November 21 – 27, 2021
FEAR NOT Brave Investors
Where have we been and where are we going? Join our weekly market thread on Traders Community…
Thanksgiving, Fed Chair and Flash PMI’s
The Week That Was – What Lies Ahead?
- Part A: Stock markets
- 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
It was a tail of two markets this week with mega caps hitting new highs like MSFT and AAPL while on the other hand we witnessed an aggressive unwind in SPACs and some of the hot recent IPOs such as RIVN and PEV. Friday was the second largest options expiration on record as we headed into a Thanksgiving holiday-shortened week. Nasdaq set intraday and closing record highs amid the mega-cap strength.
There were shakes after Austria announced a COVID lockdown and Germany announced record cases. The US House finally passed the $1.75 trillion Build Back Better Act. Oil prices continued to pullback helping 10-yr yields drop. After last week’s surge gold futures settled $9.80 lower (-0.5%) to $1,851.60/zo, down -0.9% for the week, The US dollar posted modest gains with the U.S. Dollar Index up +0.5% to $96.00.
We saw Fed governors turn more hawkish this week.
- The New York Fed president John Williams, who is a voting member continued with his hawkish tilt of late. He said we are seeing broader based increases in inflation. He also focused on familiar themes saying supply constraints are a major factor on the labor market and supply chain bottlenecks.
- Fed Governor speaking on BBGTV said US Core PCE Is “Quite High” and added that the Fed should take towards a more hawkish policy in the next couple of meetings. He said 3%-4% Rate `Is Not My Base Case’
- Fed Governor Christopher Waller said on Friday the rapid improving job market market and deteriorating inflation data have pushed him towards favoring a faster pace of tapering and more rapid removal of accommodation.
The big Fed news ahead is President Joe Biden’s choice of Fed chair. Federal Reserve Chairman Jerome Powell continues in his role after his term expires in February. Biden has also interviewed Fed Governor Lael Brainard, who is supported by progressive Democrats. an exclusive twitter poll @traderscom had Powell 47.7% and Brainard 45.8% with 6.5% choosing neither. The market concern is that Brainard is viewed as more dovish than Powell, and with inflation a reality the worry is Brainard would not be as aggressive fighting it with rate hikes if necessary.
For bulls there is the statistic that “The last five trading days of November are traditionally positive, since 1950,” said Sam Stovall, chief investment strategist at CFRA. “There’s a two-thirds likelihood the market is up on the day before Thanksgiving and a 57% likelihood the day after Thanksgiving, and a 71% likelihood that it’s up on Monday.”
“We have a market trying to interpret the Fed who is trying to find out how they can interpret their long-only portfolio at a risk parity where rates cannot rise.” – MoneyNeverSleeps
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.
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 continuous dip feed? At this point the Central Banks have kicked that answer down the road.
PART A – Stock Markets
Highlights – USA
- S&P500 added 0.3% (up 25.1% y-t-d)
- Dow fell 1.4% (up 16.3%)
- Nasdaq100 advanced 2.3% (up 28.6%)
- S&P 400 Midcaps fell 1.1% (up 24.5%)
- Small cap Russell 2000 retreated 2.8% (up 18.6%)
- Transports slipped 1.4% (up 32.1%)
- Utilities gained 0.9% (up 7.6%)
- Banks dropped 2.7% (up 39.2%)
- Broker/Dealers declined 2.5% (up 29.1%)
- Semiconductors rose 3.1% (up 39.9%)
- Biotechs declined 0.2% (down 5.4%)
- With bullion down $19, the HUI gold index fell 3.8% (down 10.7%).
Highlights – Europe Stocks
- U.K.’s FTSE equities index fell 1.7% (up 11.8% y-t-d)
- France’s CAC40 increased 0.3% (up 28.1%)
- German DAX added 0.4% (up 17.8%)
- Spain’s IBEX 35 declined 3.6% (up 8.4%)
- Italy’s FTSE MIB slipped 1.4% (up 23.0%)
Germany’s benchmark Blue Chip DAX 30 index (Deutscher Aktienindex) expanded to 40 companies on 20 September adding 10 new members to the German stock index from the MDAX which will be reduced from 60 to 50 members.
Highlights – Asia Stocks
- Japan’s Nikkei increased 0.5% (up 8.4% y-t-d)
- South Korea’s Kospi little changed (up 3.4%) (up 3.3%)
- India’s Sensex dropped 1.7% (up 24.9%)
- China’s Shanghai Exchange rallied 0.6% (up 2.5%)
Highlights – Australian Stocks
- Australia’s S&P/ASX200 finished lower for the week by 0.6% with the slump by the big banks and miners.
- The banking sector declined 3.6 per cent for the week, worst weekly performance since October 2020.
- Iron ore -4.2% to $US87.27 a tonne Friday
Highlights – Emerging Markets Stocks
- EM equities righted.
- Brazil’s Bovespa sank 3.1% (down 13.4%)
- Mexico’s Bolsa fell 1.2% (up 15.3%)
- Turkey’s Borsa Istanbul National 100 jumped 6.0% (up 17.6%)
- Russia’s MICEX equities index fell 2.6% (up 22.1%)
IPO and SPAC mania remains in full force.
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
Technical Analysis of key markets via KnovaWave
SPX continued from the power impulse 3 to the bottom of the daily cloud after it broke the Tenkan and back to rejected channel to new ATH. Bulls this is a 3 of degree off a C, Bears this a B flat We watch if this low was a (a) or C Will determine if sharp ABC completed to all time highs around +2/8. We have to respect the number of alternatives of degree of 5. With such trends keeps it simple support is Tenkan and Kijun and watch for ABC. No fear is the driving element
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
Reenergized after #SPX tripped in 3 to test recent break up at Tenkan from there we have had a powerful rally to ATH. Each new high has evolved after testing Tenkan key support. We watch for a spit of a spit Extensions are difficult to time, keep it simple.
Key for the impulse higher 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 put/call 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 Chikou rebalances
A reminder that Apple Inc $AAPL, Microsoft Corp $MSFT, Amazon.com 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.
Nasdaq tested and held the weekly Tenkan to close testing swing channel but short of ATH which both DJIA and SPX saw Support Tenkan to Kijun. Watch Chikou for divergence for continuation or failure. Divergence with Russell also a clue.
The small cap Russell RUT has been developing a large flag which it spat though last week, only to close above the Tenkan. We need Kijun to close thru to get power to retest highs. Support the cloud should it fail.
Semiconductors SMH clean with reaction from above reverted with the retest & break of triple top patterning. Earnings pull from $ON $TSM $NVDA $ASML $AMD $QCOM $AVGO $TXN $INTC $AMAT $LRCX $XLNX
Following the announcement of NVDA 4/1 split some levels off the energy break NVidia hasn’t looked back, We saw another power move off the $200 retest (old $800) & earnings this week off $300 It is a clear leader of #SOX #SMH look for cues there and ABC failures for changes.
Apple gently motored up to new ATH over the massive $160 gamma level which will be a key energy level. Support from previous highs, resistance now Fibs and Murrey Math levels. Remember the impact $AAPL has, at least short term on all the major indices.
Amazon high locked at Kijun seems …MM +3/8 and from there has built a large weekly flag after failing near the previous high. Watch action around ATH Support is 50wma wave b, ii and resistance previous flag.
The ARKK ETF trading clinically, tested triangle breakdown. Tenkan after bouncing off 50 WMA. Support previous lows, needs to clear 130 to build C or iii for bulls. We saw ATH in NASDAQ & SPX – needs to flow through to ARKK to break up soon rather than later.
US Stocks Watch
This three-month period is the second to be compared to year earlier profits that were affected by the pandemic. According to Refinitiv, earnings for the second quarter are looking to be up 78.1%. 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 markets potentially.
Investors (and algos) will focus on 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.
Earnings Highlights This Week:
Monday starts us off with
- Earnings: Zoom Video, Jack in the Box, Agilent, Urban Outfitters
Tuesday with Earnings from
- Earnings: HP, Dell Technologies, Abercrombie & Fitch, Best Buy, Nordstrom, Gap, VMWare, Cracker Barrel, American Eagle Outfitters, Dick’s Sporting Goods, Pure Storage, AutoDesk, Dollar Tree, JM Smucker
Wednesday Earnings Include
- Earnings: Dere
Thursday Earnings Include
- Earnings: Thanksgiving holiday U.S. markets closed
Friday Earnings include
- Earnings: Stock market closes at 1 p.m
These are the highlighted earnings for the US this week. Please check daily schedules for more reports.
“U.S. companies are rushing to cash in on soaring stock prices. It isn’t just the white-hot market for initial public offerings. Companies are returning to the public markets to issue shares and raise cash from investors at the same time that existing shareholders are tapping the public market to unload their stockholdings at a record clip. Companies including Zoom Video Communications Inc. and Norwegian Cruise Line Holdings Ltd. have sold billions of dollars of shares this year… There have been 556 follow-on offerings, or stock sales by companies or existing shareholders, among U.S. companies this year, the most since 1996, according to Dealogic… They have raised a total of $133 billion. Behind the boom in share issuance? An ascendant stock market.” August 25 – Wall Street Journal (Gunjan Banerji):
US IPO Week Ahead:
Part B : Bond Markets
Highlights – Treasuries
Investment-grade bond funds saw inflows of $1.416 billion, and junk bond funds posted positive flows of $99 million (from Lipper).
- Three-month Treasury bill rates ended the week at 0.04%.
- Two-year government yields slipped a basis point to 0.51% (up 39bps y-t-d).
- Five-year T-note yields were unchanged at 1.22% (up 86bps).
- Ten-year Treasury yields declined two bps to 1.55% (up 63bps).
- Long bond yields dipped two bps to 1.91% (up 27bps).
- Benchmark Fannie Mae MBS yields declined three bps to 2.02% (up 68bps).
All good while markets hold up but take note that the loosest financial conditions in history have supported record 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
Unprecedented cash payments by the U.S. government to households, changing consumer preferences and lowest mortgage rates in history have fueled a pandemic boom in housing, the fastest pace of increase on record in data from 1988 and prices surpassing the peak from the last property boom in 2005. The S&P CoreLogic Case-Shiller U.S. National Home Price Index has mark the fastest pace of increase on record in data from 1988 in 2.
- Freddie Mac 30-year fixed mortgage rates surged 12 bps to 3.10% (up 38bps y-o-y).
- Fifteen-year rates jumped 12 bps to 2.39% (up 11bps).
- Five-year hybrid ARM rates declined four bps to 2.49% (down 36bps).
- Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates up 15 bps to 3.20% (up 26bps).
Highlights – Federal Reserve
- Federal Reserve Credit last week surged $67.1bn to a record $8.627 TN. Over the past 114 weeks, Fed Credit expanded $4.900 TN, or 131%. Fed Credit inflated $5.816 Trillion, or 207%, over the past 471 weeks.
- Fed holdings for foreign owners of Treasury, Agency Debt last week dropped $12.1bn to a one-year low $3.468 TN.
- “Custody holdings” were up $26bn, or 0.8%, y-o-y.
- Total money market fund assets added $9.0bn to $4.576 TN. Total money funds increased $246bn y-o-y, or 5.7%.
- Total Commercial Paper fell $15.5bn to $1.116 TN. CP was up $133bn, or 13.5%, 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 declined five bps to 1.15% (up 53bps y-t-d).
- Ten-year Portuguese yields fell seven bps to 0.30% (up 27bps).
- Italian 10-year yields dropped nine bps to 0.86% (up 32bps).
- Spain’s 10-year yields fell eight bps to 0.38% (up 34bps).
- German bund yields sank eight bps to negative 0.34% (up 23bps).
- French yields dropped nine bps to 0.01% (up 34bps).
- The French to German 10-year bond spread narrowed one to 35 bps.
- U.K. 10-year gilt yields declined four bps to 0.88% (up 68bps)..
Highlights – Asian Bonds
- Japanese 10-year “JGB” yields were unchanged at 0.08% (up 6bps y-t-d).
Part C: Commodities
- The Bloomberg Commodities Index declined 0.5% (up 31.1% y-t-d).
- WTI crude sank $4.85 to $75.94 (up 57%).
- Gasoline fell 4.3% (up 57%),
- Natural Gas jumped 5.7% (up 100%).
- Copper declined 1.1% (up 25%).
- Wheat added 0.7% (up 30%),
- Corn declined 1.4% (up 19%).
- Bitcoin sank $6,070 or 9.5%, this week to $58,002 (up 100%).
Risk markets continue to respond to a Coronavirus outbreak and failed negotiations between Congress and the White House over an additional economic stimulus package to boost economic demand.
BDI Freight Index
- The Baltic Exchange Dry Index rose 3.6% to 2,645 on Monday, its highest since November 15th and extending gains to a third straight session, supported by the larger capesize and panamax vessel segments.
- The capesize index, which tracks iron ore and coal cargos of 150,000-tonnes, jumped 7.6% to its highest in three weeks at 3,884, amid rising iron ore prices;
- Panamax index which tracks cargoes of about 60,000 to 70,000 tonnes of coal and grains, increased 0.4% to 2,291, snapping an eight-session long losing streak. Among smaller vessel segments,
- The supramax index shed 2 points to a six-month trough at 2,235.
Copper rebounded sharply off the 50wma pulled up by the flattening Tenkan and Kijun to close right at the channel break – a key juncture. #HG shrugged off demand concerns from resurgence in Covid-19 supply disruptions. The power spits of +8/8 and +2/8 were rebalanced by the Tenkan breaking the Kijun with 50wma and cloud below. Copper had been a leader in the risk on movement for commodities.
Soybeans finally found bids after hitting weekly lows well under weekly cloud and well under 50wma to close right at the weekly Tenkan. – Watch for impulse
US Crude Oil (WTI)
4 Hour: WTI oil stayed above the 240 cloud after testing the old channel break to new highs. This is a market that is reflective of fear and greed, note the reaction when Kijun and Tenkan cross or touch and support of the 50ma around Murrey Math confluence.
Daily: Potent WTI price action indicative of 3rd wave energy highlighted by spits of the Tenkan to new highs. Continued from daily cloud twist retest to close back at Chikou & ATH. Support Tenkan, 50dma and Kijun, fractals continue with #oil Important to grasp the move continued from last week’s WTI completing its correction of the May breakup in 3 waves (or X) Rebounded from daily cloud twist to close back at Chikou. Support Tenkan, 50dma and Kijun, fractals continue with oil.
The key is crowd behavior to help tell the story which in energy is often around geopolitics. A great example of why we watch ABC corrections and from here we get the energy from the break being balanced. This move that was powered by 50dma Tenkan spit of a spit – hence the fractal energies reverberations. Support is previous lows, Murrey Math levels and Fib cluster. Support is the 50dma, Kijun, Tenkan and previous high confluence.
Weekly: WTI crude #Oil futures continued with it’s measured move & settled at fresh 7-year high. Long term 61.8% target fueled by ABC bull flag after rebalanced Chikou. Weekly Tenkan Kijun gave support & power to take out new high It must retain this energy to take out new high
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
US Natural Gas (Henry Hub)
4 Hour:: A look at that daily ABC on the 240 shows the waves clearly in the Murrey Math grid with the cloud the guide for higher (the IV) or Lower the A – meaning this is a B. Note impulses off Kijun/Tenkan crosses Recall natural gas spitting to +8/8 than +1/8 240 before retreating in 3 waves to spit violently the 50 4hr ma stayed above the cloud until the completive 5 and back in the channel in a continuation pattern since regaining the 240 cloud to rebalance the Chikou to close the week. Continue to watch Kijun reactions and Murrey Math confluence.
Daily: US Natural Gas has completed 3 waves correcting the daily 8/8 spit after a classic euphoria wave 5 to comeback to test Kijun and bounce between it and Tenkan with power before spitting the 50dma in a corrective ABC pennant of a (IV). Alts are IV or A at this juncture Notice the fractals of the move after completing the C of 4 bullish scenario has played out the consolidation phase since it completed its IV ( Bull Case) last year since then a series of 3 waves. Should the highs be a (iii) looking at possibilities we have the 161.8% at 7.026 if we get ‘silly’ 50dma support.
Like the larger wave on the way up it accelerated through previous highs (flat topped triangle energy) and over the resistance at 8/8 and new highs. We successfully tested that break in a pennant ABC. Previous highs (flat topped triangle energy) and 8/8 and new highs underscore the structure that fed the move and is key longer term.
Weekly: Going out further we see a spit of the weekly Tenkan for Natural gas continued off it’s major target, the double top potential from 2014 which equated nicely to over 8/8 Weekly and showed true impulse off that to rebalance Chikou. It’s now a question of degree, 3 or 5? Impulse just shy of the 8/8 and Tenkan confluence.
Recall the impulse wave powered from the spit of 50wma to get over weekly Kijun and Tenkan. This was energized with a series of fractals between old 38 and 50% channel, as you would expect in a seasonal commodity with weather a prime mover. Resistance is Fib/Murrey confluence, support Tenkan, Kijun – as always count your ABC’s
Key Energy Reports
- Around The Barrel – US Crude Oil Builds +6088Kbbl But WTI Cushing Around 2018 Lows
- Into The Vortex – EIA Reports Build of 81 Bcf in Natural Gas Inventories
- EIA Forecasts U.S. Natural Gas Inventories To Enter Winter Heating Season Below Average
- U.S. Natural Gas Consumption Down With Switch to Coal Due To Higher Gas Prices
- Desperate China Orders Inner Mongolia Coal Mines To Boost Production by 55%
- Natural Gas Flowing on Nord Stream 2 From Russia to Germany
- Natural Gas Volatilty a Lesson in The Reversal of Fortunes
- Record High Chinese Coal Futures Prices After Biggest Coal Producing Region Floods
- East China Manufacturing Hub Zhejiang Orders Production Suspensions to Meet Energy Targets
- ConocoPhillips Buys Shell’s Delaware Basin Assets for $9.5 bln in Cash.
- Europe Energy Crisis Years in the Making With Reactionary Environmental policy
- Oil Supply is Tighter Than Industry Estimates Morgan Stanley Says
Gold continued to rally after it broke back over base of weekly cloud closing above the Tenkan, Kijun and 50wma after wave (ii) alt gains favor to top of cloud, can it sustain it?. Still rebalancing after manic rise to +5/8 weekly rebalance of Chikou in 5 waves. To be bullish we would need to get and stay above the cloud. Murrey Math resistance, watch Fibs & Chikou.
Silver, like Gold bounced off the cloud base. Back over 50wma after spitting Tenkan providing support after reversed. Closing at weekly Kijun which is now resistance. Major support is the 50wma
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 gained 0.9% to 96.03 (up 6.8% y-t-d)
- Majors for the week on the upside, the British pound increased 0.3%. For the week on the downside, the euro 1.4%, the Australian dollar 1.3%, the Canadian dollar 0.7%, the Swiss franc 0.7%, and the Japanese yen 0.1%.
- Minors for the week For the week on the upside, none seen. For the week on the downside, the Brazilian real declined 2.7%, the South African rand 2.5%, the Norwegian krone 2.5%, the Swedish krona 2.1%, the Mexican peso 1.5%, the Singapore dollar 0.6%, the New Zealand dollar 0.6%, the South Korean won 0.5% and the Chinese renminbi slipped 0.12% versus the dollar (up 2.19% y-t-d).
Australian Dollar – AUDUSD
The Aussie dollar has corrected in 3 waves since completing a 5 at the pysch 80 level and it back break retest of wave 1 and the weekly cloud as one would expect after it completed 5 waves in emotive fashion. The Australian dollar fell to its lowest value since December under 73 US cents. Resistance 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.
New Zealand Dollar – NZDUSD
The Kiwi mirrored the AUD in its wave (iii) spit and has corrected at the cloud much of the FOMO muster wave and retested the 50% Fib & 4/8 confluence. Kijun and Tenkan Resistance, which is pivotal. Support previous break spits.
Canadian Dollar – USDCAD
The Loonie is holding the Tenkan after a 3 year high in June and corrected that in 3 waves led by the AUD and NZD. #oil price impacting direction. Watch flat Kijun and Tenkan at -1/8. Use Fibs for support and resistance.
Euro – EURUSD
Euro continues to correct in what seems like eternal flags in the channel. We watch if Kijun (pink) testing Tenkan (orange) creates any impulse as #EURUSD consolidates in the cloud. Watch 3 waves to see development for continuation. Watch for impulse off Chikou rebalance. Again governed by EURGBP and Bund volatility.
British Pound – USDGBP
British pound classic retest of daily cloud break with magnet pull of cloud twist after ABC correction – will need Tenkan to break through Kijun for more strength. The upcoming week will be heavy on UK data, which could mean an eventful week for the British pound.
Euro Pound – EURGBP
Back testing Tenkan in a C or 3 after inconclusive X – symbolic of BREXIT? Kijun, 50wma and clouds resistance.
Japanese Yen – USDJPY
USDJPY continues to test wave i after the recent weakness with Treasury yields. The 108.00 level should remain massive support for dollar-yen. Any change will come from the weekly Kijun as it breaks through the old channel. Use your #USDJPY Murrey 4/8 8/8 grid for now. #EURJPY #AUDJPY will determine risk on/off
Mexican Peso USDMXN
The Peso continues in the long triangle and consolidated despite outside uncertainty from oil and COVID19. Use the Gann octave and the extension fibs to help measure the noise.
Turkish Lire USDTRY
The Turkish Lira reversed after falling in 3 waves to explode over the Tenkan with the weekly cloud Kijun and 50wma below to see Turkish lira close the week at a record low 11.29 TRY/USD. The Murrey Math and Fib targets offer targets with the Lire at all time lows resistance in a hyper inflating collapse
Impulse begets impulse. Bitcoin has exploded higher following it’s correction impulsively upon completing 5 waves up at +2/8. Each Tenkan and Kijun tap saw an explosive kiss of death until we completed 3 waves to around 28,000. From there we saw extreme volatility. Looking back Bitcoin put in a high of $63,000 around Coinbase, the largest US crypto exchange successfully went public which signaled profit-taking . (Recall what happened after the CME and CBOE futures starts). From that high we have 2 alternatives a iii of a 1 down or (C) of IV meaning the recent high was a (ii) or 1 of a (v)
We have seen what you would expect from a 5 wave impulse peak and ABC correction, a violent correction and completion. Use Murrey Math levels for corrections and targets as algorithms control the herd here, support is the cloud and sharp ABC, 1-2 moves. From there prices agitated towards those ATHs as news of a Bitcoin ETF fueled the rally, sound familiar? But this time it wasn’t signaling we are in a 3 high probability
On the Risk Radar
Geopolitical Tinderbox Radar
Economic and Geopolitical Watch
Post 2008 it has been about easy money from Central Banks to the bank center, loan forgiveness and the like which has pumped assets at a speed and level never seen before. Given that we keep an eyes on the banking sector, it’s moves and earnings
Major US Banks Deliver Stoic Results in Q3, 2021
The major money cents banks released earnings with many record results for Q3. Mainly from trading and loss reserve releases from the pandemic kitty. Rising interest rates also help the bottom line.
- Goldman Sachs Advice on Mergers and Acquisitions Brought in a Record $1.65 billion Last Quarter
- Wells Fargo Earnings Suffer From Less Interest Income on Lower Loans
- JPMorgan Earnings Boosted By Trading and Release of Loan Loss Reserves
- Blackrock Earnings Beat Expectations With Record $ 9.5 Trillion Assets and ETFs Under Management
- PNC Bank Revenue Rises, Expects $900 million in Cost Savings From BBVA
- Citigroup Earnings Rise on Equity Trading and Loss Reserve Release
- Bank of America Earnings Lift With Higher Long Term Interest Rates And Steady Costs
- Morgan Stanley Acquisitions of E-Trade and Eaton Vance Boosted Wealth and Asset Management
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 also 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 2020 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”
The Week Ahead – Have a Trading Plan
Keys focus this week in the US will be the Fed, who will Biden choose as Chair and FOMC minutes in a short trading week with Thanksgiving. We get Flash PMIs for November from the US, Japan, Euro Area, Germany and the UK. Coronavirus numbers are being watched with as new lockdowns and restrictions were announced in Austria
It will also be a very busy week with economic data in US. The second estimate of third-quarter GDP, personal income and outlays; PCE price index; durable goods orders; flash Markit PMIs, new and existing home sales; Chicago Fed National Activity Index; and the final reading of Michigan consumer sentiment. US markets will be closed on Thursday and will close early on Friday for the Thanksgiving holiday.
In Europe, the ECB publishes its monetary policy meeting accounts on Thursday, and flash Markit PMIs are expected to show the Eurozone private sector economy expanded the least since returning to growth last February. In Japan the Jibun Bank’s flash PMI survey and Tokyo inflation; while Australia’s Markit PMIs, retail trade and third-quarter construction output and capital expenditure will also be keenly watched.
Central banks in South Korea and New Zealand will also be deciding on interest rates.
Third-quarter earnings season with reports from Home Depot, Walmart, Target, Nvidia, Lowe’s and Tyson Foods
Central Banker and Geopolitics Watch speeches, reports and rate moves.
Economic Events in the Week Ahead:
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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