Looking For A Final Uptick In Equity Futures, Before Following The 10Yr Yield Lower: We Exit Long Hedges If That Happens, And Reset Lower
Asset class modeling, Macro analyst, Bonds & Equities, Currencies & Commodities
Seeking Alpha Analyst Since 2011
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.
DECEMBER 22, 2012
ASIAN SESSION BRIEF:
THE 10YR YIELD HAS LIKELY TOPPED IN THIS TRADING CYCLE; EXPECT THE EQUITIY FUTURES TO FOLLOW LOWER, AFTER A BRIEF LAG
This is how we see the 10Yr Yield testing its top later in Europe.
With that, RTYH2 will probably make a hew high in this rally cycle.
But if the RTY makes a new higher high, while the 10Yr does not, its time to exit the long hedges, hopefully with some nominal profits.
Models say we are still due one last sell-off in equities (rise in VIX), with a new low recalibrated to December 29, from the 30th.
DECEMBER 22, 2021
EUROPE SESSION BRIEF:
LOOKING FOR A FINAL UPTICK IN EQUITY FUTURES, BEFORE FOLLOWING THE 10YR YIELD LOWER; WE WILL EXIT LONG HEDGES IF THAT HAPPENS, AND RESET LOWER
This is how we see this rally developing and ending -- which could signify the end of the rally.
This may the route that the 10Yr Yield takes, and peaks afterwards.
Yield and equity futures are still trading positively this morning, and should stay that way for the day. Gold is trading negatively with yields at this points.
Mr. TK is a twitter with these two charts below. The one immediately below shows that gold price (probably via DXY and liquidity levels) tends to rise when Bank Reserves are generally rising -- immediately apparent from looking at Gold's performance after QE started. If gold performance follows our forward looking model of Bank Reserve growth, then it just needs a little more gold decline over the next two to three weeks to find a bottom.
That completes a triangle-like sideways pattern in Gold's evolution, followed by a sharp take off sometime in January 2022.
Given the info from these constructs, we reset our short Gold hedges (which should follow equities lower, if equities fall, as we expect), after the current gold (and equities) uptick and subsequent decline.
If all of the above are true, then might be just looking at a small upside correction before Gold prices get hammered again.
Therefore we make provisions to reset the short gold hedges (plus overhedges) if the prices start dropping fast -- which may happen if equitie also fall, along with the Yield.
Looks like the Yield may do one more uptick before turning lower -- a test of the top. This should cause a final uptick in the equity futures, as well.
This will probably finalize the uptick in the futures and could be followed by a retracement of the five wave sequences-- at least 38.2 pct of the rally from yesterday. We reassess whether or not to reset the long hedges at that time. We will also put a contigent long hedge ABOVE the top of the final rally -- just in case, after we have exited the long hedges.
You don't have to do these long hedge trades with us. If you value the peace of mind of the long hedge (if you are hedged), then you can ignore our moves. That or if you prefer to do somethng else. Your choices -- always.
Trade boys suggested that instead of using the yield, which seems to be not synched with the futures today, to use the ESH2 levels instead.
I think GC is frontrunning a new rally in the equity futures, and so GC could go higher.
We will continue with the updates as we go along.
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