General
The S&P finished with another solid one-sided day. The pattern since the GME short squeeze is a bit unusual and a reminder of the emotion in the tape. The S&P 500 has posted 8 of 9 one-sided days (gap higher or lower in the day session and remain in that direction all day). Such a pattern occurred twice during the Covid uncertainty of last spring and just three times prior. The primary conclusion is that we’re ‘due’ for a few two-sided days.
The GME short squeeze illustrated how overleveraged funds are when the market heads lower and the rally showed how underexposed most managers are on the way up. Why is this period so different than the past? Passive flows and fiscal stimulus amid zero interest rate policy force investors to adjust exposure with any rate of change.
With Congress ready to send more checks for Covid and even more checks for dependents, I’m less sure why we just don’t give every newborn American 6k worth of equities and let it appreciate until retirement. Of course, maybe that’s where we’re headed.
Scoreboard
Bitcoin is ripping faces off again–nearly hitting 49,000 in the overnight session.
Events
USDA Grain Stocks report today at Noon ET. This even can move the market based on both US and World Ending Stocks.
Strategy and Levels
Overnight we’re at least seeing some reflection to the USD from reflation and continued gains in commodities like Corn, Copper, Crude, and China’s Yuan. Though I understand the Bitcoin phenomenon, I find it hard to believe the rate of change in these products can continue without some impact to commodity currencies and sterling.
Most of today’s gains in currencies are isolated to shorts in Eur, Jpy, and Chf but the structure for NZD, AUD, and GBP still ‘seems’ higher. Today will likely be a range day and classic ‘counter trend tuesday’ with retracements off this ‘mega move’ run from 3862 to 3891 in the S&P. In the unlikely event we remain negative during the day session, the streak noted above would extend to 9 of 10 and ensure tomorrow is two sided (consolidation within a solid uptrend for 48 hours essentially). Risk takers I talk to are looking to buy pullback entries in Platinum and Copper below 1165 and 364. Although Coffee hasn’t shown anything yet, breakout buys above 126 may be promising.
Happy Trading!
Sincerely,
John Netto
Macro & Event-Trading Specialist
|
Trading Futures, Options on Futures, and Foreign Currency (“FOREX”) involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Past performance is not indicative of future results. Stage 5 Trading Corp. is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.
STAGE 5 TRADING IS A MEMBER OF NATIONAL FUTURES ASSOCIATION AND IS SUBJECT TO NATIONAL FUTURES ASSOCIATION REGULATORY OVERSIGHT AND EXAMINATIONS. HOWEVER,
All opinions expressed in this newsletter are the opinion of the author and do not reflect the opinions of Stage Five Trading or affiliates. You should NOT treat any opinion expressed in this newsletter as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the author of the newsletter considers reliable, but neither Stage Five Trading nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. The Newsletter author, Stage Five, its affiliates and/or subsidiaries are not under any obligation to update or correct any information available in this newsletter. The newsletter author is a professional trader who may be actively involved in securities and financial products discussed herein, on behalf of themselves, their companies and their clients. Also, the opinions expressed by the author may be short-term in nature and are subject to change without notice. No part of the author’s compensation from Stage Five is related to the specific opinions that are expressed. Past performance is not indicative of future results. The author and Stage Five Trading do not guarantee any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed in this newsletter. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments, strategies, or trade ideas mentioned in this newsletter may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments, strategies, or trade ideas mentioned in this newsletter. Before acting on information in this newsletter, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.
|
|
