, which ended as efforts to contain the virus in the U.S. were just beginning, the bank’s loan-loss provision is up 38%; from a year earlier, it’s up 143%.

The increased loan-loss reserves are a reflection of JPMorgan’s more bearish view of the U.S. economy. In its second-quarter report, the company made significant negative revisions to its unemployment forecasts through the end of 2021 and in turn sharply reduced its expectations for gross domestic product over the same time period.

Economists at the bank now peg their base-case scenario for unemployment at the end of 2020 at 10.9%, up from a prediction of 6.6% when it reported first-quarter earnings. That dimmed outlook comes as earlier-than-expected rehiring during May and June still left 20 million out of work, and as business reopenings are being rolled back in some regions.

For gross domestic product, JPMorgan now sees a contraction of 6.2% in the fourth quarter of this year versus last, worse than the 5.4% decline it previously anticipated.

More interesting is where JPMorgan sees the U.S. economy at the end of 2021. Unemployment will still hover around 8%, the bank says, and GDP will still contract—a call that contrasts with many other Wall Street firms expecting a return to growth next year.

JPMorgan economists now expect a contraction of 3% in 2021. Until Tuesday, JPMorgan itself saw GDP growth of 0.3% by the end of 2021 from the pre-pandemic rate of 2.3% at the end of 2019.

On the bank’s call with investors and analysts Tuesday, CFO Jennifer Piepszak said delinquencies so far have been limited because of the amount of fiscal and monetary stimulus meant to support the broader economy. But “the visibility of what we’re dealing with is very, very low because we’re not seeing right now what you would typically expect to see given a recession,” she said.

Referring to CEO Jamie Dimon, Piepszak added: “Jamie has said this many times: May and June will prove to be the easy months in terms of this recovery, and now we’re really hitting the moment of truth I think in the months ahead.”

Given increased uncertainty around the macroeconomic outlook and the future of government stimulus measures as they affect clients’ ability to pay loans, Piepszak says JPMorgan is putting “more meaningful weight” on downside scenarios.

Dimon also spoke Tuesday about the bank’s preparation for a deteriorating economy. “We could bear another $20 billion of loan-loss reserves,” he said. “That $20 billion brings us to an extreme adverse [scenario] which roughly may equate to the U or W the Fed [references in discussing the recovery’s shape].” The bank is “going to do a lot more analysis on that because, obviously, we need to be prepared for that,” Dimon added.

Some across Wall Street, meanwhile, are holding on to hope of a V-shaped recovery, but rising Covid-19 cases are undermining those calls as governments and companies rethink reopenings. The latest setback came Monday, when California Gov. Gavin Newsom issued a statewide executive order closing indoor operations at restaurants, bars, movie theaters, family entertainment, zoos and museums. Gyms, hair salons, malls, and churches are also being forced to close anew in 30 California counties.

jog on
duc

https://eb2.3lift.com/pass?tl_click...90&bcud=4683&sid=66552&ts=1594859590&cb=74486

 

[ducati916]

I would also expect (at some point soonish) a rally in $US.

*Implications for Gold?

jog on
duc

 

[over9k]

Yeah that's the really funny part - my drops from the U.S have been offset by my ASX gains the past few days. I'll be pulling the trigger on FMG & RIO next week if this trend continues.

I've noticed that my stay-at-home stuff has basically followed gold's trend but with much greater volatility. When the market gets spooked and runs to safe havens, gold's bumped a bit whereas I've gained a LOT and then the same thing's occurred on good news/belief of some kind of return to normality.

None of which is surprising in the slightest.

 

[ducati916]

Just keeping an eye on things:

You never know.

jog on
duc

 

[over9k]

They're all solid long positions IMO.

But if there's a dip coming, I want to bail out before it and then buy back in. I did well buying boeing at 125 & selling at 190 and then buying back in at 170 so it'd be great to be able to do the same.

If they get their next gen chips out by xmas/winter then they're going to absolutely fly off the shelves.

 

[over9k]

Futures are in the toilet. Absolute bloodbath expected for the whole market. All the futures indices are down. Another night where I have to sleep early. Expecting to wake to horrors.

 

[Spaniel14]

Futures are in the toilet. Absolute bloodbath expected for the whole market. All the futures indices are down. Another night where I have to sleep early. Expecting to wake to horrors.

Probably a reversal of yesterday’s gains, think the market got ahead of itself and everyone is trying to jump with the gains.

 

[qldfrog]

Futures are in the toilet. Absolute bloodbath expected for the whole market. All the futures indices are down. Another night where I have to sleep early. Expecting to wake to horrors.

You are watching too many sensation channel
Dow s&o -0 .6% and Nasdaq -1.4%
Not what i call bloodbath.
Will see how it goes but surprised it is not worse.we could end up flat..at least for my investment.let's sleep on it
But agree not a great week overall so far for my systems

 

[Warr87]

Dow s&o -0 .6% and Nasdaq -1.4%
Not what i call bloodbath.

 

[Chronos-Plutus]

Jamie Dyson is an interesting character.

Does he have listed stock?

I heard some people send him ideas that work, but they just don't look like working, so they get a response.

 

[qldfrog]

Interesting
Down day..for stocks. Widely and relatively evenly
For gold silver oil btc
USD up a bit and VIX...down ..go figure on that one

 

[ducati916]

So markets a little weak today. The VIX looks as if it has already fallen back. I'll include a look at the $VIX in the close.
There has however been positive economic data:

Pretty much self-explanatory. This sort of positive data underlines the fact that the economy is coming back online. Earnings during this reporting period will continue to be poor, but they will be looked past into 2021.

TSLA and ZM. Bubble or sustainable? There is a fierce debate raging in 'Electric Cars' re. TSLA. ZM I just consider a passing fad, too easily replicated. Their best bet would to be bought up by one of the giants if they had something worthwhile. When I say worthwhile something that held a patent and had value.

The World to date:

Lots of opportunity out there.

And my main man, flippe-floppe-flye:

Winning as always.

jog on
duc

 

[ducati916]

Interesting
Down day..for stocks. Widely and relatively evenly
For gold silver oil btc
USD up a bit and VIX...down ..go figure on that one

$VIX started high and has already faded.

jog on
duc

 

[qldfrog]

Noted bonds were falling too.
In a day like that, not many places to hide
Probably a different thread but would be interesting to know your feelings about diversification Mr Duc
After GFC and quite a few day crashes observations, my initial textbook feelings about diversification for risk management between asset classes has been shaken.
On a day like today, for a us investor, everything but cash..real cash, not bonds was a nearly 1% loss....
Not that small in the scale of things