Stealth Easing & Half Way To Bounce Call

CLUB/EDGE client post Sunday May 5th. Focus on US dollar & yields falling.

» CLUB/EDGE client post Sunday May 5th 8:30 AM

I have a few topics that I want to highlight here that are related but would make for a too-long post. Instead, I will create them as a 5-part post in hopes it is easier to follow.

Mixed Signals:

1. We are more than half way to my "Bounce Call" levels of SPX/QQQ $5200/$445 as I'm stalking a market top.

2. Bulls are clinging to corporate earnings and economic growth moving higher despite yields, dollar & inflation staying firm.

3. Treasury/Fed still stimulating quietly; BOJ Intervention loud & right on cue. Both with diminishing rate of return.

4. AAPL biggest share back evah camouflages weak fundamentals & Berkshire unloading.

5. The "China is Uninvest-able" ended in January at levels 30% lower.

Bounce Call Is Still In Play

My April 17th note to clients:

We get above 5080 + hold that landing, we will revisit 5192.54 hrly gap fill in time.
That will likely be a great place to reshort.

I doubled down April 28th pre QRA/FED:

For now, I still have a BOUNCE CALL in play since last week for SPY 5192 and QQQ $445.

I followed that up Monday with a detailed Intermarket Review - April 26th, 2024: Bouncing On Schedule, But For How Long...
(The April 26th represents the date the charts were captured, but in fact, I did not present the report to clients until Tuesday April 30th.)

And then Thursday May 2nd after QRA/FED, I posted in my #chase channel that I saw USD + 10Y yields falling which would be bullish stocks and bonds.

DOLLAR & YIELDS FALL - PUSHING UP STOCKS & BONDS

As discussed earlier:
The advantage of falling USDJPY is actually potentially bullish stocks if it results in pushing back down our 10Y yield.

This is one way the BOJ/MOF intervention will help us get to that QQQ/SPX gap fill targets above: 445/5200

Market may not have realized it yesterday, but the combined efforts between Fed and Treasury actions was a form of easing.

Small but with the BOJ/MOF yen intervention, liquidity is coming into the market and bidding up stocks and bonds as USD & 10Y fall.

It's not AAPL. Its Fed scaling back QT, discounting the risk of rate hikes, so markets predictably take rates lower.

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35bn tapering reduction a month equals to ~3bps cut a month in rates
Yellen purchasing at full size 10bn a month bonds make it another 1bp cut a month equivalent
@Trade_the_swing

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Remember, it's an election year.

So now we wait for $AAPL in general but specifically for 10Y yield to soften so market can rise.

Because if it doesn’t…
and their little intervention tricks prove to fail…Then the bond bull beatings will continue until morale improves.

I went on to explain under #swing channel:

Long story short, Friday we gapped higher. My bounce call is firmly in play.

First, we got AAPL results afterhours Thursday and then the NFP miss premarket Friday morning (pulling rate cuts forward to September with 93% chance).

I do not expect any cuts/hikes, but the 3.9% unemployment rate is now helping yields to soften after the QRA/FOMC easing from Wednesday.

Long story short, it is very hard to short markets here given how I have higher QQQ/SPX price targets of 445/5200.

In the immediate future, I see bonds bouncing into 4.36% 10Y - then QQQ should be up to my 445 target. This should put some pressure on XLE + XLF, for example.

Think: Value to Growth rotation for a bit - maybe into NVDA earnings May 22nd.
Then it will be a good place for a reversal I believe.

I go on to discuss my macro & sector rotation trades:

In the meantime...
Best MACRO Short ideas still working:

USDJPY into 152 = falling dollar + yields for higher FXY, TLT, QQQ, SPY

Best swing short sector/stock rotation working:
XLE, WTIC, COIN, LLY (NVO) - now adding XLF

Best swing long sector/stock rotation working:
1. China plays still look great but weekend risk...
- but bitcoin bouncing with nasdaq and tech so careful on semi/btc/tech swing shorts!
2. Utilities still look great.
3. Select miners will look better after gold/silver digestion brings new buyers.My "Warm Summer Housing Call" as posted in March under #macro-to-micro-support has potential as MOVE + yields soften.

Translation: There are LOTS of Chase + Swing updates in those channels. I have DETAILED analysis on gold/silver miners as well as Bitcoin short and China plays long.
Very little to discuss in Trends, yet, as my focus of late is in stalking a market top.

But the only point I want to make is that we are more than halfway to my "Bounce Call" levels of SPX/QQQ $5200/$445.