Market Report And Chat Posts (Sept. 1, 2020): Exiting All Long Equities, Prepping For A Large Yield Fall, Along With Equities And Gold

Summary

• We got some sort of lift off in equities, but it's looking malevolent. We must be prepared to see lower equities, yields and lower GC as well (for few days).
• This means that we should be offloading some of our new equity longs, if not exit all of them altogether, including the all residual longs. Prepare to short bond futures.
• What we do is to fully exit equities-- if the sell-off does not happen, we will know it not too long after. So we can always reinstate longs as warranted.
• That next sell-off will probably bring the RTY to a test of its recent 1543 lows. So far we see no evidence that the continuation of the correction phase will extend beyond that. But just the same we lower the level of the general hedge to say, 1520 from 1530, just to make sure wayward volatility will not trigger the general long hedge prematurely.
• As I said, the mini seasonality of TCB and 5yr average of yields show high likelihood of falling yields in the next few days. Equities have risen, even as yields were falling. But if yields fall further, equities have to give way. However, PAM will not be shorting this time. The divergence gives troublesome clues. Let's give the TCB models the benefit of the doubt -- yields and equities will likely fall.

Robert P. Balan runs Predictive Analytic Models, #1-rated trading unit at Seeking Alpha. PAM trades Swiss HF funds using Federal Reserve, US Treasury, and term (money) market liquidity data flows as basis for trading decisions. He is domiciled in Zurich, Switzerland.

Robert Balan has 5 decades of experience in the financial markets. Education in Mining Engineering, Computer Science & Engineering, M.S in Quantitative Finance, and training in Economics led to a commodity analysis career during the commodity boom of the early 1970s. Robert made a switch to global macro focus in the early 1980 when the commodity bull market waned, with specialization in foreign exchange. Robert wrote a very high profile daily FX analysis while Geneva-based (Lloyds Bank Int'l) in the mid-1980s (the first FX commentary with a real global readership, "most accessed" in the Reuters and Telerate networks from 1988 to 1994).

He worked for Swiss Bank Corp and Union Bank of Switzerland (precursors of today's new UBS) as head of technical research in various finance centers (London, New York, and subsequently, head of prop trading at SBC in Toronto ) from the late 1980s to mid-1990s. A stint at Bank of America as head of global technical research followed in late 1990s to the early 2000s. 

Robert returned to Switzerland in 2004 as head of technical research and strategy, and FX market analyst for Swiss Life Asset Management in Zurich. Robert wrote FX analysis and capital markets commentary for Saxo Bank (Denmark) in the early 2000s. He joined Diapason Commodities Management (CH) in Lausanne in 2008 as senior market strategist, and subsequently Chief Market Strategist, utilizing fundamental macroeconomic drivers and structural/technical data in modeling asset price and sector movements. 

Robert wrote a book on the Elliott Wave Principle in 1988, which has been hailed by the London Society of Technical Analysts as best ever book written on the subject. Robert is a member of the National Association for Business Economics (NABE), U.S.A.