Top? Have we found one? Perhaps. Doubt it. This week is the 1yr anniversary of the pandemic crash, how endearing for the market to be serving up losses this morning. None of this matters to me, we’re going to continue to look for oversold pull backs to buy for now – as we remain in Scenario 2.
I’m not in the business of calling tops and bottoms, I used to think I was that smart…and believe me, that’s not a good approach. More money has been lost betting against this market vs. money lost during the drawdown periods. Tops are processes, not exact points in time. If this 12 month market melt-up is coming to a halt for the intermediate period, there’s going to be plenty of dips to be bought and rally’s to be sold along the way the Scenario 4 in the back half of the year. And to be perfectly honest, even to be discussing a market “top” is an arrogant thought to be holding at the moment. Continue to look for oversold levels to position for long side trades remains our call.
SPY -2.5% correction off the top, NQ -6.8% from peak to trough this morning, and the Russell 2000 -4% off the top. Here’s some perspective, The SPY is +82%, NQ +109%, RTY +144% on a y/y basis. So today is not the day to hem and haw over a correction. We remain bullish.
Not much to discuss here, 1.37% and at the top of the range. No movement either with this mini stock correction. Most of you have noticed I’ve reduced our position significantly here, whether this is the right move or not, a lot of money has been made in this call so I’ll make no apologies. I do think we’ll have another opportunity to gross up this position in the spring. Yields remain bullish trend, and will likely remain bullish trend through the first half of this year (and may hold bullish trend throughout the rest of the year despite a Scenario 4 outlook coming in 2H2021, we’ll see).
So stocks slide, and the Dollar catches a bid. Makes perfect sense within our positioning model. The fact was, the dollar tapped the low end of the range yesterday and was immediate OS. We’ll see if our call of the USD making an intermediate-term “bottom” is correct or not. For now, we’ll continue to look for OB rally’s to sell into.
Corrections in commodities have been few and far between. I shouldn’t have to call out market levels on a daily basis here, you know what’s going on. You have to capitalize on the correction days when they come along. Natural Gas prices look intriguing here….
*Jay Powell at 9am CST
*Consumer Confidence due at 9am CST
Don’t front run me, wait for the signal
|Market||Trend||Range Low||Range High||Notes|
|SP500||Bullish||3852||3938||Going to open immediate OS off the open today with bullish momentum|
|Nasdaq 100||Bullish||13,246||12,919||Momentum is “neutralizing” – immediate OS|
|Russell 2000||Bullish||2206||2293||Nearing immediate OS, bullish momentum remains intact|
|10yr Yield||Bullish||1.20%||1.37%||up 10bps last week in the 10yr. With more fiscal stim to be voted on next week, what’s going to stop this? D3|
|VIX||Bearish||21.76||25.48||Still bearish trend/top of the range|
|Oil||Bullish||57.27||62.64||caught in the upper half of the range|
|Gold||Bearish||1772||1824||Bouncing within it’s bearish trend, will likely be a short trade from the top of its range|
|USD (Cash)||Bearish||89.93||90.96||Bounce off of the low end yesterday. Stocks correct, Dollar corrects higher|
|EUR/USD||Bullish||1.2004||1.2184||Immediate OB yesterday, may have another leg lower coming.|
|Bitcoin Futures||Bullish||43,108||57,322||BTC getting some immediate-term negative press about price valuation has us correcting today|
These are proprietary trading ranges from RJO Futures. They are calculated by a customized standard deviation tool.
Originally Posted on February 23, 2021 – Market Outlook: Feb. 23, 2021
Disclosure: RJO Futures
The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.
Disclosure: Interactive Brokers
Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from RJO Futures and is being posted with permission from RJO Futures. The views expressed in this material are solely those of the author and/or RJO Futures and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.
Disclosure: Bitcoin Futures
Trading in Bitcoin futures is especially risky and is only for clients with a high risk tolerance and the financial ability to sustain losses. More information about the risk of trading bitcoin products can be found on the IBKR website. If you’re new to bitcoin, or futures in general please visit CME Bitcoin Futures.
Disclosure: Futures Trading
Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.