• U.S markets breaking to the upside. The Russell 2000 made a new all time closing high. European stocks continue to go vertical. None of this is bearish for stocks as an asset class.
  • U.S dollar looks poised for more strength over the euro and pound in the short-term. The most obvious play in rates & FX is the short play in U.S bonds discussed in detail below.
  • Nothing really going on in commodities except the ongoing bullish trend in crude oil.


Market: S&P500

Reason for observation: Weekly bull flag trigger

Short-term bias: Bullish

Long-term bias: Bullish

Exactly what we were looking for in U.S stocks. Though “obvious”, this volatility expansion is likely to have continuation and upwards momentum should not be faded. Look at the monthly chart, just looks like a classic uptrend grinding to make new all time highs.


Market: Emerging Markets

Reason for observation: Relative under-performance

Short-term bias: Neutral

Long-term bias: Bullish

Not much going in the emerging markets fund. For sure it looks like a clean monthly bull flag setting up, just wait for the sharp move to the upside before placing any longer term trades.


Market: U.S Dollar

Reason for observation: Daily bull flag setup

Short-term bias: Bullish

Long-term bias: Bearish

For the first time in a while, a rally in the U.S dollar is more likely to lead to more short-term strength than weakness. The trendlines drawn on the daily are a rough guide for the confines of the pullback setup.

 


Market: 20 yr U.S tsy

Reason for observation: Daily bear flag setup

Short-term bias: Bearish

Long-term bias: Bearish

Clear daily bear flag in t-bond futures. All signs pointing south. Wait for a break of the lower trendline before placing any short trades.


Market: Crude oil

Reason for observation: All timeframes pushing upper Bollinger band

Short-term bias: Bullish

Long-term bias: Bullish

Any pullback on any timeframe is likely to lead to more long trades.


Market: Natural Gas

Reason for observation: No edge

Short-term bias: Neutral

Long-term bias: Neutral

Absolutely nothing going on in natural gas for a long time now.