Nothing to see here

I need a place to occasionally store my thoughts, not a place for dialogue, self-promotion or teaching.

Powell just delivered a deadly FOMC press conference today.
Higher for longer, until something breaks and takes us back to ZIRP and QE.

Hard to be bullish after the close on futures (I mainly trade ES, ZN and UB + swing trades on FX + commodities + LT investment on stocks).

We may trend down until the midterms after which I would expect some sort of a Santa Rally fuelled by year-end flows + CPI and job data that may hint at lower rate hikes in December.

Weekly gap at around 3600 on ES - This may be a decent place for longs, either cash or Jan 4000 calls - I don't see 3500 breaking in 2022

Powell has been crystal clear today. Maybe he is more a Paul Volcker than an Arthur Burns after all

The ROC of YoY CPI has started to turn negative.
I expect this to be cheered by the market when the Nov CPI comes out next week, 2 days after midterms

We are getting closer to start buying on long duration bonds. TLT is probably a good place to start.
Unless the Fed has to pivot faster than expected, sub-90 is a good place to accumulate (that would correspond to around 5% interest rate which I don't see getting past in this cycle, but price will show the way)

1) NFPs +261K headline right on top of 20yr avg of growy months.
2) HH survey noted -328K decline in total emplmt
3) Construction saw +1K job gains; this is going sharply negative soon

Last throes on the job market
Soon, some bad news that will be seen as good news for the market

Short Dax is likely to be my core position for 2023 as it encapsulates the end of the last years of utter stupidity, wokism and irresponsible MMT and QE gibberish.

I will look to position around 14700-15000 depending how price action evolves in the coming weeks for a final target at around 8000 which is both the March 2020 lows as well as a structural long term support.

I will probably use a mix of future shorts + long dated puts depending whether vol is reasonably priced at the time (quite cheap right now but likely to get cheaper)

This is clear as mud...

The Daily is showing signs of buyer exhaustion but the previous weekly is telling me this may be just digestion.
I'll wait...

Long Oil starting to become interesting again
No rush though

Even though I am planning to go massively short DAX in 2023, the more I reflect on the market, the more I am leaning towards a head-ripping bear rally first that will force CTAs and hedge funds to go long again and probably muddy the bears' convictions.

Why?

1. Because this is how things go in general in bear markets: once the market accepts the new reality (ie higher rates, risk of recession), it "normalizes" the situation and tries to rally.
2. As rates rise, every new hike is one hike closer to the terminal rate, i.e. Fed pause, which is (wrongly) cause for optimism
3. Because the market gets tired of being bearish on the account of "traders have endured enough", even though the worse is generally ahead

One thing I am watching is the MOVE index and, if bond volatility stabilizes, equities will rally for a while before something eventually breaks under the weight of the interest rates, markets panics, Fed brings rates down... rinse and repeat

The thanksgiving seasonality is very bullish, the market seems to want to rally until year end, and unless inflation prints another scary new high or that the Fed signals another 75bp hike in December, any "meh" news will be interpreted as good news in my opinion.

But job losses will increase, earnings will plummet and something will break, taking markets to new lows in 2023 in my opinion

Price is the only trustworthy guide, patience is more necessary than ever

Periods when WTI crude was down 30%+ YoY:
Oct 2001-Feb 2002
Nov 2008-Sep 2009
Dec 2014-Feb 2016
Mar 2020-May 2020
Mar 2023-Jun 2023 (?)

And what happened after?

Against my best judgment (), I took a small Dax March23 Put @10000
Nothing serious but I have never traded Dax options and I need something to monitor with a bit of money to keep me focused on the chart
First observation: this is a very illiquid market, even on the best option broker
Second observation: this market absolutely doesn't price a recession for 2023, rightly or wrongly

Most of my position will be on futures, but when volatility is as cheap as it is now, it would be a shame not to buy some

No life changing trade, but it could be a 4-5 bagger

Me, for the last week

Greed has still some room to run...

The signal for risk-off trades should in theory be in that zone 2-3% higher
Anything above that would be a gift for bears next year but market narratives will try to confuse as many people as possible in my opinion