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View from Toronto: Strategic Market Outlook for Week (Video)
08/07/2017 2:51 am EST
If S&P 500 slips below 2,464 we can expect a test of 2,400. If the TSX slips below 15,175-15,110, we can expect a move down towards 14,950 or lower. Defensive posture to enter the week, asserts Ziad Jasani in his weekly video preview of the week.
- Global Equity Markets: July 7 Market Bounce in peril, but the plane is still in the air losing fuel.
- Global Bond Markets: Remain expensive and are likely range bound until US CPI prints August 11. However, the 10-year and 30-year U.S. Treasury auctions should be watched carefully. If under-subscribed, down-side risk grows significantly.
- Global Commodity Markets: The bounce has overheated, coupled with a turn up in the USD = down-side risk growing.
- Theme for the week: Q2 earnings tapering off, light week on economic data, currency markets and support levels in equity markets are the focal points. If S&P 500 slips below 2,464 we can expect a test of 2,400. If the TSX slips below 15,175-15,110, we can expect a move down towards 14,950 or lower. Defensive posture to enter the week.
- Broad-Decisions: Hold for mid-to-longer-term equity positions but get your stop-losses in, short-term look-short (Inverse ETFs) to open week, and then again to end the week.
Here are the calls we made on Friday, August 4 for those traders playing over the weekend:
Theme: “Down-side-risks-growing” à The July 7 “take-off” is still in the air, but it’s clear that the Commodity-Complex wants to roll over, and Technology is showing further signs of weakness, which implies shorting over-the-weekend vs. adding to longs is a better strategy (with small size until we have a confirmed swing-high on the S&P 500).
If the S&P 500 breaks below 2,464 and the Nasdaq below 6,342 roughly 50% size for inverse plays like these make sense:
S&P 500 ↔ < 2,475 but > 2,460 (with more downside risk post open)
TSX ↔ to ↑ > 15,175-110 15,317 (Support) (with more downside risk post open)
VIX ↑ < 11 but > 9.5
USD ↔ ↑ | $CAD ↓ | YEN ↔ ↓ | EUR ↔ ↓| GBP ↓
US Treasury Yields ↔
Oil ↔ to ↓ < $49 but > $47.50
Gold ↔ to ↓ < $1,261 but > $1,240
Sentiment: Indecision with weak-form risk-off.
Overnight Swing-Calls: Long the USD PowerShares DB US Dollar Index Bullish (UUP) and Horizons US Dollar Currency ETF (DLR-T).
Short Oil <$49 BetaPro Crude Oil -2X Daily Bear ETF (HOD-T).
Short Gold <$1, 261 ProShares UltraShort Gold ETF (GLL), DB Gold Double Short ETN (DZZ), DB Gold Short ETN (DGZ).
Long Canadian Financials iShares S&P TSX Capped Financials Index ETF (XFN-T), BMO S&P/TSX Equal Weight Banks Index ETF (ZEB-T) only if Oil settles above $49.50 August 4.
Long Canadian Energy iShares S&P/TSX Capped Energy Index ETF (XEG-T).
BMO S&P/TSX Equal Weight Oil & Gas ETF (ZEO-T) only if Oil settles above $49.50 August 4.
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