Traders Market Weekly: May 9-15 2021

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FEAR NOT Brave Investors

Inflation records

 Strange times But remember The Joker once served as the Iranian ambassador for the United Nations.

Inflation, Record Highs and Fed

The Week That Was – What Lies Ahead?


The melt up continued … more record highs for the S&P and Dow, despite a disappointing US jobs report, yes friends back in the bad news is good given the inflation argument. Inflation will be the theme of the week with CPI and PPI out and a slew of Fed speakers who will no no doubt be peppered with price questions. More monster earnings ahead which have continued much in the same vein as the large money center banks reported, with many posting record profits and revenues

Again inflation is front and center. The Federal Reserve kept rates unchanged at their April meeting, kept QE infinity open with TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. The gameplan per Fed Chairman Powell is likely to be on point for Fed speakers, a reminder from a few week’s back:

“So it seems unlikely, frankly, that we would see inflation moving up in a persistent way that would actually move inflation expectations up while there was still significant slack in the labor market. I won’t say that it’s impossible, but it seems unlikely… So that’s not to say inflation won’t—might not move up, but for inflation to move up in a persistent way that really starts to move inflation expectations up, that would take some time and you would think it would be quite likely that we’d be in very strong labor markets for that to be happening.”

Meanwhile … strong economic numbers and high pricing continues to flow in UNTIL that ‘piss poor’ jobs report as one trader best described it was an excuse to put those fears aside. Thus giving creedance to high prices being due to supply lines and will be transitory as the Fed ‘hopes’.  We leave our judgement out on this given China’s attempt to bully Australia who just happen to have pricing power in key commodities Iron Ore, Natural Gas, Coal and a multitude of agriculture markets.  Iron ore prices rose 4.9% to a record $US201.88 a tonne as Chinese buyers unleashed demand after a three-day holiday. Gold rose back above $US1800 an ounce to near three-month highs.  Should the showdown get uglier than lithium and other rare earths from Australia become influential also.  Not to  mention Chinese threats to Taiwan with Taiwan Semiconductor being the key to the world’s chip shortage. Is there a pattern here?  One would suggest China doesn’t have the control the CCMP propoganda amachine likes to spew out.

Money flow is key, highlighted by the markets reaction to the weak April jobs report given the S&P has effectively not allowed a pull back since the strong US Jobs report released Good Friday and here we are a month later for this Friday’s.. The Russell still lags, possibly more funds still caught out unloading. What will BlackRock do seems to be popular question after BlackRock’s assets under management rose to a record $9 trillion in the quarter, compared with $6.47 trillion a year earlier. Fixed income accounted for a bulk of the inflows, as expectations of policy tightening by the Federal Reserve triggered large moves in debt markets and pushed up U.S. Treasury yields. 

There is the prospect of an overheating U.S. economy, but remember we are coming off a low base and the lockdown has decimated many sectors of the economy and people’s lives. The relevaton from the speed of technology adapting and disrupting to a new world with the lockdown is transformative. The shift has enabled and transformed the traditional economy that we measure future outcomes off.

We still need to add almost 20 million jobs in the US alone to get back to par. Europe is in worse shape, so overheating at this point isnt a concern for most policymakers.  The unparalleled government monetary inflation has inflated many price levels and distorted asset markets BUT that was intended as to increase confidence in the ‘guts’ of the economy, homeowners and 401k holders. This point is missed by the uber bear community. From here is the big question. The RBA stability report gives us an insight into central banker thinking, they concluded Australian banks are in strong financial position coming out of pandemic and have abundant liquidity and funding,

The downside is clear with the absence of moral hazard from repeated Federal Reserve market bailouts in an environment of some would say obscene liquidity pumps. Pure greed is the other part, not wanting to miss out on fees. The obvious question is, how deeply ingrained is this attitude through the markets? How do we ween the markets off tis continuos dip feed? At this point the Central Banks have kicked that answer down the road.

After the monthly and weekly employment data the market will be going though whether the recent stimulus rounds are working with in the background of the Federal Reserve Continuing to downplay inflation risk.. We continued to see more rotation from tech to value stock, but a slower pace.

Why the angst in the bond market?

The FOMC presented new economic projections including a forecast of 6.5% for gross domestic product this year with PCE inflation going to 2.4% this year, but falling to 2% next year. Powell reiterated that the Fed sees only a temporary pickup in inflation this year because of the base effects against last year’s numbers when prices fell. The Fed will target an average range of inflation around 2%, meaning it could exceed that threshold for some time which is a change to the Fed’s ground rules. The majority of Fed officials did not see any interest rate hikes through 2023.  With the passing of the $1.9 trillion splurge a FOMO surge lifted stocks last week but now all eyes on yields dampened the enthusiasm.

What concerns bond holders and impacts stocks over the past weeks is the Fed appears to be too Blaise about inflation. This view got added weight when crude oil hit the highest prices since 2019 after OPEC decided to stay pat on production for April. But since then Crude has fallen over 12% in just a week from those highs. Hence why Powell has said “We’re going to wait to see signs of actual inflation or the appearance of other risks that could threaten the achievement of our goals. And we’ve seen that the economy can sustain exceptionally low levels of unemployment without inflation.”

There is a view that Powell also refuses to be dictated to and set the bond bullies up for failure. The V reversal this month suggests that. Air needs to come out of the market, particularly Tech, this is best illustrated by the ARK Funds and Semi-Conductor SMH ET’s (see below). From here we have another massive $1.9 Trillion stimulus. Is that enough to keep asset prices elevated, hard to fight the Fed and that kind of cash floating around. Watch the argument from analysts that higher yields mean the economy is growing, stocks are value versus hyperinflation is on its way.

After being up over 90% Bitcoin reversed sharply from $44,000 to over $63,000. One could argue bonds and crypto are at the opposite ends of the spectrum, but all they in 2021? Astonishing and symptomatic of so many confluences which we will discuss later. These added further price pressures on food and energy come after we discussed inflationary pressures are building in the US, and a truly tidal wave of Treasuries is in the pipeline. Not hard to grasp Bond market nervousness. 

Raise your eyes and look at the stopped car in front of you you may want to hit the brakes.The pandemic is not close to our greatest worry, nor is energy it seems. The  runaway credit bubble in the era of delusion and entitlement has multiple unintended consequences or are they intended? The stockmarket has lost rationality  the danger is should the bubble pop the consequences of a historic debt crisis in a deeply divided nation and unprepared social and geopolitical backdrops could be earth shattering as the Fed disregards asset inflation and bubble dynamics.

Of note during the Arctic Blast with the EV mania and the Biden Admin Green deal push we noted the spike in spot Texas electricity prices pushing the cost of electricity not on fixed plans to unheard of levels. Bloomberg reported on recharging a Tesla from about $18 to $900. Yes the price spike was fleeting but it should remind the sane amongst us the broader issue of the disconnect between the push toward electrification and our massively inadequate energy infrastructure. This is the area that needs investment, not just for our glorious EV but for all energy and possible disasters like we just saw.

Comments from Yellen and others on the same page suggest that low rates conveniently push potential debt instability far out into the future. The Fed is poised to expand its balance sheet, by adding liquidity to the tune of $1.5 TN this year with no regard for rampant asset price inflation and bubbles. Now the new administration has control of the blank checkbook and is determined to us it with no long-term thinking or planning; everything is short-term focused. Washington is gambling with our nation’s future, from kicking cans down the road to rolling drums down a hill. 


  • Part A: Stockmarkets
  • Part B: Bonds
  • Fed and Banks
  • Part C: Commodities
  • Energy – Oil and Gas
  • Gold and Silver
  • Part D: Foreign Exchange
  • Geopolitics and Economics
  • Economy Week ahead


PART A – Stock Markets

Highlights – USA

  • The S&P500 gained 1.2% (up 12.7% y-t-d)
  • Dow jumped 2.7% (up 13.6%).
  • Nasdaq100 fell 1.0% (up 6.5%).
  • S&P 400 Midcaps rose 1.7% (up 20.1%)
  • Small cap Russell 2000 added 0.2% (up 15.0%).
  • The Utilities fell 1.3% (up 4.7%).
  • The Banks surged 4.3% (up 35.6%), and the Broker/Dealers gained 1.3% (up 23.6%).
  • The Transports jumped 3.9% (up 27.5%).
  • The Semiconductors were little changed (up 11.3%).
  • The Biotechs declined 1.4% (down 3.5%).
  • With bullion rising $62, the HUI gold index surged 9.7% (up 0.7%).


 US Indices W 5 7 2021

Highlights – Europe Stocks

  • U.K.’s FTSE equities index rose 2.3% (up 10.4% y-t-d).
  • France’s CAC40 jumped 1.9% (up 15.0%).
  • German DAX equities index gained 1.7% (up 12.3%).
  • Spain’s IBEX 35 equities index surged 2.8% (up 12.2%).
  • Italy’s FTSE MIB index rose 2.0% (up 10.7%).

 Highlights – Asia Stocks

  • Japan’s Nikkei Equities Index rallied 1.9% (up 7.0% y-t-d).
  • South Korea’s Kospi index gained 1.6% (up 11.3%).
  • India’s Sensex equities index increased 0.9% (up 3.0%).
  • China’s Shanghai Exchange declined 0.8% (down 1.6%).
  • Australia’s ASX200 closed 0.3% ahead on Friday at 7080.8 to record its first weekly gain in three. Investors added bank and mining names Iron ore prices rose 4.9% to a record $US201.88 a tonne as Chinese buyers unleashed demand after a three-day holiday. BHP, Rio Tinto, Fortescue Metals moved ahead Gold rose back above $US1800 an ounce to near three-month highs. Newcrest, Northern Star, Evolution, Regis, Perseus, and Silver Lake Resources were all up.

 Highlights – Emerging Markets Stocks 

  • EM equities were mostly higher
  • Brazil’s Bovespa index recovered 2.6% (up 2.5%), 
  • Mexico’s Bolsa rallied 2.6% (up 11.8%).
  • South Korea’s Kospi index gained 1.6% (up 11.3%).
  • India’s Sensex equities index increased 0.9% (up 3.0%).
  • China’s Shanghai Exchange declined 0.8% (down 1.6%).
  • Turkey’s Borsa Istanbul National 100 index surged 3.1% (down 2.4%).
  • Russia’s MICEX equities index jumped 3.9% (up 12.0%).

IPO and SPAC mania is back in full force with last years  Snowflake an indication of and video game maker Roblox going public the most recent big hit.

From rebalance as a natural reversion after the bull mania we have surged with another speculative rush. This after Dow ended the second quarter with a 17.8% gain, the biggest quarterly rally since the first quarter of 1987, when it ripped up 21.6%. IS that enough to rebalnce and go higher? The S&P 500 had its biggest one-quarter surge since the fourth quarter of 1998,  soaring nearly 20%. The Nasdaq Composite jumped 30.6% for the quarter, its best quarterly performance since 1999.

Stock valuations, as measured by forward price-to-earnings ratios are near their highest level since the 2000 dot-com boom.

Biggest SPX Stock Winners and Losers Last Week

 Top 5 W 5 7 2021

S&P 500 Index Technical Analysis via @KnovaWave

SPX rallied again to new all time highs, after testing and spitting tenkan san & 8/8 Murrey Math at the Daily Cloud & with a positive Chikou retest. We have a number of alternatives of degree (iii) or (iv) of 5, Keep it simple support is Tenkan and Kijun as Chikou rebalances.

The break up was from above the 200dma. The balance from sharp reversal after the initial 3 wave down from the SPX wave 5 extension as Covid19 fed impulse accelerated under the tenkan. From there we had seen the ABC or 1-2-3 spinning around the 61.8% of the move. Support began at the October 2019 lows. A manic wave 5 or 3 of some degree was a resolution for the ages. Note the 100% extension from the emotive element and MM levels when the spit kicks in. A manic wave 5 or 3 of some degree was a resolution for the ages.  Note the 100% extension from the emotive element and MM levels when the spit kicks in.

SPX D 5 7 2021 

Weekly SPX spat the break channel it had been tracing since the break of v of (III) or (V). Key was the spit or retest of MM 8/8 and Tenkan San, which held with the previous highs and Tenkan.  To repeat “We look for 3 waves down and reactions to keep it simple with the alternatives in the daily.”  Keep an eye on the putcall ratio with recognition to the sheer size of contracts AND keep in mind the stimulus distortion. The spit per channel fractal and Adams rule launched back over the cloud where we were encased AND we are back testing it. Watch if a spit or clear break support as chickou rebalances

SPX W 5 7 2021

A reminder that Apple Inc $AAPL, Microsoft Corp $MSFT, Inc $AMZN, Facebook Inc $FB, and Google-parent Alphabet Inc $GOOGL make up approximately 23% of the total weight of the S&P 500. With that comes gyrations that are an outsized impact on broader markets.



Nas D 5 7 2021 

Russell 2000

 RUT W 5 7 2021

Semiconductors SMH

Watching Semiconductors cleanly with Murrey Math levels and Tenkan – keys are previous high at +1/8 and Chikou rebalance patterning. Weekly +2/8 around 250 key number recognition factor also.

 SMH W 5 7 2021

NVidia $NVDA

 NVDA W 5 7 2021

Apple $AAPL

 AAPL W 5 7 2021

Amazon $AMZN

Amazon high was MM +3/8 and from there has built a large weekly flag which it closed under after breaking the Tenkan and Kijun, watch if Kijun closes through Tehkan for a bigger move.

 AMZN W 5 7 2021


 ARKK W 5 7 2021

US Stocks Watch


Earnings Week Ahead

This three-month period is the first to be compared to year earlier profits that were affected by the pandemic. For Q1 results in from more than half of the S&P 500 companies, earnings are now expected to have risen 46% from the previous year, compared with forecasts of 24% growth at the start of the month, according to IBES data from Refinitiv. About 87% of reports have come in ahead of analysts’ estimates for earnings per share, putting the quarter on track to have the highest beat rate on record going back to 1994, when Refinitiv began tracking the data. First-quarter corporate earnings likely benefited from the firming economic backdrop. With the US stock markets at record highs the downside to increasing profit expectations is the potential for some disappointments and that could cause adverse or stalled market to potentially.

Investors (and algos) will focus pn the conference calls and outlooks. Last quarter everyone expected the worse, we saw critical updates on production in coronavirus impacted regions and if there is extended halting of operations weighing on multi-nationals.

Last week we heard from 

This week we hear from:

Estee Lauder, Diamondback Energy Avis Budget, Loews, Alexion Pharmaceuticals, Rambus, Leggett and Platt, Vornado, American Water, Iamgold, Mosaic, Apollo Global Management, ZoomInfo, ON Semiconductor. Pfizer, DuPont, AT&T, T-Mobile, CVS Health, ConocoPhillips, Martin Marietta Materials, Activision Blizzard, KKR, Akamai, Pioneer Natural Resources, Lattice Semiconductor, Denny’s, Hyatt Hotels, Host Hotels, PerkinElmer, Prudential Financial, Viavi, Caesars Entertainment, Thomson Reuters, Cummins, Vulcan Materials. General Motors, Scotts Miracle-Gro, PayPal, Twilio, Hilton Worldwide, Booking Holdings, Fox Corp., Uber Technologies, Etsy, Allstate, Accolade, Cognizant Technology, MetLife, Marriott Vacations, CF Industries, Marathon Oil, CyberArk Software, Emerson Electric, Amerisourcebergen, BorgWarner, Zynga, Tanger Factory Outlet. ViacomCBS, Regeneron, Penn National Gaming, Roku, Peloton, AMC Entertainment, Kellogg, Moderna, Murphy Oil, Beyond Meat, Shake Shack, Square, Roku, Axon, Cushman and Wakefield, Tapestry, Neilsen, AIG, Anheuser-Busch, EOG Resources, Consolidated Edison, DropBox, Expedia, Interactive, Datadog, Cardinal Health, Ambac Financial, Cigna, Siemens, Gannett, AMC Networks, Draftkings, Liberty Broadband, Elanco Animal Health

  • Monday starts us off with
  • Marriott, BioNTech, Jacobs Engineering, Simon Property Group, International Flavors and Fragrances, Wynn Resorts, SmileDirectClub, Duke Energy, Air Products, Tyson Foods, Party City, Energizer, Coty

  • Tuesday with earnings from
  • Electronic Arts, Chesapeake Energy, Hanesbrands, Aramark, International Game Technology, Palantir Technologies, Perrigo, Unity Software, Opendoor Technologies, Kinross Gold, Lemonade, Vizio, Coinbase

  • Wednesday Earnings Include
  • Toyota, Wendy’s, Fossil, Bumble, Allianz, Jack in the Box, Vroom, SoftBank, Sonos, Bayer, 1Life Healthcare

  • Thursday Earnings Include
  • Walt Disney, Airbnb, Plantronics, Burberry, Casper Sleep, Brookfield Asset Management, Door Dash, Petrobras, Aurora Cannabis, Alibaba

  • Friday Earnings include
  • Honda, Rosneft

IPO Week Ahead


 IPO Calendar 5 7 2021

IPO data via Renaissance Capital

Part B : Bond Markets

Highlights – Treasuries

  • Investment-grade bond funds saw inflows of $3.851 billion, while junk bond funds posted outflows of $1.387 billion (from Lipper).

In the US this month, spending of $972 billion was up from the year ago $356 billion, while receipts increased to $268 billion from $237 billion. Washington borrowed 70 cents of every dollar it spent last month. About 50% of the $3.41 TN first-half expenditures were debt-financed. Worse yet, our federal government is on track for back-to-back years of $3.0 TN plus annual deficits.

  • Three-month Treasury bill rates ended the week at 0.005%.
  • Two-year government yields declined two bps to 0.15% (up 2bps y-t-d).
  • Five-year T-note yields fell seven bps to 0.78% (up 41bps).
  • Ten-year Treasury yields dropped five bps to 1.58% (up 66bps).
  • Long bond yields slipped two bps to 2.28% (up 63bps).
  • Benchmark Fannie Mae MBS yields fell three bps to 1.81% (up 46bps).

 TNX W 5 7 2021

All good while markets hold up but take note that the loosest financial conditions in history have supported a record $1.4 trillion of corporate debt issuance. While easy credit availability has supported economic activity,  funding new investment whilst keeping vulnerable companies afloat. THe combination of urban shifts through virus and riots fears has fueled a booming MBS market and record low mortgage rates pushing strong housing markets into Bubble risk territory.

Highlights – Mortgage Market

U.S. home prices have been fueled by the lowest mortgage rates in history and relocation demand have risen rose at the fastest pace on record, surpassing the peak from the last property boom in 2005. The median price of a single-family home climbed 14.9% to $315,000 in the fourth quarter, the biggest surge in data going back to 1990. The Northeast led the way with a 21% gain.”

  • Freddie Mac 30-year fixed mortgage rates slipped two bps to 2.96% (down 29bps y-o-y).
  • Fifteen-year rates dipped one basis point to 2.30% (down 43bps).
  • Five-year hybrid ARM rates jumped six bps to 2.70% (down 47bps).
  • Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates down four bps to 3.09% (down 57bps).

Highlights – Federal Reserve

  • Federal Reserve Credit last week declined $17.5bn to $7.752 TN.
  • Over the past 86 weeks, Fed Credit expanded $4.026 TN, or 108%. Fed Credit inflated $4.941 Trillion, or 176%, over the past 443 weeks.
  • Fed holdings for foreign owners of Treasury, Agency Debt last week declined $3.3bn to $3.543 TN.
  • “Custody holdings” were up $198bn, or 5.9%, y-o-y.
  • Total money market fund assets fell $17.2bn to $4.512 TN.
  • Total money funds dropped $256bn y-o-y, or 5.4%.
  • Total Commercial Paper declined $8.4bn to $1.206 TN. CP was up $138bn, or 12.9%, year-over-year.

We do know we have massive speculation pockets, viz a viz the Meme or GameStop, Weed stocks and cryptocurrency spectacles in just the matter of weeks. The Fed is today throwing additional fuel on historic speculative manias.

  • The Fed QE infinity programme is a yield curve control policy with long government bond yields coming down. Bond supply and continued central bank resistance to more negative policy rates limits the move. Central banks have been cutting rates and adding liquidity to avoid systematic failure.

Highlights – European Bonds

  • Greek 10-year yields added a basis point to 0.99% (up 37bps y-t-d).
  • Ten-year Portuguese yields rose three bps to 0.51% (up 48bps).
  • Italian 10-year yields jumped six bps to 0.97% (up 42bps).
  • Spain’s 10-year yields added a basis point to 0.49% (up 44bps).
  • German bund yields slipped a basis point to negative 0.22% (up 35bps).
  • French yields increased one basis point to 0.17% (up 51bps).
  • The French to German 10-year bond spread widened two to 39 bps.
  • U.K. 10-year gilt yields dropped seven bps to 0.78% (up 58bps).

Highlights – Asian Bonds

  • Japanese 10-year “JGB” yields declined a basis point to 0.09% (up 7bps y-t-d).


Part C: Commodities


  • The Bloomberg Commodities Index surged 3.7% (up 20.1% y-t-d).
  • WTI crude gained $1.32 to $64.90 (up 34%).
  • Gasoline rose 2.4% (up 51%), 
  • Natural Gas added 0.9% (up 17%).
  • Copper surged 6.3% (up 35%).
  • Wheat jumped 3.7% (up 19%).
  • Corn surged 8.8% (up 51%).
  • Bitcoin declined $880, or 1.5%, this week to $57.141 (up 97%).
  • Risk markets continue to respond to a Conronvirus outbreak and failed negotiations between Congress and the White House over an additional economic stimulus package to boost economic demand.
  • U.S. producers production still under pre Laura levels.
  • Higher crude prices prompt some U.S. producers start drilling again with rigs up for the ninth week in a row.

BDI Freight Index

  • The Baltic Dry Index rose 1.5% to a near 11-year peak of 3,053 on Friday, extending its winning streak to 13 sessions, mainly supported by rising iron ore demand from China.
  • The capesize index, which tracks iron ore and coal cargos of 150,000-tonnes, advanced 2.6% to 4,896, its highest level since September of 2019
  • The panamax index which tracks cargoes of about 60,000 to 70,000 tonnes of coal and iron ore, gained 1.1% to 2,672.
  • Among smaller vessels, the supramax index shed 7 points to 2,144. The Baltic Dry Index rose 49% in April, the fifth straight month of gains and the most since June 2020. . source: Baltic Exchange

 BDI W 5 7 2021


Copper has been a leader in the risk on movement, The weekly channel since the low has maintained the speed of the move with support at the tenkan and tested the median line this week

 Copper W 5 7 2021

US Crude Oil (WTI)

WTI  spiked higher over $68 Last week to complete a 5 wave structure and test min targets after broke the topside of the channel it had been in since September, In any break, the key is crowd behavior to help tell the story which in energy is often around often geopolitics. We watch ABC corrections and from here we get the energy from the break being balanced. This week that was powered by the Tenkan Spit of a spit. Support  is the Tenkan, old channel & prev high confluence. Watch Kijun & 50 dma.. Resistance MM and previous lows.

 WTI D 5 7 2021


Global oilstockpiles are continuing to decline and that should also support the bullish case for oil prices. The dollar outlook has shifted quickly and if further weakness continues, the super commodity cycle could provide an additional level of underlying support for crude prices. WTI continued higher after it rebalanced chikou indicative of extreme crowd behavior reverseing at 7/8 after the series of fractals at last Dec wave 1 turn after we had completed 5 waves as marked, from here we watched 3 & 5 waves develop. Price popped after the spit of the 50wma (green) which is now key for support as Tenkan touched Kijun in a kiss of life. Given that we had tremendous energy which bore out in the hghs last seen 2019.

These are special times, recall “After we regained the pattern 261.8% from the extreme (-$40) move. The climax of the larger acceleration lower after broke the weekly uptrend, a fractal of the sharp and all the way to all time lows to negative pricing we have seen mirror replications.” Support is previous channels, tenkan and Kijun. Above we have Murrey Math time and price 

 WTI W 5 7 2021

Oil 2014 2021

Oil 2020 2021

US Natural Gas (Henry Hub)

US Natural Gas has played out both the corrective and consolidation phases since it completed its B or IV ( Bull Case) last year since then a series of 3 waves. Bear is this 3 wave is a C of B, bull a developing 5 and we closed under the daily cloud which needs to be recaptured for the natags bulls. Tenkan failed after the arctic blast with more failure after Kijun crossed Tenkan. Support is previous breaks. Resistance is 8/8 and recent highs. 

 NG D 5 7 2021

Natty has moved in a series of 3’s since spat the 50 wma to get over weekly Kijun and Tenkan BUT this week all gave way other than the weekly Kijun in it’s larger developing pennant. Support is the cloud and 50wma.  A series of fractals, as you would expect in a seasonal commodity with weather a prime mover. Resistance is recent highs and Fib/Murrey confluence.

 NG W 5 7 2021

 Key Energy Reports


Precious Metals


  • Spot Gold rallied 3.5% to $1,831 (down 3.6%).
  • Silver surged 5.9% to $27.45 (up 4.0%).


April 11 – Bloomberg (Shruti Srivastava and Swansy Afonso): “Gold imports by India surged in March to the highest monthly total in nearly two years as a slump in prices stoked demand for jewelry during the ongoing wedding season. Overseas purchases increased more than sevenfold to 98.6 tons last month from 13 tons a year earlier… That would be the highest since May 2019.”

Gold bulls got a strong trading week as weaker bond yields are keeping the dollar vulnerable to further losses. Gold’s primary driver is real yields and now that the 10-year real yield is back at the March lows in an extended consolidation that could see further downward pressure for Treasury yields. Gold is benifitting from China giving banks permission to import bullion. Gold has massive support at the $1750 level and tentative resistance at the $1800 region, followed by the $1858 level.

After its manic rise to +5/8 weekly and rebalance of the Kikou in 5 waves then tested and failed the Tenkan, kijun and 50 wma. We found support at the wave 1 confluence of the higher degeree 5, To be bullish we would need to recapture the cloud (or the flag 🙂 In sight of the intraday high of $1765.43 is a key harmonic pivot. We appear to have overcome the negative divergence between the weekly chikou, Silver spread and the recent highs BUT NOT yet Tenkan & Kijun fails. From there does the 5 play out? Watch Fibs and chikou.

 Gold W 5 7 2021

 Gold 2 26 21 Fail


Silver is back at the cloud, key 38% and 50wma providing support after the correction following the squeeze which forced Gold/Silver which buoyed silver in the PM space, eventually we reversed with a double top Knowing that recall Silver did a fractal of the sharp C up to breakdown level above the cloud fed by divergence from gold reverting. The weekly Tenkan crossing the Kijun would signal more downside. Note the MM

 Silver W 5 7 2021


Part D: Forex Markets

John Maynard Keynes, 1920: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”


  • For the week,the U.S. dollar index dropped 1.1% to 90.233 (up 0.3% y-t-d).
  • Majors for the week the Australian dollar 1.7%, the Swiss franc 1.4%, the Canadian dollar 1.3%, the euro 1.2%, the British pound 1.2%, the Japanese yen 0.7%
  • Minors for the week on the upside, the Brazilian real increased 3.8%, the South African rand 3.1%, the Swedish krona 1.9%, the Mexican peso 1.7%, the New Zealand dollar 1.6%, the Norwegian krone 1.3%, and the Singapore dollar 0.5%. On the downside, the South Korean won declined 0.8%. The Chinese renminbi increased 0.65% versus the dollar this week (up 1.46% y-t-d).

Australian Dollar – AUDUSD

Aussie dollar completed a 5 at the pysch 80 level and it back doing a break retest of 8/8 and the weekly tenkan. as one would expect after it completed 5 waves in emotive fashion.  It has closed over the 50 Wma in 5 waves but between the Tenkan and Kijun like many commodities.The AUDUSD old three year high of 0.7820 from January 6. is a key option energy point playing out.

AUD W 5 7 2021

New Zealand Dollar – NZDUSD

The Kiwi has been strengthening after RBNZ policy mostly went as expected with no changes with interest rates or its large-scale asset purchases. NZD has mirrored the AUD in its wave (iii) spit and has since closed over the panic breakdown (0%) correcting all of the panic muster wave and running to the 38% Fib & 6/8 confluence.  Support the Kijun and Resistance Tenkan, which is pivotal. Resistance 6/8 spits.

NZD W 5 7 2021

Canadian Dollar – USDCAD

The Loonie hit in 3 year high this week as it continues to benefit from dollar weakness and commodity currency strength led by the AUSD and NZD after spitting the 261% Fib & Weekly 8/8 after 5 waves lower (USD higher)  We closed ender the old 38.8% confluence. Use Fibs for support and resisitance until Tenkan and Kijun catch up

CAD W 5 7 2021


The Euro continues to correct in flags after broke the channel last May. after ABC (IV) then retested the tenkan to spit the +1/8 in 5 waves from there we closed the week back testing the tenkan (orange) and now Kijun (pink). A question of degree on recent high – 1 complete or 1 of 3?, Watch 3 waves to see development for continuation. Resistance is Fibs as marked.  Watch for impulse off Chikou rebalance. Again governed by EURGBP and Bund volatility. 

 EUR W 5 7 2021

British Pound – USDGBP

The upcoming week will be heavy on UK data, which could mean an eventful week for the British pound.

 GBP W 5 7 2021

EuroPound – EURGBP

Back testing top of outer band and tenkan of Brexit. Johnson price reaction.after its classic ABC out of failure following the X wave. Tenkan will give us a clue if normalcy is returning to the channel trade.

 EURGBP W 5 7 2021

Japanese Yen – USDJPY

USDJPY has declined for two consecutive weeks following the recent weakness with Treasury yields. BOJ could start to decrease purchases and that should thwart some yen strength. The 108.00 level should remain massive support for dollar-yen as long as Treasury yields start to stabilize. Any change will come from the weekly Kijun Tenkan kiss. Use your #USDJPY Murrey 6/8 0/8 grid for now. #EURJPY #AUDJPY will determine risk on/off

JPY W 5 7 2021

 Mexican Peso USDMXN

The Peso corrected the collapse to +1/8 against the USD right back to the 100% Fib  We have seen violent moves with outisde uncertainty from oil and COVID19. Use the Gann octave and the extension fibs to help measure the noise. 

MXN W 5 7 2021

Turkish Lire USDTRY

The Turkish Lire  had corrected back to the weekly cloud to bounce to the Kijun, correcting back through Tenkan. The Turkish Central Bank removed its tightening bias and scrapped the end-2021 inflation target in a dovish move. The Turkish lira has plunged about 11% since Naci Agbal was fired as the central bank governor in March.

 TRY W 5 7 2021


In the last 12 months Bitcoin exploded after it spent a year consolidating under the 61.8% spit. Each tenkan and kijun tap has seen an explosive kiss of life to over 423% of that consolidation. Bitcoin put in a high of $63,000 around Coinbase, the largest US crypto exchange successfully went public which signaled profit-taking after news hit that Turkey and then India are banning crypto payments from there we have seen consolidation. Use Murrey Math levels for higher corrections and target as algos control the herd here, support is the cloud and sharp ABC, 1-2 moves.

 BTC W 5 7 2021

The rise of Bitcoin 2 26 2021


On the Risk Radar

Fed Warnings on Possible Medium To Long Term Risks

Fed Financial Stability Report Risks May 2020

Geopolitical Tinderbox Radar

Trade Imbalances IMF

Italy CDS
Turkey Geopolitical

Economic and Geopolitical Watch

Job Losses

Bloomberg (Michael Sasso and Leslie Patton): “A resurgent job market is creating more opportunities at a faster clip than many economists and employers expected. What’s more, too few people are applying for positions that are reopening, and that’s setting up a battle for talent. Restaurants and hotels are raising wages, offering bonuses for worker referrals or luring people from other states to cope with the shortage…. Nonfarm payrolls rose by 916,000 last month, blowing away economists’ median estimate of a 660,000-job gain. Meanwhile, a measure of service-industry activity released this week saw the fastest growth on record in March…”

Over 14.5 million are collecting traditional jobless benefits, up from 1.7 million a year ago, with no end in sight. on Thursday, the Labor Department reported under 800,000 Americans applied for unemployment benefits for the second time since the crisis.  With the Covid shutdown we lost over 22 million jobs in March and April. Still a huge shortfall in jobs, and the big question is will they come back?

US Politics

Biden will deliver his second major sales pitch in a week for the ‘American jobs plan’ with a White House speech Wednesday, as he and his team reach out to governors, mayors and the broader public through phone calls, briefings and local TV appearances to make their case. In addition to emphasizing the need for urgency, with the pandemic exposing weaknesses that left millions of families struggling, Biden in his… remarks will argue that infrastructure needs go far beyond just roads and bridges…

“U.S. Treasury Secretary Janet Yellen… fleshed out the details of a corporate tax hike plan linked to President Joe Biden’s infrastructure investment proposal, aiming to raise $2.5 trillion in new revenues over 15 years by deterring tax avoidance. Yellen’s plan relies on negotiating a 21% global minimum corporate tax rate with major economies and a separate 15% minimum tax on ‘booked’ income aimed at the largest U.S. corporations. Dozens of big U.S. companies use complex tax strategies to reduce their federal tax liabilities to zero. Yellen said that promises of increased U.S. investment by corporations under the 2017 Republican tax cuts failed to materialize.”

The virus and psychological affect on domestic and trade relationships have impacted growth strategies with unexpected consequences   In a  fully fledged stock mania, nothing matters until it does. That is the feral nature of greed.

Global Watch

Hot Spots

  • Geopolitical tensions with China and India are on the rise as China increases military hardware near the China and India’s Himalaya border, a potential negative shock not priced by markets.
  • Italian Prime Minister Mario Draghi is bringing forward plans for as much as 40 billion euros ($48bn) in new borrowing as the cost of keeping the economy afloat drains the state’s coffers and street protests heap pressure on the government… The government has spent over 130 billion euros so far to support the economy which has pushed public debt to 155.6% of gross domestic product.” April 4 – Reuters (Sarah White):
  • “France’s public deficit is expected to reach 9% of gross domestic product (GDP) in 2021, French Finance Minister Bruno Le Maire said…, up from a previous forecast of 8.5% as the country enters its third national coronavirus lockdown. The change follows a downward revision of France’s growth forecast from 6% to 5% for this year… Le Maire… said France’s public debt was set to reach 118% of GDP this year, up from its latest forecast of 115%.”
  • China tightened its grip on Hong kong and threats with Taiwan continue. Secretary of State Mike Pompeo lifted communication restrictions between American and Taiwanese officials on Saturday. Pompeo said the restrictions had been imposed decades ago “in an attempt to appease the Communist regime in Beijing.”
  • Russia is showing the affects of low energy prices, filtering into the socio economic dynamic
  • A Brexit deal was concluded on Christmas Eve and moving rapidly through the approval process from both sides for the official start of the UK outside of Europe on Jan. 1st.
  • For emerging markets the lower US dollar is helping the Fragile 5. Argentina and Turkey are still red letter risks with Covid however.
  • Over $4 trillion of EM debt matures by the end of 2020, of which around a third is denominated in foreign currency, according to the Institute of International Finance. Nevertheless Banks are telling investors to buy, buy, buy, who is selling you should ask?

    If you wanted to play in the big room at Vegas, you are living it. Understand risk and the madness of crowds for your own sanity and wealth.

  • Continued volatility with the engulfing uncertainty of the Coronavirus and in commodity markets, particularly in oil and other commodities, not to mention unrest in Iran, Libya and Iraq. 


Trade Wars

  • Trade wars persist between Australia and China. The largest exporter of commodities and the worlds largest importer of commodities. China is experiencing record cold weather and it’s beligerance is hurting shooting itself in the foot. Regional partners such as Japan and India have supported Australia’s standing up to Chinese bullying.
  • In addition to rising tensions with China, the United States Trade Representative said last month said that the USTR is considering a new round of tariffs on $3.1 billion in European exports from France, Germany, Spain and the U.K..We are awaiting Biden’s offical resposne.
  • Chairamn Chi and President Biden had a phone hook last month week with the US saying they will review all policies but tariffs to stand in the meantime. China continued it’s theats on the matter. 


Fat Tail Virus Risk

  • “The highly contagious variant first identified in the U.K. is now the most common Covid strain circulating in the U.S., the head of the Centers for Disease Control and Prevention said… ‘The variant, known as B.1.1.7, is ‘now the most common lineage circulating in the United States.’ CDC Director Dr. Rachelle Walensky said… ‘Testing remains an important strategy to rapidly identify and isolate infectious individuals, including those with variants of concern,’ Walensky said.”
  • Reuters (Neha Arora and Francis Mascarenhas): “India reported another record number of new COVID-19 infections on Friday and daily deaths hit their highest in more than five months, as it battles a second wave of infections and states complain of a persistent vaccine shortage. Evoking memories of the last national lockdown when tens of thousands of people walked on foot back to their homes, hundreds of migrants in badly affected Mumbai packed into trains as bars, malls and restaurants have again been forced to down shutters.”
  • Fauci believes 70%-85% of the population must be vaccinated to reach herd immunity.



The major money cents banks released earnings with many record results for Q1. Mainly from trading and fees from IPO’s and SPAC’s. Rising interest rates also help the bottom line.

Banks stocks have benefited from the Federal Reserve partially lifting its hold on share buybacks, saying that banks can resume repurchases in the first quarter of 2021 as long they don’t exceed the average quarterly profits from their past four quarters. The change came after the Fed found that all major banks passed a second round of stress tests, indicating the firms can continue lending to businesses and households even if the economy dipped into a new recession.

Potentially the top six banks can buy back $11 billion in the first-quarter. Goldman Sachs shares after the announcement led the rally with a 7.7% increase. Morgan Stanley and JPMorgan jumped 6.4% and 4.9% at intraday highs. Within minutes of the announcement all three banks have announced plans to resume buybacks in the new year.

Banks are benefiting from the Federal Deposit Insurance Commission intending to ease the Volcker Rule, which restricts banks from making large investments into venture capital. The Volcker Rule was enacted in the wake of the 2008 financial crisis, and the new changes could potentially free up billions in bank capital. Bank stocks rose. otal Non-Financial Debt (NFD) expanded $737 billion during Q3 to a record $60.113 trillion.

Through the first three quarters of 2020, NFD surged an unprecedented $5.740 trillion, or 14.1% annualized. NFD was up $6.181 trillion over the past year (11.5%) and $8.817 trillion (16.7%) over two years. For perspective, NFD expanded on average $1.830 trillion annually over the past decade. NFD has ballooned 71% since the end of 2008.  

“Negative yields on long-dated government securities are more reflective of distorted market conditions than of stronger sovereign credit profiles, Fitch Ratings says. Lower interest service costs support sovereign creditworthiness, but this must be weighed against the impact of the economic conditions leading to lower yields and historically high government debt levels in a number of countries.- Fitch”

Akio Morita mistakes

The Week Ahead – Have a Trading Plan

The key focus in the week ahead for the US is the consumer price index as the focus shifts to inflation from the weak April jobs report. Multiple Fed speakers are on the calendar, and investors will pay close attention to them as new inflation data is reported. There are dozens of earnings expected in the week ahead. Another weekly key is the jobless figures after Thursday’s report of 576,000 new claims, the lowest level since the early days of the pandemic.

Central Banker and Geopolitics Watch speeches, reports and rate moves

Monday: May 3 2021

  • 8:10 p.m. Fed Governers Kaplan, Evans talking on TV

Tuesday May 11, 2021

  • 10:30 a.m. New York Fed President John Williams
  • 12:00 p.m. Fed Governor Lael Brainard
  • 1:00 p.m. San Francisco Fed President Mary Daly
  • 1:15 p.m. Atlanta Fed President Raphael Bostic
  • 2:00 p.m. Philadelphia Fed President Patrick Harker

Wednesday May 12, 2021

  • 9:00 a.m. Fed Vice Chair Richard Clarida 2:00 p.m. Fed budget 1:00 p.m. Atlanta Fed’s Bostic 1:30 p.m. Philadelphia Fed’s Harker

Thursday May 13, 2021

  • 1:00 p.m. Fed Governor Christopher Waller 4:00 p.m. St. Louis Fed President James Bullard

Friday May 14, 2021

  • 1:00 p.m. Dallas Fed President Robert Kaplan

Improvements in some economic indicators, such as home sales, manufacturing activity and  in employment data have bolstered investor confidence and helped extend the rally in stocks. Support in markets comes from the Fed’s balance sheet which has ballooned to $7.2 trillion, and the central bank committed to monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities.

Economic Events in the Week Ahead:

Sunday, May 2, 2021

18:30 AUD AIG Manufacturing Index (Apr) 19:00 AUD Manufacturing PMI 20:30 KRW Nikkei Manufacturing PMI (Apr) 21:00 AUD MI Inflation Gauge (MoM) 21:30 AUD ANZ Job Advertisements (MoM)

Monday, May 10 2021

  • 03:30 GBP Halifax House Price Index (MoM) (Apr)
  • 04:30 EUR Sentix Investor Confidence (May)
  • 06:30 EUR German Buba Wuermeling Speaks
  • 09:45 USD ISM NY Business Conditions (Apr)
  • 09:45 USD ISM-New York Index (Apr)
  • 10:00 USD CB Employment Trends Index (Apr)
  • 11:30 USD 3-Month Bill Auction
  • 11:30 USD 6-Month Bill Auction
  • 14:00 USD Chicago Fed President Evans Speaks
  • 19:01 GBP BRC Retail Sales Monitor (YoY) (Apr)
  • 19:30 JPY Household Spending (MoM) (Mar)
  • 19:30 JPY Household Spending (YoY) (Mar)
  • 19:50 JPY BoJ Summary of Opinions
  • 20:00 AUD HIA New Home Sales (MoM)
  • 21:30 CNY CPI (MoM) (Apr)
  • 21:30 CNY PPI (YoY) (Apr)

Tuesday, May 11, 2021

  • 02:00 EUR German WPI (MoM) (Apr)
  • 04:00 EUR Italian Industrial Production (MoM) (Mar)
  • 05:00 EUR German ZEW Current Conditions (May)
  • 05:00 EUR German ZEW Economic Sentiment (May)
  • 05:00 EUR ZEW Economic Sentiment (May)
  • 06:00 USD NFIB Small Business Optimism (Apr)
  • 07:00 USD OPEC Monthly Report
  • 08:55in USD Redbook (MoM)
  • 09:45 USD ISM NY Business Conditions (Apr)
  • 09:45 USD ISM-New York Index (Apr)
  • 10:00 USD JOLTs Job Openings (Mar)
  • 10:30 GBP BoE Gov Bailey Speaks
  • 10:30 USD FOMC Member Williams Speaks
  • 12:00 USD EIA Short-Term Energy Outlook
  • 12:00 USD FOMC Member Brainard Speaks
  • 13:00 USD 3-Year Note Auction
  • 13:00 USD FOMC Member Daly Speaks
  • 13:15 USD FOMC Member Bostic Speaks
  • 14:00 USD FOMC Member Harker Speaks
  • 16:30 USD API Weekly Crude Oil Stock
  • 19:00 KRW Unemployment Rate (Apr)
  • 19:50 JPY Foreign Reserves (USD) (Apr)
  • 20:00 AUD HIA New Home Sales (MoM)
  • 20:30 AUD Westpac Consumer Sentiment (May)
  • 21:30 AUD Building Approvals (MoM)

Wednesday May 12, 2021

  • 01:00 JPY Coincident Indicator (MoM) (Mar)
  • 01:00 JPY Leading Index (MoM) (Mar)
  • 02:00 GBP Business Investment (QoQ) (Q1)
  • 02:00 GBP U.K. Construction Output (YoY) (Mar)
  • 02:00 GBP GDP (MoM)
  • 02:00 GBP Index of Services
  • 02:00 GBP Industrial Production (MoM) (Mar)
  • 02:00 GBP Trade Balance (Mar)
  • 02:00 EUR German CPI (MoM) (Apr)
  • 02:45 EUR French CPI (MoM) (Apr)
  • 03:55 EUR ECB’s Enria Speaks
  • 04:00 USD IEA Monthly Report
  • 05:00 GBP BoE Gov Bailey Speaks
  • 05:00 EUR Industrial Production (MoM) (Mar)
  • 07:00 USD MBA 30-Year Mortgage Rate
  • 07:00 USD MBA Mortgage Applications (WoW)
  • 07:00 USD MBA Purchase Index
  • 07:00 USD Mortgage Market Index
  • 07:00 USD Mortgage Refinance Index
  • 08:30 USD Core CPI (MoM) (Apr)
  • 08:30 USD Real Earnings (MoM) (Apr)
  • 09:15 GBP NIESR Monthly GDP Tracker
  • 08:30 USD FOMC Member Clarida Speaks
  • 09:45 USD ISM NY Business Conditions (Apr)
  • 09:45 USD ISM-New York Index (Apr)
  • 10:30 USD Crude Oil Inventories
  • 11:00 USD Cleveland CPI (MoM) (Apr)
  • 12:00 USD WASDE Report
  • 13:00 USD 10-Year Note Auction
  • 13:00 USD FOMC Member Bostic Speaks
  • 13:30 USD FOMC Member Harker Speaks
  • 14:00 USD Federal Budget Balance (Apr)
  • 18:45 NZD FPI (MoM) (Apr)
  • 19:01 GBP RICS House Price Balance (Apr)
  • 19:50 JPY Bank Lending (YoY) (Apr)
  • 19:50 JPY Current Account n.s.a. (Mar)
  • 20:00 AUD HIA New Home Sales (MoM)
  • 21:00 AUD MI Inflation Gauge (MoM)
  • 21:30 AUD Wage Price Index

Thursday, May 13, 2021

  • All Day Holiday Switzerland – Ascension Day
  • All Day Holiday Singapore – Hari Raya Haji
  • All Day Holiday India – Eid al-Fitr
  • 01:00 JPY Economy Watchers Current Index (Apr)
  • 03:06 CNY FDI (Apr)
  • 05:30 ZAR Gold Production (YoY) (Mar)
  • 05:30 ZAR Mining Production (Mar)
  • 08:00 GBP BoE MPC Member Cunliffe Speaks
  • 08:30 USD Continuing Jobless Claims
  • 08:30 USD Initial Jobless Claims
  • 08:30 USD Jobless Claims 4-Week Avg.
  • 08:30 USD PPI (MoM) (Apr)
  • 09:45 USD ISM NY Business Conditions (Apr)
  • 09:45 USD ISM-New York Index (Apr)
  • 10:30 USD Natural Gas Storage
  • 11:00 CAD BoC Gov Macklem Speaks
  • 11:30 USD 4-Week Bill Auction
  • 11:30 USD 8-Week Bill Auction
  • 12:00 GBP BoE Gov Bailey Speaks
  • 13:00 USD 30-Year Bond Auction
  • 13:00 USD Fed Waller Speaks
  • 16:00 USD FOMC Member Bullard Speaks
  • 17:00 KRW Export Price Index (YoY) (Apr)
  • 17:00 KRW Import Price Index (YoY) (Apr)
  • 18:30 NZD Business NZ PMI (Apr)
  • 20:00 AUD HIA New Home Sales (MoM)

Friday, May 7, 2021

  • 03:00 EUR Spanish CPI (MoM) (Apr)
  • 03:00 EUR Spanish HICP (MoM) (Apr)
  • 07:30 EUR ECB Publishes Account of Monetary Policy Meeting
  • 08:30 USD Export Price Index (MoM) (Apr)
  • 08:30 USD Import Price Index (MoM) (Apr)
  • 08:30 USD Retail Sales (MoM) (Apr)
  • 08:30 CAD Manufacturing Sales (MoM) (Mar)
  • 08:30 CAD New Motor Vehicle Sales (MoM)
  • 08:30 CAD Wholesale Sales (MoM) (Mar)
  • 09:15 USD Capacity Utilization Rate (Apr)
  • 09:15 USD Industrial Production (MoM) (Apr)
  • 09:15 USD Manufacturing Production (MoM) (Apr)
  • 10:00 USD Business Inventories (MoM) (Mar)
  • 10:00 USD Michigan Consumer Sentiment (May)
  • 12:30 HKD GDP (QoQ) (Q1)
  • 13:00 USD U.S. Baker Hughes Oil Rig Count
  • 15:30 USD CFTC speculative net positions
  • 19:55 KRW Trade Balance (Apr)

Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2020. One suspects it will be a year long Groundhog day for Trump, the GOP and the Democrats. 



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