Seeking Alpha

Thomas MacLeod's  Instablog

I am an individual investor managing my retirement funds and investment funds of other high net worth individuals from Queenstown New Zealand. I recently retired from a merchant bank in New York where I ran a macro proprietary trading portfolio for 10 years where I achieved a compound 30% return... More
My business:
Glenorchy Capital
  • Five Charts to Rule Them All 3 comments
    Oct 19, 2009 02:17 AM
    Another Monday, another "Five Charts to Rule Them All" article. For those unfamiliar, this series is the result of our office decamping to a rather nice local cafe, ordering up cappuccino’s, lattes, etc.. & letting the caffeine do its thing whilst we discuss the markets. The only thing we are allowed to bring is our iPhones and maybe one or two charts. We are after qualitative analysis, rather than quantitative; what is our feel for the markets?

    Firstly, this week we tried the Brioche & yes, it was very, very good. Almost as good as Nunu's.

    Now, onto the markets. Consensus around the table is that we have seen, from a trader's point of view, some very important events for commodities, equities, and currencies. I realise that we may have lost a few readers continually harping on about commodities as the market simply moved sideways; but we are hear to make money, and now money we shall make.

    Key Commodity breakout levels have been breached, in particular crude oil moving above $75, and we suspect, onwards towards the $100 level by years end. Review the performance of the commodity currencies (Aussie, Kiwi, Loonie, Norwegian Kroner and Brazilian Real) against USD and JPY. Initial signs of weakness of in US Treasuries also contribute to the thought process. Still could be wrong.

    Equity markets received a boost this week with earnings surprises. This suggests that analysts are being conservative in their estimations (fair enough, the majority came up rather short not more than 12 months ago). To a trader this bearish viewpoint equates to a cheap stock market. On balance we would expect similar reporting from the companies still to report (the vast majority) and another corresponding rise in equity markets. This is short term trading, not referring to p/e, p/b, or other fundamentals, but pure speculation based upon market sentiment. We are after profit, not long term value here.

    Correspondingly we are also expecting Tuesdays PPI to be greeted by more suprised analysts, taking into account the ISM and Empire surveys and further rising commodity prices.

    Prediction for the week: commodity and commodity currencies end the week higher, pushing US Treasuries lower. Actually that is our prediction for the rest of the year, this pattern repeating itself. The trends remain strong and the bullish wheels remain in motion!

    The Value Line is one of our favourite measures of equity market sentiment along with average stock prices. Most people would call this a bullish chart (higher highs and higher lows).
     
     

    Investment grade bonds are also continuing this trend. We expect to see the odd weakness here and there; these are just normal trading pattern. Should this weakness continue then we would re-appraise our outlook.
     
     

    The behaviour of the Goldman Sachs commodity ETF is self-explanatory. The sideways momentum looks finally to have been breach by a move to the upside.
     
     

    We expect more positive suprises in the up coming economic releases concerning real estate. Time for short-term sentiment traders to do their thing. Long term we think there is still excellent value in this sector.



    USD is continuing its trend in a very consistent manner. A cynic may suspect that this is a deliberate action, still no panic selling apparently. Each day this continues it gets harder and harder to believe public utterances of the US Treasury and the Fed. Our AUDUSD, CADUSD, & NZDUSD positions will remain open for quite a while it seems (may we also recommend AUDJPY).
     
     

    This is kind of trading environment that we like; strong trends in place.

    Three fingers of Talisker tonight!
     
    Disclosure: Long VTI GSG IYR AGG TBT UDN
    Themes: US Macro Trends
Back To Thomas MacLeod's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

This post has 3 comments:

  •  
    This has one of the best titles for a stock market article ever!
    2009 Oct 19 04:58 AM Reply
  •  
    Agreed, was telling ofc pals same thing, but only fellow LOTR fans dig it.


    On Oct 19 04:58 AM David Jackson wrote:

    > This has one of the best titles for a stock market article ever!
    2009 Oct 19 05:49 AM Reply
  •  
    However, I do think "QE or Not QE" was also pretty good for an article on Bank of England quantitative easy policy. Best Forex title?
    2009 Oct 19 05:51 AM Reply
Full index of posts »
Latest Followers
Posts by Ticker
ACI, AGG, BTU, CEW, COW, DBA, DBB, DBC, DBV, EEM, EOD, EWT, EWZ, FHN, FNF, FXA, FXI, GLD, GOLD, GSG, GWX, HAO, HCBK, ICN, IWM, IYR, JJG, JNK, KBE, KBH, KBW, KOL, KRE, MDY, MOO, NYB, OIH, PHH, RYL, SEA, SLV, SLX, TAO, TBT, TIP, UDN, UNG, USD, UST, VTI,

Latest Comments


Most Commented
  1. Five Charts to Rule Them All (3 Comments)
  2. Shipping Stocks Ignored by the Seeking Alpha Massive (2 Comments)
  3. Take a deep breath - The USD Index is definately not on a "high" (1 Comment)
  4. Equity Market Bears Take Careful Note of the Chinese Stock Market (1 Comment)
  5. The Consequences of the US Monetary Base Bubble (1 Comment)
Posts by Themes
Banks, Bond Markets, Chinese Equities, Chinese Stock Market, Coal Stocks, Commodities, COMMODITIES, Commodities Currencies, Commodities Inflation, Commodities Risk, Commodity market direction, Corporate Bonds, CRUDE, Currencies, Currencies Commodities, Emerging Market Currencies, Emerging Markets, Energy, Equities, Equities Shipping, Equity Market Direction, Gold, grains, hogs, Home Buliders, homebuilders, Inflation, inflation commodities, Macro market trends, Macro Market Trends, Market Overview, natural gas, Natural Gas, oil and gas services, Pipelines, Real Estate, Real Estate Sector, regional banks, Shipping, shipping, Shipping Commodities, Shipping Stocks, Small Caps, Trade ideas shipping, Treasuries, US Dollar, US Financial Market Overview, US Financial Markets, US Macro Market Trends, US Macro Trends,
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.