From the Punter Trenches (5 March 2018)

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By Tanya Rawat

“Intelligence is something we are born with. Thinking is a skill that must be learned.- Edward de Bono”

From the start of the year I have been bullish JPY and all my calls have come to fruition. I foresaw it breaching a key level viz. 108 which it did. Next I saw it breach 105 purely on
a technical basis as after it breached the key 108 level, it was unable to garner bids and find a support. 105 was its next landing spot. 102.58 is the next key support which is the 50 Quarterly Simple Moving Average.

I see the Nikkei retracing upto its 5 Year Simple Moving Average, close to 12k levels.

For the Dollar Index (DXY Index) the 90.13 is a key support. It is the 100 Quarterly Simple Moving Average. If it breaches that, we can expect it to touch 86 handle. Continue to remain Bullish Dollar. EUR vs USD has a monthly resistance at 1.23 levels, see downside risks. Remain Bearish Euro.

Nasdaq consolidating at current levels and so far has maintained not to breach 5 Month Simple Moving Average which acts like its support. SPX we spoke last time could see a retracement owing to US 10Y Tsy coming close to breaching a secular downtrend saw a 2% down move. 2679 key support level is 20 Week Simple Moving Average. It breached it on Friday, but managed to gain ground and close at 2690 levels. 2690 is a key resistance level from December 2017.

Under Spx, Info tech sector consolidates around 1200 levels for the past 3 months unable to breach those levels. Financials as we know is yoyo-ing around 500 levels for the past 3 months as well. Both of which explains SPX yoyo-ing around 2800 levels. Utilities looking rather weak.

Gold back to last week’s levels, but as I said, irrespective of Dollar strength, see gains in this commodity. Since 2017 it seems to be moving in an envelope where the 100 Month Simple Moving Average seems to be acting like a resistance for the trend and 20 Month Simple Moving Average as a support. While Oil I still remain bearish as it still remains below its 5 Month Simple Moving Average of $65pb.

Questions? Comments? Contact me at Tanya@rawatspeaks.com.

Copyright © 2018 Tanya Rawat. All rights reserved. These materials are proprietary to Tanya Rawat and may not be reproduced, modified, transmitted, transferred or distributed in any form without the prior written consent of the author Tanya Rawat.

From the Punter Trenches (1 March 2018)

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By Tanya Rawat

“Starve your distractions, Feed your Focus.”

On Hawkish comments from the Federal Reserve Chair Jerome Powell, we saw the excuse the US equity markets were looking for a sell-off. I remain bullish Dollar provided 88 levels aren’t tested and so far bearish Euro call is standing firm. While we are likely to see temporary weakness in Gold as mentioned due to Dollar strength, overall  I remain bullish the commodity. In my last post, I was wary of weaker Oil on the back of Dollar strength and we are seeing continued weakness in it easing off from $67.90/barrel levels touched 26th February. I also continue to remain bullish Japanese Yen and expect it to test 105 levels versus the Dollar. While bearish US equity markets, I expect Euro weakness to act as a support for European equity indices and buoy them up soon enough. Buy dips in Europe.

Questions? Comments? Contact me at Tanya@rawatspeaks.com.

Copyright © 2018 Tanya Rawat. All rights reserved. These materials are proprietary to Tanya Rawat and may not be reproduced, modified, transmitted, transferred or distributed in any form without the prior written consent of the author Tanya Rawat.

From the Punter Trenches (27 February 2018)

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By Tanya Rawat

Dark was the night – cold was the ground” as the song goes by Blind Willie Johnson.

Look closely at the Quarterly charts of US 10 Yr Tsy yields and the S&P 500 index, you will see an interesting relationship. Of the 2 major corrections the S&P 500 index has gone through, viz. 2000 internet crash and 2007 mortgage back securities crash, the US 10 Yr Tsy yields moved in tandem with the equity market. And both at the same when the treasury yields were testing a key secular resistance level. See charts below:

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Images: Courtesy Bloomberg

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Images: Courtesy Bloomberg

This would imply that if the yields are unable to breach this level, this time again, we could see a correction in tandem in the S&P 500 index also. This close in the heels on the fact that the second largest component of the index viz. the Financials index has been unable to breach the 500 level the two times it has tried to breach it. Last time it touched this level was 2007 crash. See chart below:

s5finl
Images: Courtesy Bloomberg


Questions? Comments? Contact me at Tanya@rawatspeaks.com.

Copyright © 2018 Tanya Rawat. All rights reserved. These materials are proprietary to Tanya Rawat and may not be reproduced, modified, transmitted, transferred or distributed in any form without the prior written consent of the author Tanya Rawat.

From the Punter Trenches (6 February 2018)

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By Tanya Rawat

What you see it what you get or so the old adage goes. It was indeed a case of self-fulfilling prophecy wherein what majority of the market participants were seeing in the markets or talking about came true.

However, it isn’t all gloom and doom. It was a necessary correction as the markets were steaming ahead while the economic condition didn’t support the extremity of the move.

Key Takeaways: Bullish Gold, Bearish Dollar, Bullish SPX, Bearish DAX

Bullish Gold, Bearish Dollar
I still remain Bullish Gold and see it after a pause (I mentioned last week that while I remain bullish Gold either as a haven asset now or inflation hedge in the future as the latter picks up steam in the US it could retrace to $1,300/oz or $1,293/oz levels) heading to $1,375/oz or higher. If the Yen is unable to breach 108 support (a key support level) vs the Dollar (DXY), I see no more room for its strength primarily given how strong the momentum in the Nikkei is.

Overall, I still remain bearish DXY and see another 2% down move in tandem with EURUSD 2% up move to 1.28 levels. Though we might see temporary strength in the DXY.
We must keep this in mind as, if the DXY does start to strengthen we will see momentary correction in Gold as mentioned above.

Bullish SPX
The top constituents of SPX are:
Infotech, Financials, HealthCare, Consumer Discretionary, Industrials and so on. Energy is a meagerly 6% of the index. (There seems to be slowdown in momentum in Energy names in Europe and US on a weekly basis).

IT companies have their own idiosyncratic factors hitting it. APPL because of X not being able to receive calls and a switch to Intel from Qualcomm going forward for chips etc, Google with its case with Uber etc. If you look at the largest component of  Infotech and SPX, it started stumbling mid-January way before the ‘correction’.

Additionally, Financials are probably being sold off as ETFs with the large cap names are being sold off. Historically when yields do well, so do Financials given their direct relationship. Also, the correction in Financials is because of the psychological resistance of 500 set prior to the ’07 crash. If it breaches that, it will set new highs, hence this correction is minor.

Bearish DAX
It has breached the 50 week Simple Moving average of 12,647 levels and looks headed to 12000 levels and probably 11604. This was on the back of it unable to breach the 13,400 resistance for a second time in a row (last attempted in November 2017). There remain downside risks to DAX given that I view the Euro weakness as only temporary till it retraces to 1.28 levels.

Stay Calm and Carry On.

Questions? Comments? Contact me at Tanya@rawatspeaks.com.

Copyright © 2018 Tanya Rawat. All rights reserved. These materials are proprietary to Tanya Rawat and may not be reproduced, modified, transmitted, transferred or distributed in any form without the prior written consent of the author Tanya Rawat.

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