Search

Developed Ex. US Equities Is the Place To Be - Morning Market Squeeze

Key Tactical Takeaways:

> Although credit spreads and aussie/yen show no worrisome signs, any high-volume intra-day price spike to SPX ... would be viewed as the next tactical profit taking opportunity.


> Generally speaking, developed markets outside of the US are in the early stages of a leadership cycle with near-term staying power.

> Oil trades with 5, 21 and 63-day correlations all at 0.83 to the S&P 500, as it remains on track for the Tactical Liquidity Zone between $... and $....

> If you're enjoying the ride higher in Bitcoin, next big resistance is at ..., with first support at ...


> We're going long ... at today's open, with an initial stop at 295.04 and an initial target of 334.0. We'll go long ... at the next day's open, in the event of a close > 46.05.


Some Quick Thoughts:

After much buildup and growing speculation that a policy shift may be near, the final FOMC meeting of the year left less than a ripple in its wake. With stocks at all-time highs and housing showing strength of late, the Fed will keep the "pedal to the metal" to support MBS and equities markets. Shockingly, stocks are up in the wake of this announcement. Sense the sarcasm? Beyond this ridiculousness, there are some interesting setups taking shape internationally.


Starting with the Far East, we already know that the ultimate form of market manipulation is taking place in Japan, where the BoJ is the largest buyer of equities. As a result, the Nikkei has been ...


Next, there's China. Several weeks ago, we highlighted the Shanghai Composite in our Weekend Macro Press because of the index's recent rotation out of a massive base. We're looking to go long ... As a reminder, we use a volatility-based trigger system for determining entry and exit points for our trade ideas, and for official record keeping purposes must enter and exit trades at the open. Therefore, we'll go long ... at the next day's open, in the event ... closes > ....


Then there's Germany. After a long stretch of underperformance vs. the S&P 500 since July, the DAX is on the cusp of breaking to all-time highs for the first time since the start of the Covid crisis. Not only this, but the pattern the DAX is leaving in its wake portends higher prices over the months ahead. We do not chase rallies on our trade idea sheet, as we attempt to position ahead of the breakouts. If there is a pullback to ... in ..., we'll attempt to get long. Generally speaking, we think developed markets outside of the US have begun a cycle of outperformance with near-term staying power.


Speaking of it being our stance to not chase rallies, admittedly we were shaken out of trying to get long Bitcoin via GBTC back in September. If you're enjoying the current ride, next big resistance is at ..., with first support at ...


This is an abridged version of our premium content. If you'd like to have content like this sent to your inbox each morning, please click here to sign up for a risk-free, 2-week trial (no credit card required).


Please follow us on Twitter @xtractanalytics