Trading with point and figure

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[cantagril]

Morning DF... et Al,

Long Stoxx (as usual) and also long EURGBP from .9020. I did think that 75 might hold, and then 50 and I see .9000 as being a decent area for support....and then of course, there's yr 61.8 which may or may not have had a bearing on my entry

No TPs atm, I'll just wait to see the car crash unfold

Chart is 10 x 3 and I'll put up the 1x3 I'm trading off in a few mins.

 

[cantagril]

....and here's the EURGBP 1x3

 

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Good Morning: The Long & the Short of it and The Bigger Picture - 27 March 2020 - ADM ISI

Inbox

x

Ostwald, Marc

09:00 (1 hour ago)

to Marc

- Surveys still the focal point, but focal point still exponential US Jobless
Claims rise and fact of US topping China on Covid-91 cases; risk asset
and EM FX rebound less a turning point than a function of quarter end

- Digesting Vietnam Q1 GDP and India rate cut, awaiting Italy confidence
data and final Michigan Sentiment

- Charts: US Corporate downgrades long-term; US Financial Conditions vs
Fed Balance Sheet; US HY Credit spread vs. S&P500; US Dollar Index;
US vs Bund 10 yr yield

..........................................................................

********************
** EVENTS PREVIEW **
********************

Once again, the data calendar is a mix of digesting Vietnam's advance Q1 GDP and monthly indicators, along with March surveys - French & Italian Consumer Confidence, the latter also has Manufacturing Confidence and Austria has its Manufacturing PMI, while the US awaits final Michigan Sentiment. None of these will however get close to the meltdown message sent by yesterday's 3.283 Mln surge in US Initial Jobless Claims. The overall narrative remains unaltered, there remains no visibility about when a peak in the Covid-19 spread in Europe and North America (seemingly a very distant prospect given another sharp escalation in the US), let alone Africa or Latin America, and as long as that remains the case lockdown measures and the accompanying cliff edge drop in economic activity will be the focal point, along with the efficacy of govt and central bank measures to mitigate the likely spectacular fall-out. At some point in the not too distant future, the bigger question will be how on earth govts and central banks will be able to exit these 'whatever it takes', above all without engendering secondary or tertiary effects, a challenge which will likely last the whole of the new decade. Then there will be the very profound changes to supply chains and 'just in time' processes, along with likely huge changes to workplace structures/processes to consider.

On markets, yesterday's rally in US equity indices nominally swing that market from bear to bull, and the further tightening of credit spreads was encouraging. Quarter end may well account for much of the move, as well as some 'bargain hunting', and it may well extend today given weekend book squaring. But these sharp swings are probably the 'new normal', and the rising tide of credit ratings downgrades (see chart) serves as a reminder that headwinds at a macro- and microeconomic level are extraordinarily high, even if in the longer run they will dissipate. As previously noted, flows are the ultimate arbiter of the situation, and the stress in the credit sector, notwithstanding this week's record volume of $195.2 Bln IG Credit issuance, which contrasts with another week of record outflows from US bond funds $62.0 Bln, up from last week's record $55.9 Bln. The perspective point on the issuance is that the Fed's balance sheet crossed the $5.0 Trln level for the first time, (and as a reminder the Fed is buying IG corporate debt in primary as well as secondary markets), so this owes as much or more to issuers needing to refinance and top up cash reserves along with the Fed pump priming, rather than demand.

========================== ** THE DAY AHEAD ** ===========================

 

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Updated

 

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Updated

 

[cantagril]

...... long EURGBP from .9020. I did think that 75 might hold, and then 50 and I see .9000 as being a decent area for support....and then of course, there's yr 61.8 which may or may not have had a bearing on my entry

No TPs atm, I'll just wait to see the car crash unfold

Hmmm,

Well we seem to have rolled over and are now skidding down the road in flames.

Despite the very clean downward trend (as per the updated 10 x 3, coming soon) I still think we're due for a bounce. The current move is (imo) more about a GBP recovery than any spectacular weakness and in view of it's recent volatility and wild swings - routinely exploited by NVP - I'm expecting more of the same.....so I've added another at .8950 - I know, I know; averaging down and I'll definitely go to hell but it's a small position and Friday gyrations might well put it right and if not, the anti-pox progress in Europe should start to have an effect next week.

 

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[cantagril]

10 x 3 at 13h10 - Nikki Lauda would be proud

 

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Will supp hold..??

 

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