While we wait for the breadth and momentum divergences to develop in the equity markets, we’re taking advantage of other markets that offer uncorrelated trade opportunities.
Today, we’re looking at Jeera and Crude Palm Oil on the long side.
Mystery Chart (03-17-2020)
From the desk of Steve Strazza @Sstrazza
New Mystery Chart!
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?
Metals Are Just Another Source Of Funds
In this type of environment, our focus has been on capital preservation as opposed to capital appreciation.
We’ve gotten a lot of questions about Metals during this time, so this post will review why we’ve been out and what would get us involved again.
Three Charts You Need On Your Screen
We got a lower low in equities, followed by continued weakness rather than stabilization. Heavy cash positions and a defensive posture remains best in this historically volatile environment.
Given how quickly things are moving, there are three charts on our screen that will help identify when a shift in the market is occuring.
Looking To Copper For Clues
From the desk of Steve Strazza @Sstrazza
Thank you to everyone who responded to this week’s Mystery Chart.
We had a few buyers but most of you were selling at this logical level of interest or exercising patience to see how prices react here. A few responses also pointed out that this likely isn’t the best time to enter on the long side but are anticipating an eventual breakout and would be buyers if and when we get it.
This is the same camp we’d fall into and we provide details why in the original Mystery Chart post. With that as our backdrop, let’s look at the chart.
[Chart of The Week] What Intermarket Ratios Are Saying About Rates
From the desk of Steve Strazza @Sstrazza
We look at a variety of intermarket ratios that span just about every asset class in order to get a read on interest rates. Here is one that we don’t discuss too often, but its relationship with the 10-Year Yield is obvious from looking at the chart below.
The S&P High Beta/S&P Low Volatility (SPHB/SPLV) ratio made significant lows around the same time and place as the 10-Year has several times over the past decade.
[Chart(s) Of The Week] Lower Low Achieved, Now What?
Last week we outlined our thesis for a lower low in Indian stocks, as well as what it would take for us to get more aggressive on the long side.
After another sharp move lower with dramatic blowups in Yes Bank and Crude Oil, let’s revisit that thesis and discuss why patience remains the best course of action given current conditions. [Read more…]
Mystery Chart (03-10-2020)
From the desk of Steve Strazza @Sstrazza
New Mystery Chart!
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?
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