Testing

I took on Julian’s sell NDX trade in the form of SQQQ (3x leveraged short NDX) and FNGD (3x leveraged FAANG stocks). I don’t have any real trading experience so please defer to Julian on any differences, but just wanted to share my trade. So, that Julian and Raoul both wanted some form of short equities at the same time made me more confident in the principle, but the FAANGs-as-bonds theory, rising real rates, and rotation out of big tech into banks and consequent rotation out of NDX into Dow made me far more confident in Julian’s short NDX than Raoul’s puts on S&P. Despite Julian leaving the trade, I’m staying in for a few reasons. First, his stop was close above 13100, but he also emphasized watching the Fed meeting. It closes above the stop the day before the Fed meeting, but barely, so I waited. The Fed conference seemed to cause very bullish price action across the board and falling yields. However, the US10Y had hit an hourly TD 9 earlier in the day and could easily be seen as taking a 4-candle correction that would bounce. Further, news could easily cause a head fake. So yesterday I exited half the trade and decided to watch what happened today. US10Y spiked overnight. Its on a TD5 daily and the weekly chart is restarting a bullish up sequence on a 2 trading higher than a 1. Seems like this thing is on a tear and doesn’t care what Powell said. NDX is trading below Julian’s target for the second entry of 12880 right now. So had his trade not stopped out we would be at the point to freshly enter the second half of it! NDX was poised to hit a TD9 sell signal on the daily chart while under the 20D moving average, which recently crossed the 50D and has no indication of turning back. The last time it traded under the 20D after the 20D crossed the 50D was March 2020. This really makes me wonder about the passive algorithms. Are we getting an automatic repeat now that we have hit March 17 again? The TD count broke and went to a red 1 today. NDX might generate a fresh bearish downcount tomorrow. The last time it dropped it was saved by the 20W moving average. As I’m writing it is starting to cross it. Seems to me this trade has life left so I’m sticking to it unless US10Y does a surprising reversal or NDX looks like it could hold the 20D MA.

Thanks for the timely perspective, this market is bonkers.

Hi JB - Does China not benefit from the reflation trade? like Japan, FTSE or Italy? & what about a broad commodities exposure like GUNR Thanks

Are there any recommended nikkei etf, ftse etf and mib etf's?

The NDX vanity trade is slippery. Julian tweeted an excellent chart comparing Nasdaq and Treasury futures; https://twitter.com/JulianMI2/status/1372529863895130125 Still some downside to come?

I'm assuming Julian saw this (https://asia.nikkei.com/Economy/BOJ-to-widen-interest-rate-target-range-to-support-bank-profits), or perhaps it came out after this update was written. I'm curious if it changes his opinion on buying the Nikkei? Thanks.

Just like to point out that Nikkei is a price-weighted index dominated by Japan's FANG-style stocks (Fast Retailing @11.5%, Softbank @7.5% ...), with Financials at 1.98% and Energy at 0.2% weights. When growth or NDX underperform, Nikkei will underperform. To play value, it is better to go for Topix or DXJ or EWJ. Ref: https://siblisresearch.com/data/nikkei-225-sector-weights/, https://www.wisdomtree.com/etfs/equity/dxj, https://www.ishares.com/us/products/239665/ishares-msci-japan-etf

Nicely put Julian. Got to be in some of these trades, but it won't take much more in treasury rates rise to start a rout. (The risk is that a stock market rout here could be very hard to contain!) I feel like the FED must know this and is holding it's breath waiting to make more dovish noises... Perhaps SLR extension announcement??

Logically lay out the reasons for each trade! Thank you Julian!

Can you please check the left scale os the two graphs on page 7? The scale is not inverted.

Question about the gold position (understanding it's half size and stops are tight around the channel): Isn't there a danger that inflation expectations have somewhat front run actual inflation? 5y5y divergence from breakevens, reflation commodities (copper, silver, platinum.. Etc), KOSPI/semi weakness and oil futures mild contango are showing a bit of toppiness Consensus says nominals are still expected to rise into the 2% (3%?) range in US10y - aren't this expectation out there mostly based on growth base effects that will kick in much stronger in Q2? These combined could lead to increased real yields, continuing the downtrend in gold until H2 where the base effects ease and we enter more of a stagflation scenario with lower real yields. Is this thought train a wreck?