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Recession Obsession

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here's another interesting chart, the Copper/Gold ratio and is in a similar vein to the the chart in the post above. Could we be on the verge of the next big rally?

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Macro Charts @MacroCharts

Copper/Gold Ratio weekly RSI. All time record low -- one more for the history books. Ratio is correlated with Bond yields, which also plunged to multi-year lows. Could be forming another historic base. Maybe the most contrarian chart ever...

 

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'The next recession is coming, that's for certain!' ...  is not actually telling you very much.

Every man and his dog is predicting a recession, imminent, in 6 months, in 12 months, in 18 months, in 24 months. right.
We know this happens every time there's a downturn in the data but there have actually only been two recessions in the last 20 years. But this time it's different - yes well it always is, but what about the debt, well that's been around like forever, as that great 20th century economist Ronald Regan 🙄  said back in the 1980's "the debt's big enough to take care of itself" Boom Boom.
Ah, but the yield curve inversion, guaranteed that is. But does that really work so well now yields have been decreasing for decades and are going negative across the developed markets, even Alan Greenspan last Thursday said he expected the US yields to go negative in the future. Japan has had negative yields for an age, with such tightly packed spreads is an inversion as meaningful as once was? 
 History shows downturns in the data are more likely to lead to a new stock market rally than a recession and especially so when hedge funds are at minimal holding. The last two recessions we didn't really see coming, y2k and the bubble and bust then the sub prime fiasco (bubble and bust) but this time we know what's causing the data to drop, it's Trump trying to get China to play by the rules, it won't but it could end tomorrow.
Keep an open mind, don't swallow garbage wholesale, wait to see what happens, be equally prepared for a new leg up as for a leg down.

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S&P and momentum - value chart showing the current spike down, from these levels the biggest rallies start plus another look at current hedge fund positioning and the suggestion that in the past they have ended up chasing the market rather than being the wise front runners.

Also keeping an eye on the copper chart and a reminder of the copper gold ratio chart posted above on Sept 4th.

'History shows the biggest spikes were last-minute positioning resets that kick-started *massive* global cyclical rallies (2002, 2009, 2016).'

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I should really have made my other post here, thanks for reminding us to look at charts instead of being hammered by sh!tty manipulative 'news' stories.

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@Caseynotes makes a valid point. I do not know if there will be a recession or not but I learnt a long time ago to ignore the ‘market noise’ when trading and try and trade based on the price action. The media can influence traders in the wrong way leading to wrong trading decisions if they are not careful. 

If there is a recession and markets decide to take a tumble then you may end up having more short positions open than long. To be honest if you are comfortable trading both long and short then it really should not matter if there is a recession or not from a trading perspective. 

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oh dear, we printed money to lend to ourself and now how are we going to pay ourself back, er... just a thought but are those presses still handy?

whoa's me, we should never have left the gold standard when printed money was backed by gold, now what's it backed by ??  er, well us actually. Printed money is backed by production, people and infrastructure. There needs to be enough money in the system to keep production going but not so much as to cause excess inflation.

That's how it's always worked, people come up with a creative productive idea and the Govt prints money to pay for it, then collects taxes on it forever after. The gold didn't actually do anything. Ah, but gold kept us honest, well inflation can do that just as well.

Modern Monetary Theory, one step closer, Warren Mosler;

 

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    • Hi everyone,  so, those of you following my FTSE - Daily Trades thread may know, I'm looking for new strategies to tackle the market. Was starting to think about this today and made a few thoughts. First one I came up with in the process is the following and utilises 'Andrew's Pitchfork' a rather odd name for a simple principle.   Thought Process I was going back to the basics and starting to think about the fundamentals of trading: Buy low and sell high. Or go short high, and buy back low later. So the key of my new strategy has to somewhat depended on these fundamental trading principles. Next I was thinking, looking at a chart, in what region can the price considered to be "low" and in what region would I consider it to be "high". I was looking at a 5min chart and looking at the whole day. I was drawing one line at the low of day, one line at the high of day, those are obviously the extremes where everyone can agree prices are low / high. Then I draw a line right in the middle between the two, where the price is neither high nor low. Then I draw a line at 25% and one at 75% and said, if the price is between the low of day (0%) and 25%, I consider the price to be low. If the price is between 75% and high of day (100%) I consider the price to be high. In between (25%-75%), it's neither high nor low. If I'd somehow manage to always buy in the low range and sell in the high range (or go short vice versa), then this could be a decent strategy. The next problem I was facing is, I've done this analysis on the previous day, where we know high and low of day. How can this strategy work out for future price movements, where high and low of day are unknown. Andrew's Pitchfork This is where the Pitchfork comes in. The assumption I'm making is that if I extrapolate the 4 required levels (low of day, high of day, 25% and 75%) from the previous day to the following day, the strategy still works. This is because more often than not, prices move up and down around a certain level, without breaking away from it and moving onto the next level. (This obviously has to be proven with data - more to that later) The way the pitchfork works is exactly how the 4 required levels are drawn up. The pitchfork is defined over 3 points: High, Low and Mid-point. It then draws 5 levels on the chart: High (100%), 75%, Mid (50%), 25%, Low (0%) So how does it work The way I imagine it to work is the following: 1) Identify previous day's high and low 2) Draw the pitchfork in the chart with aligning its high and lows on the daily high and low. The mid point is exactly in the middle of daily high and low. This draws a horizontal pitchfork in the chart. 3) When the price of the asset falls below 25%, place a buy stop order at the 25% level. Once the price rises again and breaks through that level, the order gets executed. (vice versa with shorting above the 75% level) 4) Stop Loss is right below (size of the spread) the low of the pitchfork. Target is somewhere above 50%-75%. You have at least a 1:1 risk-to-reward ratio. Need to calculate target level by asset based on historic patterns. Does it work? Don't know yet. So far I've manually painted a few of those pitchforks in the chart for the past couple of days on FTSE100, NASDAQ, CL and NG and it seems it works more often than it doesn't. Cases where it clearly doesn't work is when there's a strong move to either direction, aka price breaks-out and moves to a different level than it was the day before. Interestingly when this happens, the strategy wouldn't necessarily always result in a loss, but sometimes the entry conditions would never be triggered in the first place. E.g. if we start the day already in the high region (above 75%) and then never fall below it - no order triggered on that day. On the negative side, huge breakout opportunities are missed with this strategy, so worth looking into a complementary strategy which works specifically for break-outs. Next steps Next, I'm trying to backtest the strategy. Will need to pull a whole lot of data and analyse. Hope to have that done over the weekend. Will update the thread accordingly. Data I'm trying to get: Win ratio, Where's the optimum take profit level, Time of day where this usually plays out (my idea is to hook this in with the ATR analysis I've done and trade this pattern at times of high ATR, aka FTSE, DAX in the morning, NASDAQ, NG, CL in the afternoon)  First success First successful example trade taken this afternoon on CL. You see nicely how the pitchfork is drawn on the chart and is derived by the high and low of the previous day. At 14.30 today the price dipped below the 25% level. I set the buy stop order at the 25% level, which got triggered at 14.35. The price afterwards makes a sweep move up to the 50% level, where my limit sell order gets triggered at 15.15. It would've been possible to play it up until the 75% level, but wanted to be safe, without having the data yet. Could've been luck - who knows.   What do you think of this approach?        
    • just to add to bigdeal's reply SBs can be either cash/daily funded bet or futures/forward which have a separate chart accessed from the dropdown box next to the chart title. for cash/dfb there is no expiry but you paid an overnight interest fee, this charge does not apply to futures/forwards which have a larger spread instead. see pic.
    • https://www.home.saxo/insights/content-hub/articles/2019/10/17/emerging-market-stocks-just-break-out-of-a-20-month-downtrend
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