(February 5, 2021): Looking For A Sharp Rally To A Peak In Yields, Equities; Short-Term Rates Front-Ran The Fall In U.S. Debt Issuance
Summary
- Mr.TK pointed out we still have from 3 to 5 trading days before yields may keel over. And then we assume that the equities will lag behind by 2-3 days.
- If we still have 3 to trading days of rising yields, it may be that we are looking at 1.23 - 1.25 as target for the 10yr yield.
- Therefore we can have long equity scalpers and let them run for the next 3 to 5 tradings days. That we do with long scalpers in the four major indexes.
- Short term rates are collapsing, anticipating significant reduction of Treasury issuance over the rest of the year. Short-term rates are front-running an imminent liquidity drought and fall in TCB as the Treasury reduces debt issuance. Historically, the TCB should start declining from this week to the end of March.
- There is a positive comovement between equity prices vs central bank-provided systemic liquidity. Under this measure, global equities are soon topping out and may decline until end of May.
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PAM's flagship Swing Portfolio, year-to-date (December 31, 2020) delivered $100, 181,522.77 net profit on $11,172,813 margin capital.
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January 2021 spreadsheet here:
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FEBRUARY 5, 2021
GOOD AFTERNOON ASIA / GOOD EVENING WEST COAST
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 7:48 AM
Mr. TK pointed out that we still have from 3 to 5 trading days before the yields may keel over. And then we assume that the equities will lag behind by a day or two before topping out. So he suggested to look for a long/extended Wave 3 in a sequence of five, as in the illustration below (wave 3 is thick red line).
That looks very reasonable in the YM, above. That EWP also applies to the ES too, below.
The RTY has a somewhat different variation, but the theme is that the market is probably in an extended wave 3 situation. If it is, then we may need to keep the trades on, for longer, until we get to the end of an extended wave 3.
We still have a few trading days (3 to 5 ) to an SPX optimal top;
Its the same outlook of 3 to 5 to a yield optimal top as well. Watch for the behavior of the 2020 . 2021 TCB (purple line).
GOOD AFTERNOON EUROPE
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 12:30 PM
If we still have 3 to trading days of rising yields, it may be that we are looking at 1,23 - 1.25 as target for the 10yr yield.
Then it may be that we will see the next five wave sequence like that illustrated below in the ES
What this mean is that timing may not be as crucial until the run-up is over.
*Therefore we can have long scalpers and let them run for the next 3 to 5 tradings days. That we will do with a set of small long scalpers across the board.*
*it is just a matter of timing the entry, before NY opens today.*
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 12:55 PM
all PAM BUYS 144 OF RTYH1 AT 2217 LIMIT OR BETTER, OR AT BREACH OF 2222, OCO -- ALL FUNDS
all PAM BUYS 144 OF ESH1 AT 3881 LIMIT OR BETTER, OR AT BREACH OF 3885, OCO -- ALL FUNDS
all PAM BUYS 144 OF YMH1 AT 31,082 LIMIT OR BETTER, OR AT BREACH OF 31,110, OCO -- ALL FUNDS
all PAM BUYS 144 OF nqH1 AT 13588 LIMIT OR BETTER, OR AT BREACH OF 13600, OCO -- ALL FUNDS
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 1:48 PM
PAM BUYS 144 OF NQH1 AT 13588 LIMIT OR BETTER, OR AT BREACH OF 13600, OCO
*This order was filled.*
*NQH1 -- DONE AT 13,601.75 BOUGHT 144 CONTRACTS NQH1 FOR ALL FUNDS.*
PAM BUYS 144 OF RTYH1 AT 2217 LIMIT OR BETTER, OR AT BREACH OF 2222, OCO
*This order was filled.*
*RTYH1 -- DONE AT BETTER 2215.70 BOUGHT 144 CONTRACTS RTYH1 FOR ALL FUNDS.*
PAM BUYS 144 OF YMH1 AT 31,082 LIMIT OR BETTER, OR AT BREACH OF 31,110, OCO
*This order was filled.*
*YMH1 -- DONE AT 31,080 BOUGHT 144 CONTRACTS YMH1 FOR ALL FUNDS.*
PAM BUYS 144 OF ESH1 AT 3881 LIMIT OR BETTER, OR AT BREACH OF 3885, OCO
*This order was filled.*
*ESH1 -- DONE AT 3881 BOUGHT 144 CONTRACTS ESH1 FOR ALL FUNDS.*
10xx6dbFeb 5, 2021 2:02 PM
Good afternoon, Swiss time, Robert. I am on NYT. Thank you for your explanation of PAM's change in trading patterns in the December time frame. I did noticed a substantial increase in the number of contracts you were trading in December. I also noticed from your standard and one contract model spreadsheets that most of the profits are made trading ES, RTY, NQ, and YM. Therefore I am not doing bonds or GC with my one contract trading, only those four.
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 2:08 PM
You will not miss much specializing on equity futures at the start 10xx. Learn to trade this asset first before tackling the others. That's a good approach.
flytightFeb 5, 2021 2:26 PM
Robert I am in Robert. Bought NQ this morning. I am with you Mate
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 2:28 PM
Good luck to us
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 2:58 PM
WTH?? -- games being played in the bond market.
john.derFeb 5, 2021 5:33 PM
5yr bond futures actually did a full 50% retrace on that move from the beginning of the decline. I used it as an opportunity to short ZB (30yr) again as I had exited my short position too soon. ... could get one more leg down in rates for 10yr to do a 50% retrace. Let's see.
robert.p.balanFeb 5, 2021 5:34 PM
I really think we could see 1.23 - 1.25 again John.
john.derFeb 5, 2021 5:35 PM
I was thinking a retrace would happen and got long 5yr. So, in a steepener trade now with short 30yr and long 5yr. Will let the short 30yr's go next week on your guidance should the above transpire.
If there is a bigger retrace in rates today or Monday I'll just take profits on the 5yr longs.
robert.p.balanFeb 5, 2021 5:37 PM
Lets hope it goes as expected
ippy04Feb 5, 2021 3:02 PM
NFP jobs Friday this am...
gwizz1Feb 5, 2021 3:03 PM
Yields almost the same level as the March 2020 spike.
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 3:54 PM
all PAM BUYS ANOTHER 144 OF RTYH1 AT 2213 LIMIT OR BETTER, OR AT BREACH OF 2220, OCO -- ALL FUNDS
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 4:24 PM
PAM BUYS ANOTHER 144 OF RTYH1 AT 2213 LIMIT OR BETTER, OR AT BREACH OF 2220, OCO
*This order was filled.*
*RTYH1 -- DONE AT 2213 BOUGHT ANOTHER 144 CONTRACTS RTYH1 FOR ALL FUNDS.*
We posted this yesterday . . . . time to make an update. Where are we in this EWP wave scheme?
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 6:39 PM
Orange oval marks the spot, the best EWP fit I can find.
stecbeckFeb 5, 2021 10:08 PM
Have a nice weekend
rickyman94Feb 5, 2021 10:09 PM
Have a great weekend RB!
Scott007Feb 5, 2021 10:10 PM
Great weekend RB. Sunday night for continuation!!!!
robert.p.balanModeratorLeaderOwnerFeb 5, 2021 10:12 PM
I will see you Gals/Guys in Asia Monday. GM everyone-
centexlifeFeb 5, 2021 10:13 PM
Wouldn’t be without PAM Sunday.
flytightFeb 5, 2021 10:16 PM
Robert Exciting day Robert. I see I am going to enjoy trading Futures. Found your information and charts most helpful today. Well for my first futures trade, at least I finished in the green. Cheers
jcaldeiraFeb 5, 2021 10:27 PM
Nice weekend Robert and all PAM community. Excellent trades as always.
10xx6dbFeb 5, 2021 10:36 PM
Have a great weekend, Robert. I mirrored your trades today with one contract for each of your 144 contract trades. As of now I am up $2200 for the day. Amazing.
flytightFeb 5, 2021 10:16 PM
Thank you, thank you. Taking a bow.....
But I need help with the question I posted above
nanobrainFeb 6, 2021 11:53 PM
Google is your friend @flytight. Read this: https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA101284.pdf
12645731Feb 7, 2021 3:39 PM
The TMF sale will take 3 days to clear to cash useful for futures margin. There are different internal rules at different brokers and clearing firm arrangements. Stock buying power may not be futures buying power etc. I have TDA account to get TOS
nick.88Feb 5, 2021 9:27 PM
robert.p.balan short term, 3month yields hitting a new low, even though already compressed, while 10yr yields continue to increase. Do you find the short end is most sensitive to liquidity? and so could be warning about the liquidity issues coming up?
robert.p.balanModeratorLeaderOwnerFeb 7, 2021 8:20 PM
nick - You asked. "short term, 3month yields hitting a new low, even though already compressed, while 10yr yields continue to increase. Do you find the short end is most sensitive to liquidity? and so could be warning about the liquidity issues coming up?"
Yes, absolutely. Short term rates are collapsing anticipating significant reduction of Treasury issuance over the rest of the year. For details, follow this link.
This is the impact on Treasury borrowing in the Q1 2021 quarter:
We are seeing in the past several days, that short-term rates are front-running an imminent liquidity drought and a decline in current TCB levels, as the Treasury reduces debt issuance.
Historically, the TCB should start declining from this week to the end of March.
plavacFeb 6, 2021 9:30 PM
Morgan Stanley has the same chart as Robert with Balance sheet of G4, falling hard.
Morgan Stanley: Emerging Markets have peaked | The Market Ear
Morgan Stanley: Emerging Markets have peaked
MS EM Strategy team increased their bearish tone this week and gave a number of reasons why we have seen high for the year in EM equities. Copper prices correcting, G4 balance sheets growth peaking next month, EM earnings revisions showing signs of stalling out. China’s liquidity indicators showing major drop off in growth and Korea’s outperformance vs EM peaking on Jan 11 were some...
robert.p.balanModeratorLeaderOwnerFeb 7, 2021 8:32 PM
plavac -- "Morgan Stanley has the same chart as Robert with Balance sheet of G4, falling hard."
There`s positive comovement between equity prices vs central bank-provided systemic liquidity.
Under this measure, global equities are topping out.
See u later tonight in Asian trade (Monday morning).
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