A big week of price action in Equities, Bonds, and Currencies… what are the takeaways?
Let’s look at Bonds first as they are a huge piece of the puzzle.
TLT Weekly & Daily charts
Price is close to taking out a key level on Weekly chart $92.1 and has taken out an important level on Friday, $92.75. These levels are VPOCs, Virgin Point of Controls, where heavy volume has previously lies and are often reversal pivots. Note, the levels are of course not reversals until price confirms that. So, after these key levels are taken out, I would watch for price to retake at least the 5d MA (Moving Average). Also, note the RSI is now a 21 on the Daily chart and an 18 on the Weekly chart, both in oversold territory so a bounce makes sense.
The move in price and rates has been fast , here is where rates currently are at:
Regardless, if Bonds are oversold (rates overbought) and due for a bounce, the levels have made equity valuations very important given that rate curve (various Bond maturities), now over 4%. The takeaway here is equity security selection is a priority given these level of rates.
Next, the US Dollar. The strength in the US Dollar both indicates “risk off” as investors flock to safety and an equity headwinds for US companies as a stronger currency makes US good and services more expensive.
UUP US Dollar
On Friday , price broke in the Oct Value Area and is testing the 20d MA. This appears to be the 2nd lower high since UUP made a high on 9/27, but we will need to see a break of the 20d MA that the short term high is in for the US Dollar.
The takeaway here is a break of the 20d MA should be a positive development for equities if it were to happen.
ES_F S&P futures
Back and forth price action over the last week and really since the beginning of Oct. On Friday, price got back into the Oct Value Area and above the 5d and 20d MA . A level to watch here is 3746. This is a start, but noteworthy is that indices remain in downtrends so patience and risk management are of utmost importance as the indices try to carve out the lows and regain some territory.
DIA Dow Jones Industrial Average
a bit more strength here as the DIA is testing its 50d MA. Something to keep an eye on.
One last development / takeaway is the NYSI - the McClellan Summation Index, which is great to watch for momentum changes, is trying to crossover with its 10d MA which may be a positive development for equity investors if this follows through.
Where do I want to be looking for opportunities in Equities?
Strong earnings names and so far we have seen strength in names like AEHR, NFLX, SMCI, GS, SLB and ASML. We will find more a s earnings season progresses.
Relative Strength Areas. It is no surprise to me that areas like Health Care, Financials, Metals, and Energy are showing strength. These are not expensive areas and going back to what we are experiencing with rates and currencies this makes sense.
On the flip side, there may still be short opportunities with the indices in downtrends, and in particular higher multiple names given the macro environment.
I will cover individual stock setups for TTG Members in our weekend video and watchlist.
Last week I had winning trades in AEHR, SMCI, TMDX , CAH, XLE, NVDA, SMH calls, JPM, ADBE, BAH, and losers in ABBV, SQQQ, and MRO.
check out TTG here
I hope you found this post helpful!
Here is what you can do to support my work.
Leave a like on this post below
Share this post on Twitter using the button below
Copyright © Tribeca Trade Group. All of the information in this newsletter is for entertainment and educational purposes only and is not to be construed as investment or trading advice. None of the information in this newsletter is guaranteed to be accurate, complete, useful or timely. IMPORTANT NOTICES AND DISCLAIMERS TriBeCa Trade Group is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of TriBeCa Trade Group are not acting as investment advisors and might not be registered with the U.S. Securities Authority
Thanks for reading The Tribeca Trade Group ! Subscribe for free to receive new posts and support my work.