Capitalsynthesis

Weekly Technical Analysis – “US Yields Breaking Out” 11th Nov15

Some good reports this week with much discussion on the macro significance of the data and instrument movements. Breakouts by rates and US$ index, breakdown defensive utilities. Fitzpatrick commenting that the inflation benign tailwinds from lower oil prices is likely behind us setting up for a cyclical rally attempt vs defensive issues.

As always monetary policy has been key in thwarting the recent pull back. The ECB has set market expectations for an expansion of its asset purchases and or lower interest rates at their December meeting. Euro policy makers late to the monetary magic game appear determined to play catch up to reflate the euro system and so create inflation by expansion of the ms and via lowering the euro’s value. The Swiss team’s scenario of an h1 2016 market new highs looks in the play thanks to this monetary magic.

Here the reports:

wklytech-11-11-15

Here Fitzpatrick with his usual excellent report. And what he doesn’t mention is what occurred, each time rates were too low for too long, to the yellow metal. Gold soared upward in value whenever real rates are significantly negative. 75 to 79, 02 to 04 but not yet the recent period of real negative interest rates.

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And here GS with their usual run through

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Although the cyclical indexes have the edge here the low growth, new normal is certainly still in play here. And on this basis some of the property reits do look very beaten up here. Champion Reit in HK showing about a 50% discount to to Nav and even high quality reits with low debt have seen their value collapse as rates rise at the long end.

For my own mind from a macro comment feeding in to sector allocations whilst the cyclical story has some room to run here, post a short term correction, the long end of the yield curve may be a buy soon as the chances for an inverted yield curve looks very likely to me at some point in the next few years or so. As soon as the long end plateaus this would have meaningful implications for reits once again, to the upside. In addition negative implications for the banks and other financial institutions who borrow at the short end and lend at the long end. Its usually is negative for credit expansion. A long way of saying its worth keeping an eye on the reits.

hsbc-SREITs05112015

Key an eye on all ten year debt charts. The US consumer is unlikely to sustain higher mortgage costs, currently at 4 month high rates, due to being based on the UST, roughly 160 basis points plus UST. Here the SGST:

All the best

Rich

Weekly Technical Analysis – “SP500 Still Overbought & Vulnerable” 04th Nov15 v2

I’m traveling again so apologies for the delaying in issuing.

This has been a nose bleeding retrace for dm equity markets. S&P close to making her prior highs. Nas100 new highs. From an allocation perspective, whatever the allocation be whether currencies, pms, bonds or commodities confusion reigns here. Usually confusion preempts a trend change, in my experience.

Here the Swiss team:

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And here GS

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And here Yardeni and Factset. Earnings are back to their 2013 levels. The great promise of investment and earnings growth is not coming. Perpetually, as per the Factset report, earnings consistently year after year disappoint and are revised downward as the year progresses. Speculators are perpetually forced to buy future improvements that never seem to emerge. With central banks preventing any downward price action on indexes for long and negative interest rates on many cash currency accounts now there is this squeeze higher for nominal prices even as earnings and growth disappoint. The gap between economic and earnings reality and central bank monetary action gaps ever greater making for an uncomfortable ride for those both long and short.

Across most of the DM world even as a macro comment although gdp growth is considerably higher than the 2008 bust year and employment has moved back to record levels tax receipts are still below their 2008 levels. This speaks volumes. In spite of all of this liquidity pumped (and continuing to be pumped) into the system and negative interest rates on savings accounts we are still struggling to reflate here. The ECB looking to expand her monetary madness this December. The German High Courts appear to have fallen silent on the issue, for now.

Yardeni and Factset:

Weekly Technical Analysis – “SPX Still Overbought” 27th Oct15

The ECB and then the BOC certainly helped equity markets over come some key resistances. The Euro was dumped propelling European equities into breakouts of their recent down trends. Participants were forced to short cover and any late to the bear camp have been “rolled over”. Its worth noting that overall putcall ratios are nearly back to their lows indicating participants are no longer hedging their positions. Although a pull back appears likely here in the near future the medium term remains up. From the medium and longer term perspectives the bull market appears in tact for now, although over bought short term and over due a retrace.

Here the reports:

Firstly the Swiss Team:

And here GS

And here Fitzpatrick

And here LC

And here CS with their coreviews

CS-cv-21-10-15

Finally here the MS fx report.. “Don’t fight the ECB”.

ms-fxtech

We are overbought short term on risk which at present correlates to over sold on the euro. The euro and Jpy are funding currencies for now not the US$. Euro repatriation on risk off can be sharp, as we saw a month ago.

All the best

Rich

Weekly Technical Analysis – “Short Term Toppish” 20th Oct15

Guys, i wont go through what i’m up to but suffice to say I’m struggling to comment here due to life time pressures.

In stead ill post the remaining reports and full comments later this week.

For now here the major reports.

Here the Swiss team as usual.

Wklytech-20-10-15

And here GS with the same levels SP500 but taken a more bearish line than the Swiss team stating the lows have yet to come. On a side note i don’t think i’ve seen the GS guys fence sitting (neutral stance) on instruments.

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And here Ub with their closer look at specific equity issues for positional traders, very useful.

UB-Wklytech-equity-19-10-15

And here Fitzpatrick’s usual commentary. Taking the GS line to the Sp500 vs the Swiss team’s more bullish stance.

CB-wklytech-19-10-15

For my mind i dont see much so far to suggest the bear is done. My chart from last week stands. No breakout of the bear trend and even on a break of that trend line on euro equities it needs to sustain and not be a one day wonder.

Commodities do look better and its clear from CFTC and other indicators that the US$ bull appears to be taking a significant breather in the coming months, at the very least. Cyclically therefore this could play out to a final 2016 classic end equity bull cycle run up for commodities playing into US$ weakness. The probability on this scenario is rising.

When i get more time ill post up the remaining back log of reports i have and a few side comments no doubt.

All the best for now

Rich

Weekly Technical Analysis – Short Term Overbought 13th October15

I’m conscious participants here are eager for the latest comments from the Swiss team so here their latest report. I’ll update this release tomorrow with more reports and comment.

Here the Swiss team:

wklytech-13-10-15

As a very quick comment whilst i agree with much in their report I don’t have confirmation of the reassertion of the bull market yet. I’d comment cyclical stocks less commodity stocks look less impressive. The Dax is a cyclical index and its relative weakness is clear. Also some of their tech charts appear questionable to me. As an example their Stoxx50 tech chart. I have a different looking chart which i share here. I don’t have a trend confirmation as yet. The area 33.5 to a maximum 34 is a key area.

More tomorrow.

All the best

Rich

Weekly Technical Analysis – SPX 1900 Support 2020 Key Resistance – 7th Oct15

We have a very divided set of views this week from the various technical teams.

Searching for consensus among the teams is that this recent bullish reversal will likely run out of steam very soon so certainly chasing or evening covering shorts at this precise point in the market appears a dumb thing to me. And i say that as a short holder. There is certainly a significant short squeeze under way but is this the end of the correction I’m not convinced though the Swiss team are certainly pointing that way.

The evidence they point to is the wash out level of bearishness in sentiment and put call ratios. The bullish reversal patterns especially in the key cyclical sectors (although off lower lows in the main note). And also the absence of lower lows in the commodity currencies and commodities. The US$ top is in for the Swiss team. Certainly from a global growth perspective a weakening us$ is usually bullish for global gdp and US$ leverage.

We have witnessed a lot of V shaped price recoveries in recent years and possibly this double bottom provides enough price evidence for the lows but given the momentum of the sell off, the weakening momentum of the test of the supports and the momentum of the reversal this all looks very classic price action to me of a market on volatility fire. Market breadth in terms of new 52 week lows was significantly lighter even on sectors and indexs that achieved a lower low so the price reversal trap was set and fairly clear. We have a stop hunting reversal in motion and until key levels are tested and proven little more, for my mind, so far. In my opinion is premature to call an end to the correction.

Do we have clarity on currencies yet from the US$ to the JPY? No, not yet. The euro has not weakened considerably here and neither has the Japanese yen. These price books are thin there is little evidence that participants are really adding specific currency leverage again here to buy.

Without more delay here the Swiss team:

wklytech-6-10-15

And here Fitzpatrick taking a more bearish line in respect of equities but not sharing the bullish commodities theme.

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And here

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And here Citi on FX

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And here scotia on fx

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And here Yardeni

Yardeni-tech-6-10-15

Its still early days in terms of the equity reversal or not. I need before altering stance though the European reversal has been impressive thus far.

Rich

Weekly Technical Analysis – “October Falls” 30th Sept15 v2

The Swiss team are traveling so no comment from the guys and not much need for a comment and no levels and price action particularly demands comment for now.

Near term it looks like a bounce is in progress off some key supports for several equity markets lead by asia over night. This is the totally normal progression of a market in correction. This volatility makes entry with trend more tricky but its all very normal and shouldn’t get one confused on the bigger picture for as long as major levels sustain.

Recall price action wise we got the summer storm then we got a retrace. Recently we have a a new attempt lower to the support across many equity markets. This morning we have a bounce to wrong foot late entries but aside from that the major recent summer trend lower is intact, for now.

Sector wise some positive developments:

Possibly higher lows near term for leading sectors like sox and dow transports but lets see if this mornings price action holds or simply reverses yet again.

And some negative developments:

Lower lows through the August lows on housing, materials & construction, biotech and, on the major index side, Russel2000 and Sp600 small caps.

Some evidence of today’s bounce yesterday as here divergence on the near term. We got a lower low for price beneath the Aug lows whereas breadth showed a non confirm as there were fewer 52 week lows.

It seems in spite of the generally good news re consumer consumption off the back of house price gains and building works the major indexes for these good news stories are showing the opposite. US finance BTX is just holding above key supports here and now.

Nothing as yet to make me doubt further falls into October.

Here Fitzpatrick on the issues:

cb-tech

More coming..

Here SC on the global macro allocations:

sc-gm-26-9-15

And fx wise MS

ms-fxtech-27-9-15

And here JP

jp-globalstrat-29-9-15

jp-ma-allocations-q4-15

Rich

Update..

Guys, im getting bombarded with emails requesting an update from the swiss team and others.

Please double check their last report which stated the following:

“Due to traveling, the next regular weekly comment will be published on October 6th”

Nonetheless I do have some reports and a few comments which i will post up later today. The levels and tech remains exactly as she was a few weeks ago. Nothing much has changed here and id be truly surprised if any member here is shocked by any of the recent price action. To my mind its been text book and followed almost to a digit what we expected. The only asset class i’m struggling to get a clear direction on yet in fx between the major pairs ie eurusd, eurgbp, gbpusd. These three im still struggling with and am pretty even weight between them at present due to this.

Today’s housing data from the uk was strong and good uk housing data has historically a strongly positive correlation with strong gbp vs the usd. She has weakened considerably in recent months yet the data remains strong so we do have divergence here which is at extremes now. A counter recent trend rally back to 1.55 looks likely near term but on that level or thereabouts a renewal of usd strength looks the money trade.

Aside from fx, if you are not sleeping well due to asset price confusion here reduce your deal size is all i can recommend.

Update later today.

Rich

Weekly Technical Analysis – “SP500 Strength – Sell/Take Profit” 15th Sept15 V3

Guys,

Big news day tomorrow that, in my opinion, defines if the bear rejoins in the next few days or he is put off for a few weeks to come. Its a timing and levels issue this not a trend issue, if you follow. More comments tomorrow but I like the short Nikkie long jpy trade! Tactical longs are in danger subject to tomorrow’s news but assuming some profits have been taken its right to run the remainder into the news. I suspect there will be no rate change tomorrow but the language will be hawkish, in spite of the worsening global backdrop and earnings problems.

Here the Swiss team:

wkllytech-15-9-15

And here fitzpatrick

cb-tech-13-9-15

Note the bond charts!

Here GS. (Note conviction 3 short sp500).

gs-tech-13-9-15

And here RBC macro

rbc-macro–15-9-15

More to come.

I have other reports but due to copy write issues and warnings shots from Lawyers I’m unable to issue these but for info the uber bullish ML team are staying bullish in spite of the obvious tech issues here. They have lowered their 2015 target to 2100 and remain bullish to year end.

Here UB with their great stock specific tech report:

ub-stocktech-15-9-15

Rich

Weekly Technical Analysis – “Sp500 Rebound into Mid September” 9th Sept15

Another great report from the Swiss team here below.

Its very tricky to plot the anatomy of the forthcoming ending of the bull market and the various twists and turns of a hard correction. Nonetheless it seems the team are doing a good job of doing just that.

Volatility is continuing with the Nikkie moving nearly 8% over night yesterday off the back of its central bank’s warm words. Below the team are expecting the sp500 to move to 1800 whereas Fitzpatrick is forecasting 1712 (which i more tend to agree with).

Without delay here the Swiss team’s latest:

wklytech-9-9-15

And here Fitzpatrick with some similar looking levels:

cb-wklytech-7-9-15

The eurusd comments are the most interesting and controversial. Its true that speculators have used the ECB’s words to load up with euros for speculation. (The euro carry trade). Has the ECB been so successful in their strategy that even US speculators have been using the Euro as a funding currency for US$ positions? rather than funding these positions with US$ credit? Its complicated to try and establish numbers on these issues. (Certainly NYSE leverage suggests US$ leverage remains strong but on the cross implications may be negligible). I suspect its a matter of how long and how deep this bear goes as to whether there is a renewal of US$ repatriation. In the early stages its certain that euro credit repatriation will be at its strongest. If strong enough it can become a trade in itself of course. We see. The levels are clear.

Here RBC:

RBC- macro

Back on the theme of fx, here a few fx tech charts:

CBA-fx

Here Standard C with their weekly macro report:

Sc-macro-5-9-15

That the correction is underway seem certain. How deep and how long it will sustain is up for debate and too a great degree will be government by how aggressive policy makers are in fighting gravity.

Weekly Technical Analysis – “Sp500 Rebound Into End Sept” 2nd Sept15

The highlights for me from last week’s bear attach was the short sharp explosion in volatility together with a short term liquidity drain from the market. The most notable other issue was the euro carry trade de-lever which spiked up the euro even as markets fell. Commodities generally fell as US$ also fell.

To me these were all early warning shots of what is still to come. Some of the asset market moves of this early sell off are unlikely to sustain, imo, for the later moves that are still to come. Participants will be using any improved liquidity moments to adjust their positions in a less volatile manner in the coming weeks which should set up for the main event in end Sept throughout October and possibly into early November. Near term, with 1900 hit on the sp500 Tuesday we were set up for a corrective bounce from over sold levels which also applies to European indexs. I’m long dax on this basis as a tactical trade.

Without delay here the Swiss team’s latest.

wklytech-1-9-15

And here the latest GS tech report:

GStech-30-8-15

And here the latest from Fitzpatrick

cb-wklytech-29-8-15

And here LCM’s tech latest

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And here UB with their specific stock tech charts and levels:

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And here CS with their allocations and monthly:

cs-mmmonthly-1-9-15

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Weekly Technical Analysis – “Sp500 2011 Bull Broken, Tactical Low Near” 25th Aug15

Volatility across asset markets, but particularly global stock markets, leaped out of their collective skins this week.

Across sectors and global indexes, across asset markets order books gaped and that’s significant in terms of leverage. There has to be a bid on the order book for leverage to ever be considered. So watch this issue.

Anyway, here the Swiss team’s latest:

wklytech-25-8-15

We have thin volumes. And even thin real bids and asks on world order books. The markets appear to have hollowed out by policy makers repeated interventions over the years. I’m very short on time here to comment and post right now but as of next week the desk beckons again and more time will become available again.

Apologies a little late but here GS nailing the equities with even a conviction 2 short the sp500 from last thursday. Their usd long high conviction trades look less convincing, until this week.