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Intermarket correlation - Price tells story?

  • #41
  • Jun 10, 2021 5:51am Jun 10, 2021 5:51am
what market rate to look at trading USD? Long - metermediate rate? short term rate? Fed talk?
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  • #42
  • Jun 10, 2021 8:37am Jun 10, 2021 8:37am
Quick review here on ECB press
I marked level and liquidity, divergence on chart: Eurusd, UST and Europe bond futures (inverted)

1 hour chart
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1 minute chart
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  • #43
  • Jun 10, 2021 6:36pm Jun 10, 2021 6:36pm
Quoting alps99
{quote} Could you be even more specific on this? like real analysis on combining some of those things in current economic condition and how it affect current market. I am interested. Thanks


Eg - Some participants in the markets are investing in the future of an industry, not just investing to make gains short/long term.

Eg - Some participants have enormous overhead and need to seed and plant $$$ into a country to continue to do business there.

Eg - Some need to fade their already overexposed liquidity position eg - certain branches of institutional traders.

The best way to understand this is to step away totally from all "this" stuff you have been posting and everyone else posts and get involved in the real workings of government balance sheets and company backbones.

Eg - Shareholder reports, public tax records, Annualized audits and market participation. People assume this information is exclusive or does not exist but it certainly does exist.

Shareholder Reports

https://www.google.com/search?q=Shar...hrome&ie=UTF-8

The problem with "people" as a group, is when the same info festers by being handed round as if "that's the way it is done". And usually this kind of attitude is utter rubbish. It's inflated and becomes bolder with each new mutation.

If you want to trade (Anything) data is not helpful at its own "tapping". You must get to know the source. And the source is NOT the usual things you see on this site and elsewhere, this is just to perpetuate an inflated story.

Yes the things you are mentioning are involved, but at some point, that dirty greenhouse glass window becomes too daunting and one must choose - step inside or walk away.

By using real operational workings, you can see where money is spent, how it's spent and begin to see "trends" in the data and its behaviors. And then these things you see can give better understanding of business being carried out. The rules are the same for all participants, but many 'normal people' are believing that charts and news will give them an edge. They give what I could call a "pseudo edge".

Eg - Public traded companies are a wealth of information for their industry and sector AND the propensity for the future of that industry, sector and society in general. The belief, however, is that these same co's do not utilize FX to do ANY business. This is completely untrue and inaccurate. And has NEVER been true or accurate.

Alphabet (Google)

https://www.sec.gov/Archives/edgar/d...10-kq42018.htm

For the Fiscal Year Ended December 31, 2018

Get to know business and THEIR business and see what you can learn (Not just glean) from the research done.


I hope that helps.


Peter
Real Trading is not gambling.
  • #44
  • Jun 11, 2021 9:29pm Jun 11, 2021 9:29pm
Quoting PeterCaleb
{quote} Eg - Some participants in the markets are investing in the future of an industry, not just investing to make gains short/long term. Eg - Some participants have enormous overhead and need to seed and plant $$$ into a country to continue to do business there. Eg - Some need to fade their already overexposed liquidity position eg - certain branches of institutional traders. The best way to understand this is to step away totally from all "this" stuff you have been posting and everyone else posts and get involved in the real workings of government...
Could you help me just a little bit, please share your view/analysis of your case study on real life economic with the link to current market condition?
  • #45
  • Jun 13, 2021 11:25am Jun 13, 2021 11:25am
Quoting PeterCaleb
{quote} Eg - Some participants in the markets are investing in the future of an industry, not just investing to make gains short/long term. Eg - Some participants have enormous overhead and need to seed and plant $$$ into a country to continue to do business there. Eg - Some need to fade their already overexposed liquidity position eg - certain branches of institutional traders. The best way to understand this is to step away totally from all "this" stuff you have been posting and everyone else posts and get involved in the real workings of government...
Come on Peter, im waiting
  • #46
  • Jun 13, 2021 12:04pm Jun 13, 2021 12:04pm
Quoting alps99
{quote} Come on Peter, im waiting
i'm waiting also.. come on peter.. we want learn from you.. don't be shy
  • #47
  • Jun 13, 2021 10:11pm Jun 13, 2021 10:11pm
Firstly, let me say this - most people I have ever met, fall into 2 categories = those who understand the business world and those who do not. Truthfully, there is no issue with being ignorant of the business world, but many traders (beginner or not), believe that the money fairies just send big or small orders to market and then these same participants disintegrate into thin air until the "next trade setup" comes around. On another thread, I have tried to explain these things in simple language, only to find that chosen ignorance prevails and common sense is simply not present.

So let's have a go here - FX is not based on currency denominations and never has been. It is based on business being carried out worldwide. And so, people who lock themselves in a room with just a chart and some data are missing the point. My above posts have shared the pertinent starting point. To actually truthfully understand the FX markets, you have to appreciate what they are on the ground level. And to do this, you need to see that specific categories of participation exist and sometimes, want to, need to or even have to, place monies into the market.

The analysis I use is based on understanding why the FX markets were setup, who tends to use them and WHY they use them. Thinking about it this way it's easy to look at the shareholders report and tax audit report, to see where a company is up to for its tax:revenue ratio - year to year and see the reason why they may send orders to market. Sometimes it's to offset, other times they want to or need to invest to A) Diversify B) Counter Offer what they have already been doing .... eg = gone long on the industry index eg Nasdaq for a semi-quarter (A Pre-dated start to end period within a stakeholders quarterly period) and returns are good but not "great", so they want to bolster profits. Or perhaps to redeem tax deductions etc.

For many people, they are 'satisfied' with Fx futures data or Order Flow etc. I use these "sometimes" but really, they are the aftermath of what usually can be equated beforehand.

** This should NOT be confused with "predicting a market". For me it is about seeing what is very likely to happen beforehand so I can anticipate. So the fx futures data/order flow people see orders and data and basically, the black-white personification of that market, but still "have to deal with" the grey area that forms as to the "why", meanwhile I am looking at the instigator "Why" and I have found it to be more reliable and stable. And additionally, I don't need to import third party data (free or paid for).

Every medium or large cap participant has rules and regulations they MUST follow. FX markets may be "decentralized" but nothing is going on without a paper trail, ever. But most people are told that decentralized = anonymous. It's simply untrue. Every entity that participates does business in whatever way they do it. They have to, otherwise they have no money to send orders to market. Debt recovery and consolidation procedures only work for some situations and are not meant for constant use. So for them, it's 'business as usual'.

I have noticed, THIS is the toughest thing for people to wrestle with on this site. The idea that real life is happening out there and it DOES matter what goes on.

If a business is doing badly, is underperforming, or is outperforming its previous (eg year to year or eg past 2 quarters) then you need to look at how management do under pressure, and what their cap position is, so you can see how much internal debt they can still carry while placing orders to market. This tied in with their previously recorded activities, helps to see how they analyze the markets they participate in. I know this seems general, but once you get to know these ingredients and become familiar with using these types of information, the picture becomes clearer.

Cap Position = Every company has to keep 'money on hand' to deal with uncertainties etc. And for some categories it is mandatory. And you can use this information to get a look at how they do business and what kind of debt they carry, what kind they outsource and how they fulfill their obligations. It is literally built into their business activities. It just requires some digging and sorting. No secret to it. Just some elbow grease.

So I suggest to anyone interested in this, spend some time with the documents on the links above and learn about business and the business world. This approach is how it has always been done because it is information everyone has access to. (Apart from insider trading stuff of course).

It works for 'day trading' styles as well as the other styles. And helps the person to become more well rounded as a trader. Doing it this way gives your trading longevity rather than just very short term profits without any real understanding of what you're doing.

I hope that helps. The rest is up to the reader to familiarize themself with everything mentioned.


Peter
Real Trading is not gambling.
  • #48
  • Jun 14, 2021 5:52pm Jun 14, 2021 5:52pm
Quoting alps99
I open this thread to discuss about topic as the title said: to exploit the divergence between multiple correlated assets. Let's do this together. I believe traders on the street look at multiple assets and react according to the prevailing theme. For example in an economic ecession, as stock rallies when sign of confidence, commodity price and commodity/emerging market currency will also get a boost as they share the "same energy" in a trading theme.. Sometimes they just sell bond when stocks rally. I don't know why, that's what happened. Although...
Interesting topic. In the context of currency trading, I watch several markets when thinking through fundamental analysis. For example, oil price/expectations are important when thinking about the CAD and, less so, the GBP; commodity price index when thinking about the AUD; 10 year bond yield differentials when thinking about the EUR, GBP, and Yen, among others; and gold prices when thinking about the CHF (but this connection seems to be diminishing over time). I'm not sure this analysis has much impact on how the next 4H candle forms on ant currency pair, but certainly can influence the structure of the market on the 4H chart.

With that in mind, I have several charts on my charting system that are not currency related, such as gold, oil, bond yields, and a commodity index.
  • #49
  • Jun 14, 2021 10:21pm Jun 14, 2021 10:21pm
Quoting GEfx
{quote} Interesting topic. In the context of currency trading, I watch several markets when thinking through fundamental analysis. For example, oil price/expectations are important when thinking about the CAD and, less so, the GBP; commodity price index when thinking about the AUD; 10 year bond yield differentials when thinking about the EUR, GBP, and Yen, among others; and gold prices when thinking about the CHF (but this connection seems to be diminishing over time). I'm not sure this analysis has much impact on how the next 4H candle forms...
Correlation didn't diminish, they temporary breaking up.

I presented a case in #34 about EURUSD and 10years Germans bund-US note yield differences.

As the case of CHF & Gold: both quoted in USD, so it's understandable they have some correlation. Second is market normally views them as "safe haven". Be careful here, don't take it for granted.
When someone say Risk or Safe, one always have to ask: What kind of risk? Safe before what?
CHF has a great link to EUR, as Swiss's economy tied to European Union. The debt crisis peak 2012 in EU dragged CHF down vs USD while Gold in consolidation.
  • #50
  • Edited Jun 15, 2021 12:57am Jun 14, 2021 11:54pm | Edited Jun 15, 2021 12:57am
Quoting PeterCaleb
Firstly, let me say this - most people I have ever met, fall into 2 categories = those who understand the business world and those who do not. Truthfully, there is no issue with being ignorant of the business world, but many traders (beginner or not), believe that the money fairies just send big or small orders to market and then these same participants disintegrate into thin air until the "next trade setup" comes around. On another thread, I have tried to explain these things in simple language, only to find that chosen ignorance prevails and common...
A distinction has to be made between the assets and a host of products derived from the asset values in the form of Futures, Futures Options, Contracts for Difference (CFDs) , structured notes, ETFS (exchange-traded funds) which were designed to provide hedging facilities to an asset holder but now provide huge speculative opportunities to traders like me.

A clear distinction also has to be made between the forces of supply and demand influencing the asset valuation and the competition in the derivatives markets.
Helicopter money has clearly exposed the notion of true competition. The assets markets are being influenced by the authorities to toe the government line.

The derivatives market has lost its original purpose of hedging and now it is for mercenaries that include the exchange appointed market makers, cartels, wealthy persons, small speculators like me indulging in a no holds barred kind of environment, all taking care that the golden goose remains. So informal level of demand and supply forces shape the derivatives markets in an orderly manner. As long as retail speculators understand this reality and play the games to the best of their abilities to match the big players moves with small accounts (buying options and capping risk) but with sharp skills or having a fat purse (buying and selling all kinds of derivatives) are welcome to enjoy the show.

Those who have small financial resources and are not willing to invest time in themselves to prepare for derivatives sport should not get involved.
FF is attracting 99.50% of such persons and they are using FF to take out their frustrations and looking for shoulders to cry.
Practice makes a person perfect
  • #51
  • Jun 15, 2021 5:42am Jun 15, 2021 5:42am
Quoting simnz
{quote} A distinction has to be made between the assets and a host of products derived from the asset values in the form of Futures, Futures Options, Contracts for Difference (CFDs) , structured notes, ETFS (exchange-traded funds) which were designed to provide hedging facilities to an asset holder but now provide huge speculative opportunities to traders like me. A clear distinction also has to be made between the forces of supply and demand influencing the asset valuation and the competition in the derivatives markets. Helicopter money has clearly...


As I do concur with much of what you have said here, simnz, to me, there is no reason to add too much to this.

The approach I have described, is used by me everyday with the the focus on 'big players', fundamental markets and many production and resource markets so I can observe the ripple effect being created.

The only prerequisite a person needs, is the willingness to learn the real life ingredients that exist, as well as be updated re: 'the game'. However, I am a strong believer in understanding the game but to not play "their" game. To me this is a trap.

Analytics are helpful but lack the finesse of fully appreciating how the economies are intertwined and entangled.

As many people enter into the financial markets through the "information door", they do not understand that behind the curtain is just a matter of layers.


Peter
Real Trading is not gambling.
  • #52
  • Jun 15, 2021 6:08am Jun 15, 2021 6:08am
Quoting PeterCaleb
{quote} As I do concur with much of what you have said here, simnz, to me, there is no reason to add too much to this. The approach I have described, is used by me everyday with the the focus on 'big players', fundamental markets and many production and resource markets so I can observe the ripple effect being created. The only prerequisite a person needs, is the willingness to learn the real life ingredients that exist, as well as be updated re: 'the game'. However, I am a strong believer in understanding the game but to not play "their" game....
My intention was to warn those entering the information door to not get trapped. Financial trading is not a usual activity.
In my case, I can say I have made the money, not from the knowledge I gained from my two master's degrees. Moneymakers really put in a lot of time in understanding how the money machine works. It is from observing and understanding the realities of life.
Practice makes a person perfect
  • #53
  • Edited Jun 24, 2021 1:50am Jun 23, 2021 11:00pm | Edited Jun 24, 2021 1:50am
The number is inflation, everyone shout inflation, the Fed said it's transitory.
But the market doesn't think so. The market thing it's gonna be dis-inflation in the next periods

All the market based are pointing down to disinflation expectation
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And if you suspect that the Fed's influence on those to make it artificial low market based inflation, it would sell TIPS bond to the market or increase norminal bond purchase in order to widen the difference.
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In fact, after the pandemic crisis moment, since June 2020, Treasury securities has been steadily purchased by the Fed at speed of 80B/month.
https://www.newyorkfed.org/markets/d...tional-details

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and here's the detail (this is the level of Treasury held in Fed balance sheet, not purchasing speed):
Fed stop buying T-bill, focus on short-term note (1-5 years)

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Doesn't explain the move on bond's yield.
Inflation expectation is real from then until March this year. But since then, the rate fall.
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Wat happened here?
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Weren't those signaling something? Like, the banks need to balance their portfolio to matched with their liabilities's term?
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  • #54
  • Jul 28, 2021 8:05am Jul 28, 2021 8:05am
Price action yesterday makes me thing. Have we seen this before?
Suddenly Dollar dropped like a stone. We all know the last few week is the risk-off trade.
Government Treasury securities up, not just in US but everywhere. The deflation ghost keep coming back to haunt the market (and also economy) over and over again despite of inflation fear (and printed report).

The wind has changed its direction since... maybe late May to June. The "reflation" trade was over. No more yield lead currency. The signal actually started earlier.
Long dated yield stop rally since April. There was an unwind Dollar position movement (maybe - for the Q1 rally), and this move stopped around mid-May.There's a consolidation...
And this consolidation is when everything was about to unfold. The "Market correlation" changed, the dynamic changed.

Money came back to its bunker. USD rallied, partly because a risk-off trade, partly because the yield difference between US and rest of developed world. JPY (not against Dollar) and Government bond rallied. Market based Inflation expectations down, Commodity and commodity currencies performed poorly, money out of Emerging market (maybe fear of Delta variant) and also Developed economy's equity (except US) performed poorly. Dow Jones and Value stock underperformed Nasdaq, SnP and Growth, Tech stocks (these sector benefit from low interest).

We've seen this before. Treasury securities ain't market for average Joe. Big Dealers ain't stupid! While everyone shouts inflation, CPI printed highest number since years ago and they were busy buying Long-dated bonds? And what the banks were doing? Reluctant to lend! Well, if there's inflation and real recovery, they would use massive bank's reserve (these are not money btw, in our sense) bid for safe-negative-return-assets. There's something wrong here. The only entity banks lend to is the Government. They stop taking risk.

We've seen this before. Im not saying things will unfold exact same way it did in the past. But for sure we're not gonna like it when it happens, again, and again.
The last time this narrative happened is right before Covid virus spread to the world financial market, before March 2020. Actually we can trace all the way to late 2018 when global yield started to fall. Dollar up, bond up, commodity and global equity performed poorly.

And it happened again. Not "too much money caused inflation" is the problem; problem is "too little money and not enough for substantial inflation and growth".
  • #55
  • Jul 28, 2021 11:28pm Jul 28, 2021 11:28pm
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  • #56
  • Jul 28, 2021 11:29pm Jul 28, 2021 11:29pm
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  • #57
  • Jul 28, 2021 11:31pm Jul 28, 2021 11:31pm
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  • #58
  • Aug 10, 2021 4:29am Aug 10, 2021 4:29am
If you do fundamental analysis based on official data, you really need to read these articles
https://alhambrapartners.com/2021/06...asd-no-chance/

https://alhambrapartners.com/2021/07...tions-of-them/

Listen to market signals, not statistical tricks. The authorities have the same response whenever crisis happen, hence, secular trend will continue.
  • #59
  • Aug 10, 2021 7:54am Aug 10, 2021 7:54am
Quoting alps99
If you do fundamental analysis based on official data, you really need to read these articles https://alhambrapartners.com/2021/06...asd-no-chance/ https://alhambrapartners.com/2021/07...tions-of-them/ Listen to market signals, not statistical tricks. The authorities have the same response whenever crisis happen, hence, secular trend will continue.
Macro trading vs micro trading:
Please share your insights.
Practice makes a person perfect
  • #60
  • Aug 12, 2021 10:46am Aug 12, 2021 10:46am
Quoting simnz
{quote} Macro trading vs micro trading: Please share your insights.
What's micro trading?
0 traders viewing now