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Trader Z's Day in Review
Trader Z's Premarket Report
Stocks
Stock futures are mixed this morning as the market’s prepare for the Fed’s latest policy decision on interest rates after wrapping up a terrible month. S&P 500 futures and Nasdaq 100 futures are up 0.04% and 0.07%, respectively. Futures tied to the DJIA have slipped 26 points, or 0.06%. Early Wednesday, ADP's employment report showed the U.S. economy added 113,000 jobs in October, below estimates for a 150,000 increase and up from September's 89,000 rise. ADP's report is a precursor to Friday's jobs report from the Labor Department.
Bonds
Treasury futures are near top of day’s range, with yields lower by 2bp to 3bp across the curve, unwinding portion of late Tuesday selloff. US 10-year borrowing costs fall 3bps to 4.89%. CME's FedWatch survey on Tuesday showed zero chance of any rate hike when the Fed concludes its two-day meeting on Wednesday. In fact, the survey of fed funds interest rate speculators went so far as to show a 3% probability that the central bank will trim short-term rates — currently in a 5.25%-5.5% target range — by a quarter point. The Fed decision is out at 2 p.m. ET. and the real question is how much tightening did the bond market just do for the Fed? Keep your eyes on TLT, no bid, no rally in stocks.
Currencies
The Dollar Index has climbed 0.1% as markets braced for the Federal Reserve to hold rates steady. The yen is stronger after some government jawboning earlier on Wednesday, rising 0.3% versus the greenback. The euro drops 0.3. Japan's top currency diplomat Kanda said speculative FX moves seen cannot be explained by fundamentals and he is concerned that one-sided, sharp FX moves negatively affect the economy, while he added that authorities may or may not say when they conduct intervene, according to Reuters. The dollar moving higher is still a problem for risk assets.
Commodities
Oil has climbed after slumping in the first two days of the week, as a still-contained Israel-Hamas war shifted attention back to resilient global demand. WTI rose 1.1% to trade near $82. Spot gold is flat.
Crypto
Bitcoin has been on a winning streak lately, rocketing almost 25% over the last month Carnivores. Bitcoin is currently trading at $34,300, heavily consolidated in the ranges between $32k and $34k. The price increase was led by the rumors and news surrounding the spot ETF approval. VN thinks BTC looks poised to run to 40k.
The Setup
Vector Nostradamus remains skeptical of this rally attempt. We will need to retake important moving averages before any significant long positioning can be taken. J. Powell and the Fed still control the fate of this stock market and the bond market. If the hawkish rhetoric continues, and the higher for longer mantra is all we hear, then stay lightly exposed and nimble as we are still fighting the Fed. We are looking for tactical short term opportunities.
Trader Z's Premarket Report
Stocks
Stock futures continue yesterday’s sideways action early Tuesday as the market attempts to consolidate last week’s big gains without giving too much back. S&P 500 futures and Nasdaq 100 futures are near breakeven while futures tied to the DJIA dropped 70 points, or about 0.2%. The markets are now trying to establish new support so that the rally from last week can continue after all three indices wrapped their best week in 2023. The November strength contrasts with what was a weak October in which the S&P 500 slipped into correction territory. This potentially major shift in sentiment was driven by the Fed leaving interest rates unchanged following their meeting last week, which also saw Treasury yields slide and stocks climb.
Bonds
Treasuries are rising ahead of Fed speakers later today, with the 10year Treasury trading at 4.625% down 2bps from yesterday's close. The US session includes at least seven Fed officials scheduled to speak and $48b 3-year note sale at 1pm New York time. The move is still muted though as US yields are lower by less than 2bp across the curve. The bond rally needs to resume in the next couple of sessions for stock to run higher.
Currencies
The Dollar Index is up 0.2%. The Aussie is the weakest of the G-10 currencies, falling 1% versus the greenback after the Royal Bank of Australia signaled a higher hurdle to further policy tightening. Remember Carnivores, currencies are partially driven by interest rate differentials. The Euro is losing support at 1.0700, the Pound is dropping towards 1.2300 and the Yen is back below 150.00 all over again. The dollar strength is problematic. 150 Yen needs to hold.
Commodities
Crude benchmarks remain under pressure after slipping overnight. There has been no form of recovery this morning, despite stocks bouncing back a bit this morning. WTI Dec’23 and Brent Jan’23 have lost the USD 80/bbl and USD 84/bbl levels respectively, an action which pushes the benchmarks to multi-month lows with support seen around USD 78/bbl mark in WTI from late-August. Gold is under a little pressure with the stronger USD offsetting any potential haven demand.
Crypto
Bitcoin (BTC) has kept steady under the $35,000 level in the past 24 hours, with meme coin dogecoin (DOGE) driving gains for traders. Tokens of major blockchains such as Solana’s SOL, BNB Chain’s BNB and Cardano’s ADA lost as much as 3% as traders likely took profits after a broader crypto rally last week. SOL pared gains after a nearly 70% jump in the past month, data shows. Bitcoin appears to be continuing to consolidate recent gains.
The Setup
Vector Nostradamus thinks it’s likely the next few days will be potentially range bound as markets attempt to digest the huge month-to-date moves in bonds and stocks, while traders wait for the next round of major catalysts (which don’t arrive until the week of 11/13 with the US CPI, Biden-Xi summit, US gov’t funding expiration, the start of Oct-end earnings, and more). The key is for the market not to give much back. We will look for opportunities that appear to be poised to leg up if we breakthrough the downtrend line highlighted in the wrap.
Trader Z's Day in Review
Stocks managed to climb again today Carnivores, as the bounce from oversold conditions managed to run another day. The S&P 500 climbed 0.7%, the Nasdaq added 0.5%, and the DJIA advanced 123 points, or 0.4%. The Russell 2000 led the way up 0.85%. We had 11/11 sectors in the green again today, but still with no volume. If bulls want more than a bear market bounce, we are going to need to see some more volume Carnivores. Real estate and financials outperformed in the S&P 500, with the sectors higher by 2% and 1.1%, respectively. Notably, however, some mega-cap tech stocks lagged. See how tough it is for this market to REALLY rise without mega-cap tech? Crude oil slid further, falling to $81.16 a barrel, and the yield on the benchmark 10-year Treasury note fell 1 basis point to 4.86%. The pause in rates has been partially responsible for our two-day rally in stocks.
With the last trading day of October on the books, it is time to look back at the carnage. Stocks posted their third-straight losing month. The Dow and the S&P 500 fell 1.4% and 2.2%, respectively. This marks the first three-month losing streak for both indexes since March 2020. Nasdaq fell more than 2% in October, also on pace for its third consecutive negative month. These loses come on the back of a rapid rise in Treasury yields. This month, the benchmark 10-year U.S. Treasury yield breached the key 5% level for the first time since 2007. Market participants attribute the rise to several factors, including stubborn inflation and concern the Federal Reserve will keep interest rates higher for longer.
The Fed is set to release its next decision on interest rates tomorrow afternoon. Fed funds futures pricing suggests a roughly 99% probability that the central bank will keep rates at current levels, according to the CME FedWatch Tool. Also, on Wednesday we get the Treasury's quarterly refunding announcement, the JOLT survey, and private ADP payroll data. Treasury officials are expected to give details of the $776 billion debt offering for the fourth quarter and $816 billion in the first quarter of 2024. The Job Openings and Labor Turnover Survey is expected to show job openings at 9.375 million in September, down from 9.610 million in August. Finally, ADP payroll data for October is expected to show 150,000 changes in private employment after September's 89,000. The market will be looking for soft data to give the Fed a reason to pause. Better than expected data will probably be negative. The Fed and AAPL will then be the next catalysts for this market. Any long trades here should just be considered tactical, as the trend is still down and risk are skewed to the downside. Vector Nostradamus now waits to see if the Nasdaq Composite can take back the 50-day moving average, after taking back the 200-day moving average today. VN is also now waiting for the SPY to retake its 200-day moving average at 420 before any meaningful attempt at longs are taken. SO far it just seems like a bounce from oversold conditions.
Vector Nostradamus is bearish and is at 1/5 trend models in buy mode. VN notes all major indexes are mostly below key moving averages (with the exception of the QQQs). Breadth was decent today at 1.86 to 1 advancers to decliners. Nothing to write home about Carnivores. We need a 3 to 1 or 4 to 1 type a/d ratio. Bulls are going to have to do better than that for this to be a believable rally attempt. VN notes that bonds still haven’t convincingly bounced, so still not what we want to see in yields Carnivores. VN notes that yields must at least stabilize for there to be a meaningful rally in stocks. VN would also like to see the dollar weaken. VN continues to note that the trends in gold and bitcoin look the most intriguing out of all the major markets. VN still ranks energy (including coal and uranium), select defense names, and a few insurance names.
Today we have a financial stock to highlight Carnivores. Tradeweb Markets Inc. (NASDAQ:TW) builds and operates electronic marketplaces for rates, credit, equities, ETFs, and money markets. The company serves institutional, wholesale, and retail clients in multiple countries. The business has four key segments: Institutional, Wholesale, Retail, and Market data. Each of these segments represents 60.5%, 23%, 9.3%, and 7.2% of FY22 revenue.
TW recently announced its 2Q23 results, and its revenue was largely in line with analyst forecasts. Better than expected expense management contributed to an adjusted EBITDA margin of 52.5%, which surpassed analyst forecasts. This led to TW posting an EPS beat of $0.52 vs consensus estimate of $0.50. TW appears poised for continued growth and market share expansion in the evolving landscape of electronic trading. The tailwinds of electronification expected to drive TW's revenue growth, especially in rates derivatives and credit markets. The company's strong performance in 2Q23, including record electronic market share and expense management, underscores its market position and potential. Since going public in 2019, TW shares have significantly outperformed the S&P 500, and it is possible that TW is in the early innings of using technology to disrupt the traditional fixed income trading business. Check out TW the VN stock of the day.
Daily TW
Weekly TW
The Japanese Yen fell sharply today Carnivores, on track for its weakest close versus the U.S. dollar in 33 years. This came on the back of the Bank of Japan taking another step toward abandoning its controversial policy of yield-curve control. The BOJ at its policy meeting effectively loosened its cap on long-term bond yields, saying that its previous 1% limit on the 10-year Japanese government bond would now serve as a “reference point.” Traders, it seemed, were expecting more hawkishness after the news that the BOJ policy makers were likely to further loosen the yield-curve control policy after lifting the cap from 0.5% to 1% in July. Instead the announcement was percieved as dovish. In response, the U.S. dollar rallied sharply and was up 1.6% at 151.445 yen in North American afternoon trade. That would market its highest finish based on end-of-day levels since July 3, 1990, according to FactSet. Surges above 150 yen by the dollar last year prompted rounds of intervention by Japanese authorities to stem the currency’s weakness. Many analysts and economists have argued that an incremental loosening of yield curve control, or YCC, and a slow walk toward normalization of monetary policy makes sense as the BOJ because they are the only major central bank left where official interest rates remain negative. With these low interest rates, the yen is unlikely to find its footing. Until either the Fed begins to signal that it’s at least thinking about future interest rate cuts or the Bank of Japan signals it’s ready to lift rates, the dollar continues to run. Carnivores know that risk assets need a weaker dollar like lower yields to break the current downtrend, and the Dollar trend is still headed the wrong way. Yen Daily Yen Monthly (10 years)
Daily Yen
Monthly Yen
Trader Z's Premarket Report
Stocks
U.S. equity futures are slightly higher this morning Carnivores after the major averages capped their best week of the year on the back of a big decline in yields. S&P 500 and NASDAQ-100 futures are slightly higher by 0.1. Futures tied to the DJIA are barely above breakeven. All the major averages are coming off their best weeks of the year so far. The Dow ended last week up by 5.07% for its biggest weekly advance since October 2022. The S&P advanced 5.85% in that time, and the Nasdaq Composite jumped 6.6%. It was the best week since November 2022 for both indexes. Vector Nostradamus flipped from bearish to bullish as the major indexes were able to re-take many important moving averages. VN thinks that the key to this week will be to consolidate last weeks gains without giving too much back.
Bonds
Treasuries are slightly lower across the curve partially unwinding Friday’s sharp bull-steepening rally spurred by softer-than-expected October jobs report. US yields are higher by up to 3bp across front-end of the curve, and the 10-year yields around 4.59%. We have very limited economic data is scheduled for this week, while auctions resume Tuesday with $48b 3-year note sale, followed by 10- and 30-year offerings Wednesday and Thursday. We do have a ton of Fed speak though. Powell is slated to speak Wednesday and Thursday, among more than a dozen planned appearances by Fed officials this week. The stock market rallied on lower yields, so pay attention to bond prices as they are still the primary driver of asset prices.
Currencies
The Dollar Index is flat after the index on Friday posted its worst performance since mid-July. The Japanese yen is one of the weakest G-10 currencies, falling 0.2% versus the greenback. The USDJPY last week was boosted by short covering by leveraged funds. The Pound, Euro and Franc all have extended gains vs Dollar to form 1.2400+ triple top, probe 1.0750 and approach 0.8950 respectively. The dollar’s run is tied to yields, so if bonds continue to catch a bid the dollar should weaken. This will be good for gold and crypto.
Commodities
Crude benchmarks are firmer and have continued to climb despite a lack of fundamental or geopolitical news. The move is primarily a recovery from Friday’s pressure and aided by geopolitics alongside a softer USD. WTI Dec’23 contracts are at the top end of their range just under $82/bbl. Gold is little changed as the market awaits the next catalysts that could be either dollar weakness or geopolitical turmoil. Oil remaining subdued is positive for stocks.
Crypto
Bitcoin is trading just below $35,000 as weekend markets continued to consolidate higher. Bitcoin has been above 34k for 11 days now Carnivores. After nearly hitting $36,000 during the week, VN still favors upside continuation. Many Alt coin have come back to life as well. Ethereum is trading around $1900. Crypto is alive Carnivores, this is good sign for risk assets.
The Setup
Last week could potentially mark the end of rising rates (in the bond market) and the fight with the Fed. Vector Nostradamus flipped from bearish to bullish on the improved technical conditions and last week’s breadth thrust. VN now wants this market to prove itself by holding last week’s gains and breaking through the down trend line (in the major indexes since the August top) convincingly on volume. Based on historical breadth analysis, there is a high probability that last week was potentially a meaningful bottom in stock prices.
Trader Z's Day in Review
Stocks managed to climb again today Carnivores, as the bounce from oversold conditions managed to run another day. The S&P 500 climbed 0.7%, the Nasdaq added 0.5%, and the DJIA advanced 123 points, or 0.4%. The Russell 2000 led the way up 0.85%. We had 11/11 sectors in the green again today, but still with no volume. If bulls want more than a bear market bounce, we are going to need to see some more volume Carnivores. Real estate and financials outperformed in the S&P 500, with the sectors higher by 2% and 1.1%, respectively. Notably, however, some mega-cap tech stocks lagged. See how tough it is for this market to REALLY rise without mega-cap tech? Crude oil slid further, falling to $81.16 a barrel, and the yield on the benchmark 10-year Treasury note fell 1 basis point to 4.86%. The pause in rates has been partially responsible for our two-day rally in stocks.
With the last trading day of October on the books, it is time to look back at the carnage. Stocks posted their third-straight losing month. The Dow and the S&P 500 fell 1.4% and 2.2%, respectively. This marks the first three-month losing streak for both indexes since March 2020. Nasdaq fell more than 2% in October, also on pace for its third consecutive negative month. These loses come on the back of a rapid rise in Treasury yields. This month, the benchmark 10-year U.S. Treasury yield breached the key 5% level for the first time since 2007. Market participants attribute the rise to several factors, including stubborn inflation and concern the Federal Reserve will keep interest rates higher for longer.
The Fed is set to release its next decision on interest rates tomorrow afternoon. Fed funds futures pricing suggests a roughly 99% probability that the central bank will keep rates at current levels, according to the CME FedWatch Tool. Also, on Wednesday we get the Treasury's quarterly refunding announcement, the JOLT survey, and private ADP payroll data. Treasury officials are expected to give details of the $776 billion debt offering for the fourth quarter and $816 billion in the first quarter of 2024. The Job Openings and Labor Turnover Survey is expected to show job openings at 9.375 million in September, down from 9.610 million in August. Finally, ADP payroll data for October is expected to show 150,000 changes in private employment after September's 89,000. The market will be looking for soft data to give the Fed a reason to pause. Better than expected data will probably be negative. The Fed and AAPL will then be the next catalysts for this market. Any long trades here should just be considered tactical, as the trend is still down and risk are skewed to the downside. Vector Nostradamus now waits to see if the Nasdaq Composite can take back the 50-day moving average, after taking back the 200-day moving average today. VN is also now waiting for the SPY to retake its 200-day moving average at 420 before any meaningful attempt at longs are taken. SO far it just seems like a bounce from oversold conditions.
Vector Nostradamus is bearish and is at 1/5 trend models in buy mode. VN notes all major indexes are mostly below key moving averages (with the exception of the QQQs). Breadth was decent today at 1.86 to 1 advancers to decliners. Nothing to write home about Carnivores. We need a 3 to 1 or 4 to 1 type a/d ratio. Bulls are going to have to do better than that for this to be a believable rally attempt. VN notes that bonds still haven’t convincingly bounced, so still not what we want to see in yields Carnivores. VN notes that yields must at least stabilize for there to be a meaningful rally in stocks. VN would also like to see the dollar weaken. VN continues to note that the trends in gold and bitcoin look the most intriguing out of all the major markets. VN still ranks energy (including coal and uranium), select defense names, and a few insurance names.
Today we have a financial stock to highlight Carnivores. Tradeweb Markets Inc. (NASDAQ:TW) builds and operates electronic marketplaces for rates, credit, equities, ETFs, and money markets. The company serves institutional, wholesale, and retail clients in multiple countries. The business has four key segments: Institutional, Wholesale, Retail, and Market data. Each of these segments represents 60.5%, 23%, 9.3%, and 7.2% of FY22 revenue.
TW recently announced its 2Q23 results, and its revenue was largely in line with analyst forecasts. Better than expected expense management contributed to an adjusted EBITDA margin of 52.5%, which surpassed analyst forecasts. This led to TW posting an EPS beat of $0.52 vs consensus estimate of $0.50. TW appears poised for continued growth and market share expansion in the evolving landscape of electronic trading. The tailwinds of electronification expected to drive TW's revenue growth, especially in rates derivatives and credit markets. The company's strong performance in 2Q23, including record electronic market share and expense management, underscores its market position and potential. Since going public in 2019, TW shares have significantly outperformed the S&P 500, and it is possible that TW is in the early innings of using technology to disrupt the traditional fixed income trading business. Check out TW the VN stock of the day.
Daily TW
Weekly TW
The Japanese Yen fell sharply today Carnivores, on track for its weakest close versus the U.S. dollar in 33 years. This came on the back of the Bank of Japan taking another step toward abandoning its controversial policy of yield-curve control. The BOJ at its policy meeting effectively loosened its cap on long-term bond yields, saying that its previous 1% limit on the 10-year Japanese government bond would now serve as a “reference point.” Traders, it seemed, were expecting more hawkishness after the news that the BOJ policy makers were likely to further loosen the yield-curve control policy after lifting the cap from 0.5% to 1% in July. Instead the announcement was percieved as dovish. In response, the U.S. dollar rallied sharply and was up 1.6% at 151.445 yen in North American afternoon trade. That would market its highest finish based on end-of-day levels since July 3, 1990, according to FactSet. Surges above 150 yen by the dollar last year prompted rounds of intervention by Japanese authorities to stem the currency’s weakness. Many analysts and economists have argued that an incremental loosening of yield curve control, or YCC, and a slow walk toward normalization of monetary policy makes sense as the BOJ because they are the only major central bank left where official interest rates remain negative. With these low interest rates, the yen is unlikely to find its footing. Until either the Fed begins to signal that it’s at least thinking about future interest rate cuts or the Bank of Japan signals it’s ready to lift rates, the dollar continues to run. Carnivores know that risk assets need a weaker dollar like lower yields to break the current downtrend, and the Dollar trend is still headed the wrong way. Yen Daily Yen Monthly (10 years)
Daily Yen
Monthly Yen
Trader Z's Premarket Report
Stocks
Stock futures are up slightly after a soft October jobs report drove bond yields lower. S&P 500 futures are higher by roughly 0.5%, futures linked to the tech-heavy Nasdaq-100 index have gained 0.3%, and futures tied to the DJIA rose 100 points, or 0.5%. Market giant AAPL fell 1.4% after the iPhone maker issued a weak revenue outlook for the December quarter. The October jobs report that came out Friday showed the U.S. economy added 150,000 jobs. That was lower than the increase of 170,000 payrolls expected by economists polled by Dow Jones, and below September’s blowout of 336,000 jobs.
Bonds
Bond yields, which have weighed on the stock market the last three months, tumbled Friday in the wake of the worse-than-expected payrolls figures and lighter average hourly earnings increase. The 10-year Treasury yield lost more than 9 basis points to 4.57%, down from the 5% high it hit last month. The 2-year Treasury yield lost 7 basis points to 4.9%. We have been waiting for this turn in the bond market to provide relief to the stock market. We have a potential intermediate/long term bottom in bonds.
Currencies
The Dollar Index is down 0.65% on the weak jobs data. The dollar is having its biggest weekly drop in more than three months as traders weigh prospects for a halt in the Fed’s policy tightening policy. This is further confirmation that the macro pressures on the stock market could be easing.
Commodities
Oil prices rebounded a bit more this Friday morning, as West Texas Intermediate futures rose modestly, trading at $83 a barrel. WTI is holding near its lowest level since late August though as geopolitical tensions have not sent oil prices soaring higher. Gold is firmer by 0.79% trading near $2000/oz with ongoing USD softness providing support. If the dollar rolls over, Vector Nostradamus projects gold will break out above $2100.
Crypto
Bitcoin (BTC) is on the back foot changing hands at $34,235, representing a 2% drop on the day. Prices briefly topped the $36,000 mark early this week, extending past week’s 15% surge from near $30,000. VN still believes that crypto will consolidate recent gains and BTC will move towards 40k.
The Setup
Conditions are improving rapidly for stocks. The Dow is up 4.4%, on pace for its best weekly performance since October 2022. The S&P 500 is tracking for a 4.9% advance on the week, while the Nasdaq is up 5.2% — both are tracking for their best week since November 2022. VN notes many moving averages have been reclaimed. Bonds are catching a bid, the dollar is weakening, and market breadth is improving. We will look to take advantage of improving conditions.
Trader Z's Day in Review
Stocks managed to climb again today Carnivores, as the bounce from oversold conditions managed to run another day. The S&P 500 climbed 0.7%, the Nasdaq added 0.5%, and the DJIA advanced 123 points, or 0.4%. The Russell 2000 led the way up 0.85%. We had 11/11 sectors in the green again today, but still with no volume. If bulls want more than a bear market bounce, we are going to need to see some more volume Carnivores. Real estate and financials outperformed in the S&P 500, with the sectors higher by 2% and 1.1%, respectively. Notably, however, some mega-cap tech stocks lagged. See how tough it is for this market to REALLY rise without mega-cap tech? Crude oil slid further, falling to $81.16 a barrel, and the yield on the benchmark 10-year Treasury note fell 1 basis point to 4.86%. The pause in rates has been partially responsible for our two-day rally in stocks.
With the last trading day of October on the books, it is time to look back at the carnage. Stocks posted their third-straight losing month. The Dow and the S&P 500 fell 1.4% and 2.2%, respectively. This marks the first three-month losing streak for both indexes since March 2020. Nasdaq fell more than 2% in October, also on pace for its third consecutive negative month. These loses come on the back of a rapid rise in Treasury yields. This month, the benchmark 10-year U.S. Treasury yield breached the key 5% level for the first time since 2007. Market participants attribute the rise to several factors, including stubborn inflation and concern the Federal Reserve will keep interest rates higher for longer.
The Fed is set to release its next decision on interest rates tomorrow afternoon. Fed funds futures pricing suggests a roughly 99% probability that the central bank will keep rates at current levels, according to the CME FedWatch Tool. Also, on Wednesday we get the Treasury's quarterly refunding announcement, the JOLT survey, and private ADP payroll data. Treasury officials are expected to give details of the $776 billion debt offering for the fourth quarter and $816 billion in the first quarter of 2024. The Job Openings and Labor Turnover Survey is expected to show job openings at 9.375 million in September, down from 9.610 million in August. Finally, ADP payroll data for October is expected to show 150,000 changes in private employment after September's 89,000. The market will be looking for soft data to give the Fed a reason to pause. Better than expected data will probably be negative. The Fed and AAPL will then be the next catalysts for this market. Any long trades here should just be considered tactical, as the trend is still down and risk are skewed to the downside. Vector Nostradamus now waits to see if the Nasdaq Composite can take back the 50-day moving average, after taking back the 200-day moving average today. VN is also now waiting for the SPY to retake its 200-day moving average at 420 before any meaningful attempt at longs are taken. SO far it just seems like a bounce from oversold conditions.
Vector Nostradamus is bearish and is at 1/5 trend models in buy mode. VN notes all major indexes are mostly below key moving averages (with the exception of the QQQs). Breadth was decent today at 1.86 to 1 advancers to decliners. Nothing to write home about Carnivores. We need a 3 to 1 or 4 to 1 type a/d ratio. Bulls are going to have to do better than that for this to be a believable rally attempt. VN notes that bonds still haven’t convincingly bounced, so still not what we want to see in yields Carnivores. VN notes that yields must at least stabilize for there to be a meaningful rally in stocks. VN would also like to see the dollar weaken. VN continues to note that the trends in gold and bitcoin look the most intriguing out of all the major markets. VN still ranks energy (including coal and uranium), select defense names, and a few insurance names.
Today we have a financial stock to highlight Carnivores. Tradeweb Markets Inc. (NASDAQ:TW) builds and operates electronic marketplaces for rates, credit, equities, ETFs, and money markets. The company serves institutional, wholesale, and retail clients in multiple countries. The business has four key segments: Institutional, Wholesale, Retail, and Market data. Each of these segments represents 60.5%, 23%, 9.3%, and 7.2% of FY22 revenue.
TW recently announced its 2Q23 results, and its revenue was largely in line with analyst forecasts. Better than expected expense management contributed to an adjusted EBITDA margin of 52.5%, which surpassed analyst forecasts. This led to TW posting an EPS beat of $0.52 vs consensus estimate of $0.50. TW appears poised for continued growth and market share expansion in the evolving landscape of electronic trading. The tailwinds of electronification expected to drive TW's revenue growth, especially in rates derivatives and credit markets. The company's strong performance in 2Q23, including record electronic market share and expense management, underscores its market position and potential. Since going public in 2019, TW shares have significantly outperformed the S&P 500, and it is possible that TW is in the early innings of using technology to disrupt the traditional fixed income trading business. Check out TW the VN stock of the day.
Daily TW
Weekly TW
The Japanese Yen fell sharply today Carnivores, on track for its weakest close versus the U.S. dollar in 33 years. This came on the back of the Bank of Japan taking another step toward abandoning its controversial policy of yield-curve control. The BOJ at its policy meeting effectively loosened its cap on long-term bond yields, saying that its previous 1% limit on the 10-year Japanese government bond would now serve as a “reference point.” Traders, it seemed, were expecting more hawkishness after the news that the BOJ policy makers were likely to further loosen the yield-curve control policy after lifting the cap from 0.5% to 1% in July. Instead the announcement was percieved as dovish. In response, the U.S. dollar rallied sharply and was up 1.6% at 151.445 yen in North American afternoon trade. That would market its highest finish based on end-of-day levels since July 3, 1990, according to FactSet. Surges above 150 yen by the dollar last year prompted rounds of intervention by Japanese authorities to stem the currency’s weakness. Many analysts and economists have argued that an incremental loosening of yield curve control, or YCC, and a slow walk toward normalization of monetary policy makes sense as the BOJ because they are the only major central bank left where official interest rates remain negative. With these low interest rates, the yen is unlikely to find its footing. Until either the Fed begins to signal that it’s at least thinking about future interest rate cuts or the Bank of Japan signals it’s ready to lift rates, the dollar continues to run. Carnivores know that risk assets need a weaker dollar like lower yields to break the current downtrend, and the Dollar trend is still headed the wrong way. Yen Daily Yen Monthly (10 years)
Daily Yen
Monthly Yen
Trader Z's Premarket Report
Stocks
Stock futures are up nicely this morning Carnivores as Treasury yields are falling with traders starting to sense that the Fed could be done raising rates for 2023. S&P 500 futures are up 0.7%, and Nasdaq 100 futures have risen 1.1%. Futures tied to the DJIA have added 171 points, up 0.5%. The markets also digested further signs of softening in the labor market. Weekly jobless claims on Thursday ticked higher to 217,000 for week ending Oct. 28, more than the 210,000 in the previous week and the 214,000 consensus estimate from Dow Jones. Could it be possible that we are no longer fighting the Fed?
Bonds
Treasuries are slightly higher, with yields down across the curve, adding to Wednesday’s session gains spurred by the Treasury’s refunding details and Fed Chair Jerome Powell’s press conference. US yields lower by up to 3bp across the long-end of the curve, which outperforms, flattening 5s30s, 2s10s spreads by 1bp and 3bp on the day. The 10-year yields around 4.705% and near bottom of days range into early US session. Vector Nostradamus indicates we may have a bottom in in the worst bond bear market in modern history. Watch TLT for signs of more long duration bond buying.
Currencies
The Dollar Index is off 0.4%, extending a decline against its Group-of-10 peers as US yields fell after Fed Chair Jerome Powell’s dovish comments. The pound is up 0.3% versus the greenback, lagging behind most of its G-10 peers ahead of the BOE rate decision. The Euro, Swiss Franc and Yen are all up at the Dollar's expense, with EUR/USD back on a 1.0600 handle, USD/CHF straddling 0.9050 and USD/JPY closer to 150.00 than 151.00. Falling yields and a falling dollar are what stock prices need to break this downtrend. Vector Nostradamus is watching for signs of a dollar peak.
Commodities
Crude benchmarks are in the green in a continuation of post-Fed/Powell price action. WTI Dec’23 and Brent Jan’24 are posting gains of $1.50/bbl on the session and are trading around the $82.00/bbl and $86.00/bbl range. However, this remains well within Wednesday’s bounds and a long ways away from the $83.40/bbl and $87.00/bbl recent highs. Spot gold is benefitting from the post-Powell trade as the USD and yields continue to slip. Gold will need a dollar sell-off to break to new highs above $2100.
Crypto
Bitcoin and other cryptocurrencies advanced nicely yesterday, Carnivores, lifted by an improvement in appetite for risk assets. Bitcoin’s recent market rally is signaling a potential intermediate term bullish trend according to Vectro Nostradamus. However, the price currently faces resistance at $36K. VN thinks that once 36k is broken, BTC should run up to 40k. Multiple forces are pushing crypto prices higher. There remains significant buoyancy from optimism that the Securities and Exchange Commission (SEC) will soon approve a spot Bitcoin exchange-traded fund (ETF), which would be expected to usher in a fresh wave of retail and institutional interest. Geopolitical risk from conflict in the Middle East has also renewed calls for Bitcoin as a haven asset, like gold.
The Setup
Are we getting the reversal in yields and the dollar that might stop this market correction and bring buyers back into the market? After the most aggressive rate hiking campaign of the modern era is the Federal Reserve done? Maybe. While it is too early to tell, we like the price action and yesterday’s Fed meeting. Now if AAPL can just not deliver a tape bomb, and employment comes in cool tomorrow morning, we might just have the beginnings of a real rally attempt here. We are tactically long looking for continued trend improvements and better breadth.
Trader Z's Day in Review
Stocks managed to climb again today Carnivores, as the bounce from oversold conditions managed to run another day. The S&P 500 climbed 0.7%, the Nasdaq added 0.5%, and the DJIA advanced 123 points, or 0.4%. The Russell 2000 led the way up 0.85%. We had 11/11 sectors in the green again today, but still with no volume. If bulls want more than a bear market bounce, we are going to need to see some more volume Carnivores. Real estate and financials outperformed in the S&P 500, with the sectors higher by 2% and 1.1%, respectively. Notably, however, some mega-cap tech stocks lagged. See how tough it is for this market to REALLY rise without mega-cap tech? Crude oil slid further, falling to $81.16 a barrel, and the yield on the benchmark 10-year Treasury note fell 1 basis point to 4.86%. The pause in rates has been partially responsible for our two-day rally in stocks.
With the last trading day of October on the books, it is time to look back at the carnage. Stocks posted their third-straight losing month. The Dow and the S&P 500 fell 1.4% and 2.2%, respectively. This marks the first three-month losing streak for both indexes since March 2020. Nasdaq fell more than 2% in October, also on pace for its third consecutive negative month. These loses come on the back of a rapid rise in Treasury yields. This month, the benchmark 10-year U.S. Treasury yield breached the key 5% level for the first time since 2007. Market participants attribute the rise to several factors, including stubborn inflation and concern the Federal Reserve will keep interest rates higher for longer.
The Fed is set to release its next decision on interest rates tomorrow afternoon. Fed funds futures pricing suggests a roughly 99% probability that the central bank will keep rates at current levels, according to the CME FedWatch Tool. Also, on Wednesday we get the Treasury's quarterly refunding announcement, the JOLT survey, and private ADP payroll data. Treasury officials are expected to give details of the $776 billion debt offering for the fourth quarter and $816 billion in the first quarter of 2024. The Job Openings and Labor Turnover Survey is expected to show job openings at 9.375 million in September, down from 9.610 million in August. Finally, ADP payroll data for October is expected to show 150,000 changes in private employment after September's 89,000. The market will be looking for soft data to give the Fed a reason to pause. Better than expected data will probably be negative. The Fed and AAPL will then be the next catalysts for this market. Any long trades here should just be considered tactical, as the trend is still down and risk are skewed to the downside. Vector Nostradamus now waits to see if the Nasdaq Composite can take back the 50-day moving average, after taking back the 200-day moving average today. VN is also now waiting for the SPY to retake its 200-day moving average at 420 before any meaningful attempt at longs are taken. SO far it just seems like a bounce from oversold conditions.
Vector Nostradamus is bearish and is at 1/5 trend models in buy mode. VN notes all major indexes are mostly below key moving averages (with the exception of the QQQs). Breadth was decent today at 1.86 to 1 advancers to decliners. Nothing to write home about Carnivores. We need a 3 to 1 or 4 to 1 type a/d ratio. Bulls are going to have to do better than that for this to be a believable rally attempt. VN notes that bonds still haven’t convincingly bounced, so still not what we want to see in yields Carnivores. VN notes that yields must at least stabilize for there to be a meaningful rally in stocks. VN would also like to see the dollar weaken. VN continues to note that the trends in gold and bitcoin look the most intriguing out of all the major markets. VN still ranks energy (including coal and uranium), select defense names, and a few insurance names.
Today we have a financial stock to highlight Carnivores. Tradeweb Markets Inc. (NASDAQ:TW) builds and operates electronic marketplaces for rates, credit, equities, ETFs, and money markets. The company serves institutional, wholesale, and retail clients in multiple countries. The business has four key segments: Institutional, Wholesale, Retail, and Market data. Each of these segments represents 60.5%, 23%, 9.3%, and 7.2% of FY22 revenue.
TW recently announced its 2Q23 results, and its revenue was largely in line with analyst forecasts. Better than expected expense management contributed to an adjusted EBITDA margin of 52.5%, which surpassed analyst forecasts. This led to TW posting an EPS beat of $0.52 vs consensus estimate of $0.50. TW appears poised for continued growth and market share expansion in the evolving landscape of electronic trading. The tailwinds of electronification expected to drive TW's revenue growth, especially in rates derivatives and credit markets. The company's strong performance in 2Q23, including record electronic market share and expense management, underscores its market position and potential. Since going public in 2019, TW shares have significantly outperformed the S&P 500, and it is possible that TW is in the early innings of using technology to disrupt the traditional fixed income trading business. Check out TW the VN stock of the day.
Daily TW
Weekly TW
The Japanese Yen fell sharply today Carnivores, on track for its weakest close versus the U.S. dollar in 33 years. This came on the back of the Bank of Japan taking another step toward abandoning its controversial policy of yield-curve control. The BOJ at its policy meeting effectively loosened its cap on long-term bond yields, saying that its previous 1% limit on the 10-year Japanese government bond would now serve as a “reference point.” Traders, it seemed, were expecting more hawkishness after the news that the BOJ policy makers were likely to further loosen the yield-curve control policy after lifting the cap from 0.5% to 1% in July. Instead the announcement was percieved as dovish. In response, the U.S. dollar rallied sharply and was up 1.6% at 151.445 yen in North American afternoon trade. That would market its highest finish based on end-of-day levels since July 3, 1990, according to FactSet. Surges above 150 yen by the dollar last year prompted rounds of intervention by Japanese authorities to stem the currency’s weakness. Many analysts and economists have argued that an incremental loosening of yield curve control, or YCC, and a slow walk toward normalization of monetary policy makes sense as the BOJ because they are the only major central bank left where official interest rates remain negative. With these low interest rates, the yen is unlikely to find its footing. Until either the Fed begins to signal that it’s at least thinking about future interest rate cuts or the Bank of Japan signals it’s ready to lift rates, the dollar continues to run. Carnivores know that risk assets need a weaker dollar like lower yields to break the current downtrend, and the Dollar trend is still headed the wrong way. Yen Daily Yen Monthly (10 years)
Daily Yen
Monthly Yen
Trader Z's Premarket Report
Stocks
Stock futures are mixed this morning as the market’s prepare for the Fed’s latest policy decision on interest rates after wrapping up a terrible month. S&P 500 futures and Nasdaq 100 futures are up 0.04% and 0.07%, respectively. Futures tied to the DJIA have slipped 26 points, or 0.06%. Early Wednesday, ADP's employment report showed the U.S. economy added 113,000 jobs in October, below estimates for a 150,000 increase and up from September's 89,000 rise. ADP's report is a precursor to Friday's jobs report from the Labor Department.
Bonds
Treasury futures are near top of day’s range, with yields lower by 2bp to 3bp across the curve, unwinding portion of late Tuesday selloff. US 10-year borrowing costs fall 3bps to 4.89%. CME's FedWatch survey on Tuesday showed zero chance of any rate hike when the Fed concludes its two-day meeting on Wednesday. In fact, the survey of fed funds interest rate speculators went so far as to show a 3% probability that the central bank will trim short-term rates — currently in a 5.25%-5.5% target range — by a quarter point. The Fed decision is out at 2 p.m. ET. and the real question is how much tightening did the bond market just do for the Fed? Keep your eyes on TLT, no bid, no rally in stocks.
Currencies
The Dollar Index has climbed 0.1% as markets braced for the Federal Reserve to hold rates steady. The yen is stronger after some government jawboning earlier on Wednesday, rising 0.3% versus the greenback. The euro drops 0.3. Japan's top currency diplomat Kanda said speculative FX moves seen cannot be explained by fundamentals and he is concerned that one-sided, sharp FX moves negatively affect the economy, while he added that authorities may or may not say when they conduct intervene, according to Reuters. The dollar moving higher is still a problem for risk assets.
Commodities
Oil has climbed after slumping in the first two days of the week, as a still-contained Israel-Hamas war shifted attention back to resilient global demand. WTI rose 1.1% to trade near $82. Spot gold is flat.
Crypto
Bitcoin has been on a winning streak lately, rocketing almost 25% over the last month Carnivores. Bitcoin is currently trading at $34,300, heavily consolidated in the ranges between $32k and $34k. The price increase was led by the rumors and news surrounding the spot ETF approval. VN thinks BTC looks poised to run to 40k.
The Setup
Vector Nostradamus remains skeptical of this rally attempt. We will need to retake important moving averages before any significant long positioning can be taken. J. Powell and the Fed still control the fate of this stock market and the bond market. If the hawkish rhetoric continues, and the higher for longer mantra is all we hear, then stay lightly exposed and nimble as we are still fighting the Fed. We are looking for tactical short term opportunities.
Trader Z's Day in Review
Stocks managed to climb again today Carnivores, as the bounce from oversold conditions managed to run another day. The S&P 500 climbed 0.7%, the Nasdaq added 0.5%, and the DJIA advanced 123 points, or 0.4%. The Russell 2000 led the way up 0.85%. We had 11/11 sectors in the green again today, but still with no volume. If bulls want more than a bear market bounce, we are going to need to see some more volume Carnivores. Real estate and financials outperformed in the S&P 500, with the sectors higher by 2% and 1.1%, respectively. Notably, however, some mega-cap tech stocks lagged. See how tough it is for this market to REALLY rise without mega-cap tech? Crude oil slid further, falling to $81.16 a barrel, and the yield on the benchmark 10-year Treasury note fell 1 basis point to 4.86%. The pause in rates has been partially responsible for our two-day rally in stocks.
With the last trading day of October on the books, it is time to look back at the carnage. Stocks posted their third-straight losing month. The Dow and the S&P 500 fell 1.4% and 2.2%, respectively. This marks the first three-month losing streak for both indexes since March 2020. Nasdaq fell more than 2% in October, also on pace for its third consecutive negative month. These loses come on the back of a rapid rise in Treasury yields. This month, the benchmark 10-year U.S. Treasury yield breached the key 5% level for the first time since 2007. Market participants attribute the rise to several factors, including stubborn inflation and concern the Federal Reserve will keep interest rates higher for longer.
The Fed is set to release its next decision on interest rates tomorrow afternoon. Fed funds futures pricing suggests a roughly 99% probability that the central bank will keep rates at current levels, according to the CME FedWatch Tool. Also, on Wednesday we get the Treasury's quarterly refunding announcement, the JOLT survey, and private ADP payroll data. Treasury officials are expected to give details of the $776 billion debt offering for the fourth quarter and $816 billion in the first quarter of 2024. The Job Openings and Labor Turnover Survey is expected to show job openings at 9.375 million in September, down from 9.610 million in August. Finally, ADP payroll data for October is expected to show 150,000 changes in private employment after September's 89,000. The market will be looking for soft data to give the Fed a reason to pause. Better than expected data will probably be negative. The Fed and AAPL will then be the next catalysts for this market. Any long trades here should just be considered tactical, as the trend is still down and risk are skewed to the downside. Vector Nostradamus now waits to see if the Nasdaq Composite can take back the 50-day moving average, after taking back the 200-day moving average today. VN is also now waiting for the SPY to retake its 200-day moving average at 420 before any meaningful attempt at longs are taken. SO far it just seems like a bounce from oversold conditions.
Vector Nostradamus is bearish and is at 1/5 trend models in buy mode. VN notes all major indexes are mostly below key moving averages (with the exception of the QQQs). Breadth was decent today at 1.86 to 1 advancers to decliners. Nothing to write home about Carnivores. We need a 3 to 1 or 4 to 1 type a/d ratio. Bulls are going to have to do better than that for this to be a believable rally attempt. VN notes that bonds still haven’t convincingly bounced, so still not what we want to see in yields Carnivores. VN notes that yields must at least stabilize for there to be a meaningful rally in stocks. VN would also like to see the dollar weaken. VN continues to note that the trends in gold and bitcoin look the most intriguing out of all the major markets. VN still ranks energy (including coal and uranium), select defense names, and a few insurance names.
Today we have a financial stock to highlight Carnivores. Tradeweb Markets Inc. (NASDAQ:TW) builds and operates electronic marketplaces for rates, credit, equities, ETFs, and money markets. The company serves institutional, wholesale, and retail clients in multiple countries. The business has four key segments: Institutional, Wholesale, Retail, and Market data. Each of these segments represents 60.5%, 23%, 9.3%, and 7.2% of FY22 revenue.
TW recently announced its 2Q23 results, and its revenue was largely in line with analyst forecasts. Better than expected expense management contributed to an adjusted EBITDA margin of 52.5%, which surpassed analyst forecasts. This led to TW posting an EPS beat of $0.52 vs consensus estimate of $0.50. TW appears poised for continued growth and market share expansion in the evolving landscape of electronic trading. The tailwinds of electronification expected to drive TW's revenue growth, especially in rates derivatives and credit markets. The company's strong performance in 2Q23, including record electronic market share and expense management, underscores its market position and potential. Since going public in 2019, TW shares have significantly outperformed the S&P 500, and it is possible that TW is in the early innings of using technology to disrupt the traditional fixed income trading business. Check out TW the VN stock of the day.
Daily TW
Weekly TW
The Japanese Yen fell sharply today Carnivores, on track for its weakest close versus the U.S. dollar in 33 years. This came on the back of the Bank of Japan taking another step toward abandoning its controversial policy of yield-curve control. The BOJ at its policy meeting effectively loosened its cap on long-term bond yields, saying that its previous 1% limit on the 10-year Japanese government bond would now serve as a “reference point.” Traders, it seemed, were expecting more hawkishness after the news that the BOJ policy makers were likely to further loosen the yield-curve control policy after lifting the cap from 0.5% to 1% in July. Instead the announcement was percieved as dovish. In response, the U.S. dollar rallied sharply and was up 1.6% at 151.445 yen in North American afternoon trade. That would market its highest finish based on end-of-day levels since July 3, 1990, according to FactSet. Surges above 150 yen by the dollar last year prompted rounds of intervention by Japanese authorities to stem the currency’s weakness. Many analysts and economists have argued that an incremental loosening of yield curve control, or YCC, and a slow walk toward normalization of monetary policy makes sense as the BOJ because they are the only major central bank left where official interest rates remain negative. With these low interest rates, the yen is unlikely to find its footing. Until either the Fed begins to signal that it’s at least thinking about future interest rate cuts or the Bank of Japan signals it’s ready to lift rates, the dollar continues to run. Carnivores know that risk assets need a weaker dollar like lower yields to break the current downtrend, and the Dollar trend is still headed the wrong way. Yen Daily Yen Monthly (10 years)
Daily Yen
Monthly Yen