Monday Paper Round
April 3, 2023
Paper is back after a short vacation in the alps. Many thanks for all your recommendations. We visited lake garda to watch some friends run a marathon. This inspired Paper to aim for a half-marathon. So, if you have any good tips. Just send them in your comments or tag me on Twitter. We then drove up the mountains (a beautiful ride) to Val Gardena. Luckily, there was a dump of snow and a temperature drop which made for a good few days of skiing before it got all slushed away in warmer conditions. The food, surroundings and people, though, were first class. Highly recommend.
Now, let’s see what some charts are telling us.
ES, the model flipped to long last Thursday. What a difference a week makes. I would anticipate choppiness, but the recent strength has been impressive. One doesn’t have to look further than liquidity conditions to assert where the bid is coming from.
NQ, the relentless bid continues. Model is still long but there is another round of overbought signals appearing. Cautious.
ZN, the overbought conditions materialised, and we consolidated just below the 200-day ema. Waiting mode while model is still long.
US 2-10s curve, failure at resistance now consolidating while the model is still long (in steepeners). The thing with curve trades is that you need to be patient.
BTC/USD, model triggered a second buy-signal. Clear consolidation mode around 28k. I would expect a leg lower before new accumulation could occur.
Gold, also in a consolidation pattern. While the model is still long, we are clearly losing some steam in that first run-up. 2k will be a tough hurdle to take.
EEM, nice bounce from oversold levels, and we’re very close to triggering a buy signal in the model. Stay patient young padawan.
EUR/USD, choppy. Model is long, but I would not take this as a high-quality signal, given recent ranges.
USD/JPY, this looks ready to break higher even though the model doesn’t show a long yet. Given the pairs’ strong links to bond yields, I would watch it closely for confirmation.
USD/ZAR, The rand has been trading in relatively smooth patterns over the past year. The model’s accuracy was, therefore, very good. We just got a sell signal on that puppy. Let’s see whether we tag the previous resistance.
Crude Futures, beautiful tag of the resistance line. The model is still short, so if not in the position, I could envisage this to be a good level to re-short if so inclined.
It would appear that we are consolidating in many asset classes. This bodes well with my overall assessment that the market is seeking new direction post the bank crisis wobble from a few weeks back. What next? The reaction to this week’s ISM and NFP data will tell. The recent Oil announcements will likely fizzle out quickly.
Be nimble out there!
Your,
Paper Alfa