Its been a fast and furious last few days with a major reversal signal in the US$ as well as a new momentum bullish moves across many commodities, their miners (COPX GDX etc) as well as new reaction highs in several cyclical indexes like Tech (QQQ) and Home builders (HGX). With both their breadth remaining strong and not close to contrarian. In spite of the Euro strength many European indexes have scored new highs inc Spain’s Ibex35 leading the charge. (Remaining long this equity index alpha for now). Asia took off on the macro news story from the FED with the Hangseng providing the beta due to the US$ to the HKD. (Long 2800 listed in HK).
FX wise, the Eurusd moves have momentum following a decent price distribution. Given the weighting (ctfc) still to the US$ the move could sustain until the weightings level off. Also worth watching the USDSGD to see the support breaks which would invite more US$ weakness. And equally AUDUSD which is close to a large resistance area. US$ inflation expectations have bounced but not surpassed recent levels.
For my own book I remain long this market but at a lower leverage level than prior due to the commodities weighting. I see the bounce but had very strong momentum downward recently that has not been totally negated. This bounce needs to be tested and then lets see the reaction. If the reaction is compelling, ie price achieves a higher after after the tactical correction attempt and the move is with momentum a heavy weighting would be in order. A little more evidence first. My book close to new highs but not there as yet due to the precious metals weakness vs a month earlier.
Here the Swiss team’s latest:
The US$ inverse to the commodities is all important at this point in the market. Its important for the next big trend of dollar carry long commodities so its important to plan your trade correctly and of course score the entry on both sides of the trade.
Here Yardeni
Here SC on the FX
More reports coming.
Rich
WF global chart book: