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Dax pausing at the weekly R1 and Dow within striking distance of it's all time high. H1 charts;

Interesting S&P daily shaping up¬†ūüĎá

As I've tried to point out often it looks like you were lured into thinking you could go into full time trading without a viable plan or tested strategy and learn on the fly. That may be because you w

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      14/01/21 09:51

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    Niles
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    • Current Economic Leading Indicator Outlook: Always Look At The Big Picture ¬† ¬†The last 9 months have been nothing but epic in terms of the performance of risk asset if you have made some money great! If you have lost some, don't worry there is always a bull market somewhere.¬† ¬† Given the current confidence and state of affairs,¬†I think it's time we begin to begin to reassess our current economic situation. Bonds have been getting destroyed since the relation story started to take a hold late last year, commodities have been spectacular as inflation has risen due to¬†base effects. The YoY growth in rates ? PHOAR! talk about a rally eh?¬†¬†Now, however, we are reaching important levels (IMHO). When I look at the economic fallout post covid, there is still a lot of scaring left over as a result of the lockdowns. Many people are unemployed and under employed and a lot of support is still needed. Yes,¬†¬†prices are rising and businesses are opening up again but there is still ALOT of work to be done. Inequality still needs to be addressed, countries are still battling the pandemic and the stop start nature of re-openings and closures,¬†all pose¬†a significant hurdle to growth. ¬† ¬† Also, before the lockdown, there were a lot of structural issues in the economy that needed to be addressed. These issues ( demographics, high government debt to GDP encouraged by record low interest rates) are still with US and over the coming months, my guess is that once the inflationary impulse is done with, we will see these issues come back to surface as they have not yet been dealt with.¬† ¬†¬†I use the ism as a cyclical indicator. It is a survey I use as¬†¬†a means to gauge the speed of the economy , the current reading for the US sits at > 64. Highest level since 1988. Normally around these levels , the ism tends to ¬†begin to decelerate. See below. ( source trading economics) Also, the employment situation needs to be addressed , > 13 million people require support from the US government. (Source macrotechnicals).¬† ¬† ¬† ¬†Inflation is here yes, however, we should now start thinking about the consequences of higher prices;¬†If companies have higher input¬†prices, there is a ceiling¬†to how much of those prices can be passed on to consumers. If the consumers are unemployed , ¬†there is potentially a demand issue which will result in¬†¬†companies having¬†no choice but to take those prices down this has a knock on effect on the supply chain resulting in lower input prices. Currently, the euro area is in the midst of a 5¬†year high in prices.¬† ¬† At some point, this will start to matter. Lastly and most importantly, the rise in interest rates on a year over year basis is reaching a point where historically, there has always been a slow down in the rise of rates. Cyclical pattern has been in place since 1994. This was a tool I used to prepare for the reflation theme we experienced over the last 9 months. ¬† ¬†I am not calling for imminent¬†deflationary¬†collapse. I am simply saying statistically, we could be heading for bumpy roads as global governments attempt to heal the scaring caused by the mandated lockdowns.¬† So What Is The Play? The play is simple; Should lower inflation becomes a reality I would want to own¬†¬†Bonds, the Dollar, Gold, Gold miners Tech,¬†High quality and low beta stocks. Not right here right now of course as I still think there is a little more room left in the tank for inflation. But I would start adding these securities to a watchlist for observational purposes . Watch their performance on a regular basis to see for periods when the market potentially starts to sniff these economic conditions out. ¬† Risks To MY View ? If we get an infrastructure bill for the US then inflation is going a lot higher and bonds will continue to languish¬†. And it will mean my view is wrong. At that point I will stay with the reflation and growth story buying more commodities, value and growth companies until the cows some home. Good luck out there. CA¬† Lastly, its been a little slow with ranges this week. Mad week at the offie. Will hopefully be able to get back on top of things next week. I wrote this in one take. You will probably find gramatical errors. Try to ignore them and focus on the key ideas.¬†‚ėļÔłŹ
    • yeah, the 3 markets will be correlated but they each still have their own market participants who will be pulling one way or another in the short term and then correcting overall from time to time. After the US shutdown there is only Auckland and Melbourne were big boys are still playing¬†but they don't command the same level of volume¬†or,¬†therefore, the best prices. I wouldn't worry about your¬†broker acting to get your stops, it's just every other b*****d out there, everyone knows where your stop orders are, they're in the same place as everyone else's¬†ūüôā. A big player usually only has to cover about 25 points in order to collect 75% of the stops around a major level. ¬†
    • I hear you I guess my¬†only comment would be the lack of consistency across the three pairs that by their nature should mean they are not altogether different in character (EU, GU and EG) - one would have thought (and of course I accept I could be wrong) that if GU and EU are behaving normally with perhaps a minimally wider spread then there is little reason for EG to be both very spiky and excessively wide spread the cynic in me will always ask the question.¬† Its not unlike having that very special ability to place a stop on what turns out to be the very bottom tick and yet it never seems to¬†happen¬†with quite the same degree of accuracy or regularity with one's limits¬† I jest of course but I bet I am not alone in pondering that one... ¬† ¬†
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