MARKETS IN REPAIR
Oh Canada! Weird Divergences. Bond Market Flummoxed. Wen Policy Intervention? Refinancing Gonna Be A Bitch. The Dollar Manipulation Game. Market-Moving Data This Week.
»CLUB/EDGE client post premarket January 6th, 2025
Oh Canada!
This morning we awake to news of the expected resignation from Canada's prime minister Trudeau.
The result is a sharp drop in the USD to 108 - ironically, exactly at my 109.30 level where I warned (last week and again Friday) it would see softening. LOL
Anyway, this is helping to pulldown USDCAD, USDCNH, USDJPY etc and cause SPY + QQQ to gap higher.
For now.
But keep your eyes on the 10Y yield pushing higher as well. You know my 4.69% is near, and equities won't like it getting/staying above.
Another boost to markets is an early report on Q4 record surge in semi sales helping lead SMH, NVDA higher.
Luckily, we are positioned long in both.
“NVDA - An UPdate. Too much too soon? Or too much of a good thing? Either way, that MARCH financed call spread is up a decent 5600% or $5.60/contract.”
Weird Divergences
I wrote this over the weekend. We will see if today, or follow through from today, changes my assessment of market in general.
We also have the election verification likely delayed by a freak snowstorm over DC, so let's hope nothing nefarious pops up.
For now, here's what I see for market divergences worth noting:
Beneath the surface, I see breadth still weak, in need of repair.
But options flow leans bullish on the aggregate.
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NAAIM went from 100 to 60 in a NY minute, which only tells us they are fickle and fearful.
And yet sky-high SKEW is not bearish if we climb the wall of worry.
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Dealers are in negative gamma which is trouble should selling pick up speed, but we really need to trigger 5850 for that.
All the while the institutional landscape from dark pool data suggests they still accumulate long positions in key assets (read: Tech).
…
"One More High" in MAG7 for Q1 is still my baseline bet.
But until we get through inauguration Jan 20th, the market under the surface is not in a big hurry to get there so bears being nimble not proud.