The Santa Rally compared, The Calm before the Storm, Oil & USD at must hold levels
Hey it’s Kieran! Another week in the markets is upon us, so here are the key events to be aware of, and the most interesting Macro research coming out of the investment banks. I’ll hopefully speak to you this week in the Traderseed Trading Challenges and as ever, if you have any questions, just leave me a comment below.
Weekly Watchlist
Friday’s nonfarm payrolls will be the highlight of this week but there are many market moving events taking place this week. Fed Chair Jerome Powell is speaking at the Brookings Institution on Wednesday. The economic calendar also features the ISM manufacturing PMI and the Fed’s favoured measure of inflation, the core PCE price index, both of which are published on Thursday. Eurozone Inflation (CPI) as well as Chinese PMI numbers will also be published on Wednesday.
The Macro View
Plunging Oil. Brent crude fell to its lowest level since early January as demonstrations spread to multiple cities in China. We have now reversed all 2022 gains and are back to 2021 levels.
DXY at huge levels. The US Dollar sits at the centre of the global macro picture. Last week’s bounce did not materialise and today we look to be testing major levels. Make or break time.
Santa Rally 2021 v 2022. The S&P 500 santa rally last year started in early October and gained 12% in three months. This year’s rally has so far gained 12% in two months.
China Tech downtrend remains intact. HSTECH, the Asian technology index, has led the tech selloff from Jan 2021. Despite the huge rally over the past 2 months, it reversed off the negative trendline and the downtrend remains in tact for now. We cannot get excited about a new bull cycle in Chinese tech until this closes above the trend line.
Bitcoin’s inflow problem stays intact. Not a major surprise but it’s always worth keeping an eye on the institutional bid in beaten down sectors. Once institutions start accumulating Bitcoin again it will show up here. I will continue to monitor.
China Covid Parabolic. Another day, another new all-time record in new local cases in Mainland China.
VIX 2022 vs VIX 2008…. Are we in the calm before the storm?
I hope you found this interesting and useful. I write this newsletter every Monday so make sure to follow me! As ever, keep your risk management top of mind, trade safe, and stay nimble out there.
Have a good week!
Kieran
www.traderseed.io
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