Oil is set up for a swing-low (confirmation above $71.15) and Dr. Copper (Copper, CPER) is on approach to break resistance of $2.79, while Gold/Silver are also set up for swing-lows; all swing-lows in commodities are under-pinned by a softer USD, says Ziad Jasani.
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Recorded: 2:03 pm, July 13, 2018
Duration: 2:02
The highest probability scenario for Equity markets to rise this week involves:
• USD ↓ (UUP): Likely driven by Jerome Powell’s testimony (Tuesday/Wednesday) on the heels of softer inflation data over the last two weeks.
• Commodities ↑ (DBC, DBB): Oil is set up for a swing-low (confirmation above $71.15) and Dr. Copper (Copper, CPER) is on approach to break resistance of $2.79, while Gold/Silver are also set up for swing-lows; all swing-lows in commodities are under-pinned by a softer USD, and optimism surrounding trade into the G20.
• Bonds ↓ Yields ↑ (Global-Bonds, 10-year U.S. Treasury yield): Technical set up for Bonds is swing-high under-resistance while yields are set up to bounce from bottom of consolidation pattern. Recent attraction to fixed income is “testimony” from Mr. Market that back-half growth risks are real, and fear for rates to rise faster than communicated by central bankers has lessened. However, optimism towards trade into the G20 meetings coupled with Powell’s testimony is likely to reduce immediate concerns. As yields bounce, Financials are likely to start outperforming Chinese GDP, Industrial Production and fixed asset investment data is a key risk to start the week, followed by Netflix earnings after the bell on Monday. The former is expected to put a damper on risk sentiment, while the latter is expected to delight; dove-tailing into a less-hawkish presentation from Powell on Tuesday.
If ACWI (Global Equity Market) is able to surmount its 50-day average and the S&P 500 is able to hold above 2,805-2,800 we can expect Equities to be pointed north this week, essentially confirming continuation of the June 28 macro market swing-low.
In this case we would focus our acquisitions in the following areas:
Currencies on the other side of the USD: FXE, FXY, FXB, FXC, FXA, FXF, CYB Commodities: DBC, DBB, Gold, Silver, CPER, XGD-T, GDX, SIL, XME, XLE, XEG-T, ZEO-T, XMA-T
Equities outside of North America: EFA, EEM Financials: XLF, KBE, KRE, KIE, XFN-T, ZEB-T, ZWB-T
Trade war related spaces: DIA, XLI, XLB IF the June 28 macro market swing-low does not continue, we will be flipping to the “dark side” looking to short or play inverse.
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