Week of April 21 - DXY/Oil/DJI/10yr
Nobody will ring a bell at the top.
What a great selloff we had last week! I was expecting a pop higher for the sell but they just wanted to pull the rug on bulls early in the week it seems.
Pretty much everything got monkey hammered. Indexes and Oil slid while gold held in (for now). The great news is we now have a directional market to trade again - these are MUCH easier to trade compared to the sideways chop that NDX has experienced for the past 2 months.
Last week, we saw pretty hard selling across the board and I think this is just the first warning shot of the coming recession. We have been in the largest and longest bull market in history and it feels like we are nearing a tipping point.
This week, I will be focusing on the Dow. I have really enjoyed trading the Dow as it has really clean charts compared to NDX. This comes from the fact that the DJI has the 30 largest USA companies in the index which tend to be rather stable from a price standpoint.
The added benefit is that there are no tech stocks getting subjugated to gamma squeezes or mania like NVDA or AI related plays. It's nice to have a boring index that trades clean.
Dow - Friday during the Asia session - Israel attacked Iran. This spooked markets and go us into our QUARTERLY downside target for the DJI. In fact, DJI was down YTD during the Asia session until the bounced it higher. But what this means for us, is that I am looking for higher targets from HERE on the DJI in the short run.
On the Weekly, I would LOVE to see a bounce back higher to 39k area. This will get us into the premium of the entire swing lower, and would allow us to target that FVG living up there at 39.4k. We swept the LOY on DJI - now we need a backtest.
The good news is that dropping down to the h4 charts, we can see that we almost have a Market Structrue Shift (MSS) to bullish. The 200sma on the 4hr chart also aligns with our weekly target area - but we could see a nice 1000 point gain in DJI before we turn lower again
DXY - DXY formed a weekly Doji. I am expecting last weeks lows to be swept on DXY before it resumes its uptrend.
Crude Oil - OIl got absolutely smashed last week. That being said, I still want to see 88 trade on WTI before we roll over. This looks like it was just a pullback to the 200sma area on the 4hr chart.
10yr Yield - We have been waiting for the 10yr to tag our 4.7% level so we can start loading the boat with bonds. Last Tuesday gave us just that opportunity, From here, I am expecting rates to start to drop and in a big way - this will align with the oncoming recession.
Gold - Gold closed the week > 2400 but off its ATH. I still want to see Gold come in on the weekly chart, but we need to crack 2340 for that. I have alerts set for Gold but I am not super intent on watching it at these levels.
So here is the setup I am watching for this week;
Until next week - We'll be watching.
What a great selloff we had last week! I was expecting a pop higher for the sell but they just wanted to pull the rug on bulls early in the week it seems.
Pretty much everything got monkey hammered. Indexes and Oil slid while gold held in (for now). The great news is we now have a directional market to trade again - these are MUCH easier to trade compared to the sideways chop that NDX has experienced for the past 2 months.
Last week, we saw pretty hard selling across the board and I think this is just the first warning shot of the coming recession. We have been in the largest and longest bull market in history and it feels like we are nearing a tipping point.
This week, I will be focusing on the Dow. I have really enjoyed trading the Dow as it has really clean charts compared to NDX. This comes from the fact that the DJI has the 30 largest USA companies in the index which tend to be rather stable from a price standpoint.
The added benefit is that there are no tech stocks getting subjugated to gamma squeezes or mania like NVDA or AI related plays. It's nice to have a boring index that trades clean.
Dow - Friday during the Asia session - Israel attacked Iran. This spooked markets and go us into our QUARTERLY downside target for the DJI. In fact, DJI was down YTD during the Asia session until the bounced it higher. But what this means for us, is that I am looking for higher targets from HERE on the DJI in the short run.
On the Weekly, I would LOVE to see a bounce back higher to 39k area. This will get us into the premium of the entire swing lower, and would allow us to target that FVG living up there at 39.4k. We swept the LOY on DJI - now we need a backtest.
The good news is that dropping down to the h4 charts, we can see that we almost have a Market Structrue Shift (MSS) to bullish. The 200sma on the 4hr chart also aligns with our weekly target area - but we could see a nice 1000 point gain in DJI before we turn lower again
DXY - DXY formed a weekly Doji. I am expecting last weeks lows to be swept on DXY before it resumes its uptrend.
Crude Oil - OIl got absolutely smashed last week. That being said, I still want to see 88 trade on WTI before we roll over. This looks like it was just a pullback to the 200sma area on the 4hr chart.
10yr Yield - We have been waiting for the 10yr to tag our 4.7% level so we can start loading the boat with bonds. Last Tuesday gave us just that opportunity, From here, I am expecting rates to start to drop and in a big way - this will align with the oncoming recession.
Gold - Gold closed the week > 2400 but off its ATH. I still want to see Gold come in on the weekly chart, but we need to crack 2340 for that. I have alerts set for Gold but I am not super intent on watching it at these levels.
So here is the setup I am watching for this week;
- I want to see DJI trade higher into the the weekly breaker block around 39k. From there I will be scouting for short entries.
- Looking for interest rates to continue to march lower - this will be bullish for indexes (at first) as indexes tend to ignore WHY rates are dropping for a little while.
- Oil has one last gasp in it and will be supported by DXY heading lower to confirm its breakout - I am looking for $88 to trade on WTI.
Until next week - We'll be watching.
Comment:
Note the dates of the red lines - all of the BIG crashes were election years.
Trade closed: target reached
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Fed Funds rate is in blue, and the Feds Balance sheet is in Orange.
Fed Funds Rate(FFR) is at the same rate it was in 2005 - during this same time the Fed had $0 debt on its balance sheet.
Contrast that now, to the Fed having a $3.5tn Balance sheet - with rates at 20 year highs.
Most the movement we have seen over the past 6 months has been stocks trying to reprice the FedFunds Rate. Cuts keep getting pushed back to September at soonest - and then doubtful due to election optics.
An old but great chart - here is the 2yr Note vs the FedFunds rate in Blue, and the 2yr note in Orange.
Since 2000 - the crossing of the FFR BELOW the 2yr note rate - has led to a recession 100% of the time. Take note of the DATES of the red lines.
We are close, buy nobody is going to ring a bell - but the bond market always seems to know first.
The coming deflationary bust that will be debt driven - is unavoidable.