Friday Chart Book
Burry & Out / Debasement Nonsense / Chart Updates
Just as a champion of short-selling, Michael Burry, left the world stunned with his announcement of shutting down his Scion fund, the irony of this world opened up as stocks, led by technology names, started faltering again. The Semiconductor sub-index started struggling from its lofty heights as the calendar turned into November. We previously tagged the 50 moving average (pink) and promptly bounced. But this has now fizzled out as we once again meet the pink line.
As I am writing this as of Thursday night, UK time, the Morgan Stanley US growth equity index is now poised to close below the 100-day average.
Mag7, you ask? The 50-day is also in play. Notice the same setup in January / February (green circle) when we first touched the 50-day to bounce twice, but this resulted in a deeper correction. This could play out in a similar fashion. BTDippers might what to consider such a scenario.
What’s driving this sudden shift? For about a week, I noticed a shift within sectors, with a preference for defensive names, while indices were holding up. Stocks selling off on positive earnings is an exhaustion signal in addition to the structure. Today, however, also marks a sudden shift in bond markets, as the December meeting is now seriously challenged, with us dipping below a 50% probability. The USD, meanwhile, is also selling off. Hang on, stocks, bonds and USD selling off in tandem sounds very familiar. April comes to mind. Gold, for once, while starting a ramp again (Silver much more), is also faltering.
Debasement anyone? I will write about it another time, but I think that’s such a misleading narrative that is being floated by people who have no idea. Currencies fluctuate through cycles, and bonds have rallied this year. Why are inflation swaps collapsing under such a scenario? Wouldn’t you want more compensation for your debasement after all?
Let’s move on.
For now, a few equity reversals have been emerging in select market segments. Refer to the chart pack below, which outlines my long-standing trading models.
A reminder that you can now also use my trading models in TradingView scripts, which I made available for subscribers to use on their charts. This is not free and incurs an additional cost. These are my momentum, reversal and intra-day models I am often referencing.
If you are interested, ping me an email with your TV username. Note that only paying subscribers will be granted access. No exceptions.
Paper Alfa turned 3 a few weeks ago. As a sign of gratitude, I am running a 20% discount for life on new subscriptions. Please use the link below.
Let’s now read Macro D’s thoughts on the shutdown and the Fed’s dilemma. In addition, you will find the updated chart pack of all 250+ charts across the global macro universe.
Have a fantastic weekend!