Middle East War
I opened the trading room because of the War in the Middle East announced over the weekend.
Market Thoughts from Intermarket Tells:
The rate of descent in breadth destruction is slowing.
But I still see no capitulatory low in place.On Headline Risks:
The prospects of war have been pushed out a bit.
So VIX is still poised but not advancing strongly.
This could change and portfolios are not positioned for War.
Gold, Bonds + Yen are slightly bid but would need a lot of follow-through to confirm solid reversals.On Bonds + FX:
Nasdaq is softening a bit but still leading YTD with SPY ex-Tech equal-weighted down -1% YTD. Baseline bet: these growth plays need to roll over for bonds to catch a real bounce.
Bond market is closed today but likely shows them supported somewhat tomorrow when it opens.
USDJPY is softening from 150 to 147.80 (overshoot potential back to 145 in time), which should also help USD + 10Y come down.
BUT the real tell is if DXY can break 105.77 on wkly.
If not, DXY will move higher once back above 107.22 on wkly to push into $110.My Call (Updated) on Yields:
10Y 4.9% is critical.
4.7 10Y as you know was my level for this year that I made over a year ago. TLT $85.
My level now: 4.9% is CRITICAL because above on wkly/M close is parabolic but below is liquidation back to 4.3 (likely on intervention and/or USD swaps).
This higher yield move would align with my TLT updated Swing Short price target near 2009 high of X~$81.23. But given bonds are very extended, it is more usual for a bounce before a trounce.
Hard to see 10Y above 4.9 this year without major conflict (read: risk/term premium exploding)On Risk Premium in Yields:
Risk premium in yields continues to be demanded as fiscal spending rises- so basically bond buyers are doing the Fed's job for them, further tightening credit which leads to economic contraction. Fed doesn't have to hike, but they also can't cut and keep the confidence game going or stop inflation expectations from spiking without talking down/back their "strong economic" posture.FED IS TRAPPED and REAL economic growth is not confirmed.
In fact, GDI and PMI are flat, prices and wages are staying sticky, and rising nominal GDP is not the real economy so when accounted for inflation, it is 0.Also, about that hot NFP number Friday: it was ALL government jobs. Private sector lost 400K full-time jobs.
Sector Rotation Moves:
Kinda needed to be positioned in advance for XLE (energy), XAR (aerospace/defense), HACK (cyber security software) bounces on Middle-East conflict, but we also could have had them without the headlines as XLE had fallen into 200D, XAR into 200W and HACK on 100D.
JETS long into airline earnings is starting off poorly.
XHB continues to fall so that is working.
Precious metals catching a short-term bounce would have happened regardless I believe given the rate of sell off for gold and silver.
Ditto with oil. I warned Friday so that well-timed sector short in advance of last week's 14% sharp drop in crude had given most its gains already.Intraday Levels:
SPX 4300 put wall is the level <> with 4232 being next level it needs to break below for lower.
QQQ is still all about 366 WKLY and 362 intraday.Swing Ideas:
GD > 228.20 WKLY GAP was the LRE chase/swing today - liked best of all the XAR plays.
LLY > 538 after swing short PT of 534 was tagged and reversed Friday.
MNST still working its way short to 46
LI still working its way short to 30NEW: DIS - Just needs to get/stay > 84.69 on daily. 82.46 nice daily stop. Nelson Peltz activism is increasing stake and helping DIS breaking up out of the wkly wedge. Will post in Swing.
Chase long PLTR > 17.04 with 17.46 wkly trigger as PT
Chase short TSLA < 256 INTO 250 THEN 241
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