Trade Inflection Trading from the trenches Weekly update 03/06
Hello Again
Well what a week that was both geo politically and market wise. A lot of noise and drama and in some markets a lot of volatility and in others a lot of nothing. Lets break it down.
Last week I gave you the ES big level tree.
So a whole lot of nothing … That’s the ES for you, no new developments on the big picture essentially, Thursday it attempted a break out and got hammered down in brutal fashion back to 4342 and tested the 280 support and closed around 4320. So where does that leave us back in this bloody range I am afraid!
The Big ES Level Tree for this week is as follows.
So for this week 4280/4260 LIS. I have to say it is looking weaker and weaker. I will be watching this 6 hour chart particularly the triangle for confirmation of breakout as this will guide me during the week. You can see the triangle runs out till Tuesday so we could have more chop till then. FED Meeting is not till Wednesday the 16th so still plenty of time for fun and games.
6 HR ES
The week ahead.
As I mentioned last week
“If at any time Russia uses its strongest card and turns the gas or oil taps off to Europe then to put it politely, Europe is screwed! Germany in particular (Europe imports 30% of it’s oil and Germany imports 40% of its gas from Russia) it also happens to be Europe’s strongest economy. Depending on how long Russia turns of the taps it could pretty much land us with a recession. This event would not surprise me even if just a quick shot across the bows as Russia will need to remind the world how it can hurt if provoked.” Whilst Russia did not turn off the taps: The Dax lost 8.2% this week.
“Fed, BOE. ECB tapering and increasing rates - This hasn’t changed and will start in the USA in earnest over the next few weeks at the next Fed meeting. Can the market actually stand on it’s own two feet. It is my view it never has, it certainly hasn’t in the past 12 years. Constant injection of money via bond purchases has completely distorted the equity markets and this is all going to stop."
So to summarize Political events, Inflationary/ Stagflation pressures, Central Bank tightening, recessionary risk and increasing rates is not a bullish market.”
My views have not changed. Hats off to the way the West dealt with the sanctions. It has been brutal with Russia overnight becoming Person non grata. Literally some funds and Companies have lost 98% of their value poof, zero, nada, nothing literally dust! vaporized! The sanctioning of the Russian Central Bank was huge it wiped them and any company wishing to deal in Russia off the map. Much like Iran and N Korea it is a complete no go zone. Lets be honest who the fuck wants to trade in Russia now?
So what next?
Ceasefire ? Possible and obviously Bullish for a period of time??? Until increasing rates, inflation come into play
Russia ? My bet sanctions will last till Putin is departed… so good luck with any timing of that trade ..
The nuclear option. Will the West actually embargo Gas and Oil from Russia?
This is a very difficult conundrum. Clearly any embargo of Oil & Gas from Russia comes with huge costs to the West both financially and politically. Financially we are screwed as Oil and Gas prices will explode ergo more inflation ergo Stagflation & recession. This is what is economists call the “ We are fucked scenario”
Politically can the West explain and sell to their voters “Hey this is a price worth paying for Ukraine’s sovereignty” . IE you will pay much much higher Gas and Oil prices and don’t worry about it you pleb it will all be ok…. oh and please don’t ask for a pay rise because this will only add to the problem. Now tell that to say Germans who take 40% of their Gas from Russia … This is what political economists call the “ We are fucked scenario”
So in this situation our finest elites will usually do nothing and we plebs get fucked any how.
Any loss of Russian Oil/ Gas will have to be taken from elsewhere so the only way that can happen is Iran particularly for Oil, So as that “Deal/ Option” has not finished or been concluded I do not expect any embargo. Only once this is completed can the West at least try to convince their voters that any price hike will be temporary…. as Iranian oil will cover any Russian loss.
Inflation is here it ain’t “fucking transitory” it never was and never will be!”
Powell said this week that he would expect Rates to go to 2 to 2.5 % and this would normalize inflation - Clown!
The big event this week will be CPI on Thursday that’s The Consumer Propaganda Index. Lets see how BLS can make a mockery of this yet again.
So the above are my views and have been for over the past year. It was a only matter of time. Inflation is probably running north of 15% right now but if you frig the Index then you can obviously bring it down i.e. look at the PCE for one ..
As always trade price on a daily basis. I was some what surprised that the US indexes held pretty steady this week since the Europeans were getting destroyed at the bank end of the week. Although you could argue the Europeans were catching up. I will continue to send out daily Pre open calls. If you find this useful or want more information feel free to add comments and let me know.
We had a great week in the room nailing it pretty much each day. Results were
Total +106 ES and + 118 NQ on the week.
7 Day Free trail to the Discord Room invite
Cheers TI
Results
https://www.tradeinflection.com/result