Friday's Paper Round

Enter the Charts

Happy Friday, folks. I am writing this from a train, so let’s hope the bandwidth allows it to send this one through the information superhighway.

There is nothing new from what I can see, coiling and more frustration for those hoping for larger moves, including myself.

Let’s dig in.

ZN-Future, continues in a coiling range and oscillates around the 200-day EMA. The model is still long but without much conviction here. It would appear not to be the major source of market direction currently, reinforcing the somewhat lower vol impetus to other asset markets.

This is highlighted by the receding MOVE index, which is now at levels seen before the onset of the mini-banking crisis.

ES, consequently, didn’t blink in reaching February levels while the model hit another buy level today. I don’t need to tell you that the break-out from the previous 2023 highs will be the blurb of way too many commentaries. Let’s see how it plays out.

Talking of break-outs, Gold is nearing its previous 12m highs. The model recorded a 3rd buy signal which usually is a good confirmation of a strong trend already in play. Let’s see whether we can take those levels out.

Silver also had a great run since the break of the banking turbulence. Liquidity is strong with the metals. The somewhat weaker USD is also helping this perform. The model, similar to its golden cousin, recorded a third buy signal, also eyeing a break-out of its last year’s highs.

The 5-30s curve highly correlates with overall yields, highlighting its increased sensitivity to recessionary data points. We shall see, but Paper still likes steepeners, as highlighted in the “When to buy Bonds” posts.

BTC/USD. The force seems strong with this one. The model is long a second unit into the latest leap above 30k. This is from a previous consolidation around the 28k mark.

ETH outperforming BTC over the past week, although quite a choppy pair all eyes are on whether we could have a bit of a trend reversal and let ETH lead the way.

DXY, similar to certain risk assets, would indicate a closing in on previous February lows. Can we break out? We are getting close to the conclusion as its lines up with other markets nicely.

Overall risk on tone would come from collapsing implied bond volatilities and with that other cross-asset volatilities alongside it. We are approaching critical levels in order to record break-outs in various markets. Let’s see whether its confirmed. The next week or two will be quite telling. Stay the course. Stay nimble and have a wonderful and blessed weekend.

Your,

Paper Alfa