Market Report/Chat Comments (July 10, 2020): PAM Community Getting Set For An Equity Rally To A Seasonal Liquidity Flows Peak In Two To Three Weeks

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robert.p.balanModeratorLeaderOwnerJul 10, 2020 4:55 AM

GOOD MORNING ASIA / GOOD EVENING USA

July 10, 2020

robert.p.balanModeratorLeaderOwnerJul 10, 2020 5:00 AM

Interesting development in yields versus historical data and seasonality. Barring a lower NY close in yields today, the next several days should have the yields higher relative to the close in NY yesterday (Thursday).

I take that as positive for equities.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 5:06 AM

The top of the 5yr average in SPX is still 4 to 6 Trading Days away.

1 replyJuly 10, 2020 8:38 AM

robert.p.balanModeratorLeaderOwnerJul 10, 2020 5:09 AM

We see the same situation in the NDX

robert.p.balanModeratorLeaderOwnerJul 10, 2020 5:12 AM

Four to 6 tradings days to a top in the 5yr average is the main outlook here as well.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 5:16 AM

Same analytical platform but applied to NDX -- the same outlook of 4 to 6 TDs before the 5yr average peaks.

Those looking for more substantial declines hoping the so-called "double bottom" extends further, will likely be disappointed. The market provided us the chance to exit short positions yesterday. If you failed to do that, you may have to ride your short positions for several days longer -- or you hedge.

The key data to watch are the yields. Rising yields will add extra kick to the rise in equities. Falling yields have asymmetrical effect -- equities may or may not decline alongside sliding yields.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 5:24 AM

And yields are likely to rise over the next 2 to 3 days at least.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 5:26 AM

On balance, equity futures will likely rise later in the trading day -- the current consolidation phase is almost over.

stecbeckJul 10, 2020 5:27 AM

thank you Robert

robert.p.balanModeratorLeaderOwnerJul 10, 2020 5:29 AM

GN for now -- see you in Europe trade in a few hours. Ciao.

welcome Gail

stompalotJul 10, 2020 5:30 AM

Thanks Robert

Re; The top of the 5yr average in SPX is still 4 to 6 Tradings away.

Thank you for this clarity, Robert. One more question, a few weeks back you were expecting a rocket up in equities in the latter part of July. With the current liquidity prediction, are we trending away from that thought?

robert.p.balanModeratorLeaderOwnerJul 10, 2020 10:39 AM

.eatmorewalnuts EMW -- show me exactly when I made this forecast. But you are probably taking it from earlier iteration of this model.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 10:43 AM

Market tops are very diffuse -- the 5yr average of SPX shows a double top. Can still happen. But I am making a trading call, not a vague forecast. I will not count on a double top when the time comes to take some profits. I will take profits as indicated, and if the second top is trade-able, I will trade it long again.

welcome stomp

robert.p.balanModeratorLeaderOwnerJul 10, 2020 11:17 AM

Yields falling now . . .

and bond futures are soaring.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 11:22 AM

Since June 15, equities and yields have been going the opposite way.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 11:42 AM

Falling yields vs rising equities . . . . this comes in the wake of great demand for US govt securities from foreign central banks

robert.p.balanModeratorLeaderOwnerJul 10, 2020 11:48 AM

This divergence actually started in 2014.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 12:15 PM

I said PAM will hold the long TNU0 bond futures for several more weeks, but there is risk of higher yields over the next several days. What we do is exit the long bond futures, and will reinstate them after a decent pullback.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 12:20 PM

all PAM SELLS 96 CONTRACTS TNU0 FOR ALL FUNDS. XXX HAS TO TAKE THIS INTO THE JOINT ACCT AT THIS TIME OF THE TRADING DAY SO AS NOT TO GET A BAD FILL.

TNU0 -- DONE AT 158-17.5 SOLD 96 CONTRACTS FOR ALL FUNDS.

freer7Jul 10, 2020 12:23 PM

Very opportunistic Robert!

jdefpJul 10, 2020 12:24 PM

Good morning, Robert. Do you have an updated EWT outlook for yields given the recent move? Thank you.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 12:40 PM

John -- I would trust the liquidity seasonality than an EWP wave count in yields/etfs.

jdefpJul 10, 2020 12:44 PM

OK. Fair enough. Thanks.

centexlifeJul 10, 2020 1:45 PM

Any interest in adding to GC and/or NQ on pull backs, ie, BTFD?

robert.p.balanModeratorLeaderOwnerJul 10, 2020 1:54 PM

Tex -- yes by all meâns.

god599 also asked the same question somewhere, and I replied in the affirmative.

flytightJul 10, 2020 1:56 PM

robert.p.balan Good morning Robert. Quiet night I see. Your roadmap this morning is perfectly clear. No questions required. Cheers

robert.p.balanModeratorLeaderOwnerJul 10, 2020 1:57 PM

Just to give this issue closure -- xxxxxx indeed did not subscribe after the two-week trial despite what he claimed. Access terminated -- case closed. Thank you all for your patience.

Fortunately, there will be no more free trial subs by August 1.

timothy.r.kiserJul 10, 2020 4:10 PM

He said that I only picked on him about posting in PAM. The community really did a good job in handling him. Thanks to all.

Scott007Jul 10, 2020 4:13 PM

Smart move. Trial not needed. Actually I world like to see you limit number of new clients. Boards get a little busy. But that's just my opinion

robert.p.balanJul 10, 2020 4:15 PM

Absolutely right Scotty.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 2:12 PM

GM FT -- well and good

ptTL9Jul 10, 2020 2:23 PM

GM Robert, do you still have TZA sell order open? What is the reason behind keeping SQQQ?

robert.p.balanModeratorLeaderOwnerJul 10, 2020 2:27 PM

Accountant did a reconciliation with XXX -- orders not executed.

ptTL9Jul 10, 2020 2:28 PM

robert.p.balan hope you get your fill soon

robert.p.balanModeratorLeaderOwnerJul 10, 2020 2:29 PM

after several TDs, yes hopefully.

I was too greedy.

jdefpJul 10, 2020 2:40 PM

Here comes NQ and rates.

.eatmorewalnutsJul 10, 2020 3:37 PM

No worries, at this point it was probably a month ago, and yes, based on an older version of the chart I believe. I'm not going to worry about digging it up. Appreciate your clarification

robert.p.balanModeratorLeaderOwnerJul 10, 2020 3:58 PM

RTY beating the competition, even NQ.

yunengJul 10, 2020 4:15 PM

That's really a big surprise. I can't find a reason to explain it.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 4:16 PM

Market Erases Entire Remdesivir Headline Rally

jdefpJul 10, 2020 6:12 PM

Great call on closing TN longs, Robert. Beginning to look like rates are going to hue as anticipated.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 6:36 PM

Thanks John.

wisesunJul 10, 2020 6:37 PM

is there a chance for yield to go back to 0.65% in next few TD?

robert.p.balanModeratorLeaderOwnerJul 10, 2020 6:40 PM

robert.p.balanModeratorLeaderOwnerJul 10, 2020 6:41 PM

Yield target could even be 0.70s if the historical data calls the shots, again.

wisesunJul 10, 2020 6:45 PM

thanks

robert.p.balanModeratorLeaderOwnerJul 10, 2020 6:47 PM

all PAMS BUYS 48 CONTRACTS OF RTYU0 AT 1404. LIMIT OR BETTER, FOR ALL FUNDS

Scott007Jul 10, 2020 7:00 PM

i love this chart. its all i really focus on lately.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 7:17 PM

PAMS BUYS 48 CONTRACTS OF RTYU0 AT 1404. LIMIT OR BETTER, FOR ALL FUNDS

MODIFY THIS TO:

all PAMS BUYS 96 (FROM 48) CONTRACTS OF RTYU0 AT 1404. LIMIT OR BETTER,

OR AT BREACH OF 1420,OCO, GTC, FOR ALL FUNDS.

flytightJul 10, 2020 9:09 PM

robert.p.balan Are you watching TQQQ. It is at the top of its rising wedge and should break out nicely.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 9:36 PM

I watch NQ

stecbeckJul 10, 2020 9:46 PM

robert.p.balan thanks for an awesome week and have a nice weekend

robert.p.balanModeratorLeaderOwnerJul 10, 2020 9:46 PM

Thanks Gail

centexlifeJul 10, 2020 9:48 PM

Thank you Robert from a new annual member ... better than Shiner Beer.

2 repliesJuly 10, 2020 9:52 PM

jdefpJul 10, 2020 9:48 PM

LOL!

Ah you Texans...

robert.p.balanModeratorLeaderOwnerJul 10, 2020 9:49 PM

This straight line rally will be retraced. We will trim some and put it BACK LATER IN ASIA ON MONDAY. GTC

ptTL9Jul 10, 2020 9:50 PM

Dear Robert, thank you so much for your dedication and commitment to PAM, you are an inspiration, it is due to your hard work that we are all able to continue learning and improving. Please be safe and well!!

Great weekend to you and everyone at PAM!

robert.p.balanModeratorLeaderOwnerJul 10, 2020 9:50 PM

Thanks for kind sentiments Rita. God bless, and hoping you get the results you are aiming for.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 9:50 PM

all PAM SELLS 144 CONTRACTS NQU0 AT 10850 (FROM 10825) LIMIT OR BETTER, FOR ALL FUNDS. GTC,

.eatmorewalnutsJul 10, 2020 10:01 PM

Sold at 10825. Missed the edit.

robert.p.balanJul 10, 2020 10:03 PM

no problem Mr. Walnut Farmer -- that opportunity loss was peanuts for you.

god599Jul 10, 2020 10:04 PM

Also, Robert is only selling approximately 25% of his NQ holdings.Hope you also did the same thing

.eatmorewalnutsJul 10, 2020 10:08 PM

Trust me, I'm not complaining about taking profits.

user.52221690Jul 10, 2020 10:37 PM

Hi Robert, can I ask why you are selling part of your long NQ?

robert.p.balanJul 10, 2020 10:42 PM

user.52221690

"This straightline rally will be retraced. We will trim some and put it BACK LATER IN aSIA ON MONDAY. "

Just squeezing more juice from the long trade. And making sure some paper has been turned into dollars.

sparketJul 10, 2020 9:52 PM

Shiner is tough to beat! Thanks RB for another great week.

hpwave535Jul 10, 2020 9:52 PM

Robert, this week was personally a masterclass for me. I was able to capture 60% profit on my overall capital!! The call on the double bottom and then the subsequent bounce was phenomenal. Cannot express my gratitude in words. Thank you and have a great weekend

robert.p.balanModeratorLeaderOwnerJul 10, 2020 9:52 PM

YOU ARE WELCOME HP

AND EVERYONE, AS WELL.

Scott007Jul 10, 2020 9:54 PM

great week RB....one of the best. love those charts...safe and happy WE

sidaaronJul 10, 2020 9:56 PM

Thank you from me as well Robert. You're are a trading wizard, and I'm learning and growing my account. Much gratitude to you

robert.p.balanModeratorLeaderOwnerJul 10, 2020 9:59 PM

Welcome sid -- nice weekend to you and all

god599Jul 10, 2020 10:01 PM

power to you Robert! keep rocking. locked in some nice profits on NQ

jking3683Jul 10, 2020 10:01 PM

Two thumbs up for robert.p.balan . The call for the double bottom was awesome !!!

robert.p.balanJul 10, 2020 10:03 PM

all PAM SELLS 144 CONTRACTS NQU0 AT 10850 (FROM 10825) LIMIT OR BETTER, FOR ALL FUNDS. GTC,

stompalotJul 10, 2020 10:05 PM

Robert, thank you for a great week. I appreciate you, Tim, PAM, and the PAM members for all your efforts. Have a great weekend!

robert.p.balanModeratorLeaderOwnerJul 10, 2020 10:07 PM

you too stomp. take care.

mbritoJul 10, 2020 10:07 PM

Have s nice weekend Robert. Take care.

lbin3815Jul 10, 2020 10:09 PM

Robert, what are your thoughts about GC position?

flytightJul 10, 2020 10:11 PM

Robert A great way to end another superb week Robert. I hope you are enjoying what you have sowed. I know we are forever grateful. Cheers Robert.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 10:13 PM

lbin3815

robert.p.balanModeratorLeaderOwnerJul 10, 2020 10:14 PM

Adding to GC longs on Monday in Asia

flytight - thanks for the nice compliment, friend.

federergoatJul 10, 2020 10:15 PM

Hey Robert, is there a way to confirm whether gold is in the heart of wave3 or not?

robert.p.balanModeratorLeaderOwnerJul 10, 2020 10:16 PM

Maybe that is what it is FG. We are completing wave 3, and then wave 5 completes in 4 to 6 TDs, like the equities

Very observant federergoat

Gold and equities should peak almost together --- my thesis -- GC will peak earlier than SPX or NDX

gpbowen24Jul 10, 2020 10:24 PM

Another great week and 7TDs this month. Many thanks. Robert et all have a great weekend. !

robert.p.balanModeratorLeaderOwnerJul 10, 2020 10:25 PM

You too GP and welcome

all PAM SELLS 144 CONTRACTS NQU0 AT 10850 (FROM 10825) LIMIT OR BETTER, FOR ALL FUNDS. GTC,

robert.p.balanModeratorLeaderOwnerJul 10, 2020 10:52 PM

RTYU0 -- DONE AT 1421.15 BOUGHT 96 CONTRACTS OF RTYU0 FOR ALL FUNDS.

federergoatJul 10, 2020 10:54 PM

Hey Robert, if you still have time, I would like to ask whether the intermediate top we are projecting next week should be follow by a period of substantial decline or not?

robert.p.balanModeratorLeaderOwnerJul 10, 2020 10:57 PM

GC has been positively coupled with equities lately. If equities sell off in late July untiö late August or early September, I believe Gold will also suffer.

But you'll never know -- you can never trust these relationships for very long.

user.52221690Jul 10, 2020 11:04 PM

For gold it might also depend on the severity of the equity decline? Robert are we expecting some major drop in markets, of the order of at least 5%?

I guess correlation equity/gold in that case might increase as usual during stress

jdefpJul 10, 2020 11:07 PM

Today looked like gold might have latched onto its historical favorite. Yields.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 11:08 PM

user.5222169

robert.p.balanModeratorLeaderOwnerJul 10, 2020 11:09 PM

look how sharp the fall in liquidity outflows are (light blue) .. the negative impact on equities could be very large.

user.52221690Jul 10, 2020 11:15 PM

True that. I guess there is potential to go even lower than March's lows?

robert.p.balanModeratorLeaderOwnerJul 10, 2020 11:19 PM

I was suggesting (hoping) that this large sell'off will make the first PAM millionaires. The Bossman has doubled the margin guarantee to $4 million if we need to use it -- we might just may need it. We actually do not need it -- we are already up almost $6million during the first two weeks of July. We could be flogging 1,000 plus short contracts if we believe this grand sell off has a good chance happening.

12645731Jul 10, 2020 11:21 PM

So you are not concerned that the decline is mostly in swaps ? That is a foreign exchange channel which is not directly funding equities ?

robert.p.balanModeratorLeaderOwnerJul 10, 2020 11:22 PM

The large decline in repos is very damaging. These TOMOs are mainstays in the creation of bank reserves which are falling sharply as well (light green line in the chart above).

12645731Jul 10, 2020 11:22 PM

Yes , ty

user.52221690Jul 10, 2020 11:32 PM

I guess for those more undercapitalized the best strategy would be to start buying OTM options during the next week, if the markets keep rising, so that we can position ourselves for the decline starting after the OPEX week with relatively little capital outlay and bit potential (both delta and vega)

15 repliesJuly 11, 2020 1:36 PM

robert.p.balanModeratorLeaderOwnerJul 10, 2020 11:39 PM

That is what RM13 has been saying as well.

I guess for those more undercapitalized the best strategy would be to start buying OTM options during the next week, if the markets keep rising, so that we can position ourselves for the decline starting after the OPEX week with relatively little capital outlay and bit potential (both delta and vega)

god599Jul 10, 2020 11:44 PM

OTM puts for the late July decline you mean?

centexlifeJul 10, 2020 11:45 PM

I would go longer dated. Who the heck has perfect foresight.

user.52221690Jul 10, 2020 11:46 PM

I guess at least Aug expiry

But if the market declines hard it's better to have more Vega, so maybe I will go for Sept expiry

centexlifeJul 10, 2020 11:48 PM

And with the fed buying equities do not exaggerate the down draft.

12645731Jul 10, 2020 11:51 PM

The Fed wants Congress to permission buying of equities and thus absolve them of the equity futures purchases thru JPM since 1987 so they may let it slide to scare everybody into submission.

robert.p.balanModeratorLeaderOwnerJul 10, 2020 11:51 PM

There is a very high bar for the Fed to start buying equities. I am almost sure that will not happen -- too much political exposure for the Fed to do that.

MARKETS CLOSED