Thank you guys for joining me and welcome to Episode 18 of Season 2 brought to you by Magnelibra Trading & Research (MTR). This episode is entitled “America First Policy Moves Forward-Markets Wavering”
Quick Disclaimer: The following podcast is for educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and may not be appropriate for all listeners.
Yesterday saw the risk markets get smacked square in the face of America First Policy action as the Trump Administration advances with 25% tariffs on Mexico and 20% tariffs on Chinese imports. We know China will try to counteract these measures equally, but honestly they do not hold the cards here. Also yesterday we saw TSMC Wei and Trump announce a new $100Bn agreement to invest in the United States and build chipmaking facilities here in the coming years.
This is the product of forcing the rest of the world to bring manufacturing here by making shipping and tariffs a cost factor that cannot be ignored. Whether this all works out or not remains to be seen. There are trillions in bilateral trade agreements that are being adjusted here now and that will have some repercussions, this will have an adjustment period and maybe that is what really worries risk assets.
Anyway Sunday nights trade was a minor extension of the late day massive rally on Friday, but NY came in and it was big sellers right out of the gate and the markets never looked back! We will take a look at the technical aspects later, but let’s check in on the consumer stocks reporting this morning Target and Best Buy. Target beat expectations with decent holiday demand, but the outlook is uncertain and this is leading to a down move in the stock. Same story for Best Buy beating expectations but FY2026 revs were lower than expected. Right now Target is down 5.42% at $114.23 -$6.55:
Best Buy is -12.95% at $75.55 -$11.24:
So these retail stocks are not painting a great picture moving forward and we can almost sense all the data is pointing toward risk off moving forward as market participants seem to be doing more selling off of these earnings reports.
Today after the close we have CrowdStrike, the cybersecurity tech company. Its recent price action has seen the stock fall 17.3% off the highs and trading below our topping pattern level of $398:
As far as the options Breakevens we will use the $377.50 strike straddle which is priced at $36.20 and indicative of a 9.6% move. The options markets aren’t giving us a lot to chew on and considering the move lower has pushed down near 20% it wouldn’t shock us if earnings gives the stock a little boost but overall we don’t see a great play in this one.
Ok onto other news really quick we wanted to touch upon Google and its quantum computing Willow chip. We heard a bunch of great and extraordinary things about this but we also know that this is a double edged sword. In simple terms we can say that the risk of this kind of advancement is a threat to the very basis of our entire system, our reality and we just aren’t sure that mankind is ready for all of this. So we heard that Google has been very secretive now and we aren’t sure if they have shut this thing down or if they discovered something they don’t want anyone else to know! Anyway keep an eye out for this, but as we go forward quantum computing will revolutionize everything, we just aren’t sure we’re ready for it, morally or metaphysically, and that’s all we will say on this, but keep your eyes and ears open in this arena, because the cat is out of the bag now. Anyway here is a link to the google blog about this new technology, Google Willow
Guys this is how MTR operates, we read, we listen and we take in a ton of data, and what resonates with us, is what we present to you, we don’t know sometimes why things stand out, but we don’t question the universe, we just deliver what’s on our minds. We hope our subscribers, listeners and readers benefit from our insight and that’s why we present what we do to you. How you receive it is up to you! What is strange though is the stock really started to accelerate lower once the news of Willows future fell into question:
Ok let’s get to the markets, here now with the settlements and rolling changes Gold was the big winner yesterday in the US and the Dax had a big performance and the Nasdaq was the day’s biggest loser:
As far as the MCA CTA Markets Sentiment saw the Euro move back to neutral and the Pound is now +1:
When we look at the US Bond Markets we can see the yields continue to tumble:
Let’s take a look at the US 10Y chart and here we will take a look at two perspectives and why traders have to look at multiple time frames and from multiple angles. Now we aren’t talking about High Frequency goes or day traders in and out, but rather from a more broader perspective. So this first one is a weekly chart focused upon the last 2 years. You guys have seen this chart many times before, we have and continue to have our expected downward path which is highlighted. So we are back into this trend channel now and we would now expect that 4.37% area to act as our resistance point but on this chart and what we want to point out is that 3.20% is the bottom of this range and expected given our vantage point here:
However when we zoom way out and look at the 10Y on the monthly chart, we feel too many bond investors have lost touch with the decades old down trend that we broke out from because of all the inflation post Covid. Many don’t believe we can trade back down there, but the reality is we tend to focus on the short term and disregard the larger forces at play. What if we are at the top of a renewed downward trend channel? One that could and will ultimately take us back down to 1.50%?
So many today are focused upon inflation, but the reality is the inflation is a product of the Feds balance sheet and monetary increase, this has led to a massive concentration of wealth but the yields topping out here are telling me the future will have a very different story to tell. So when you look at these prior two charts, the biggest takeaway is don’t just focus on the short term, you have to be aware of the bigger picture that exists!
Another bigger picture item can be displayed in this next chart, this one should scare the hell out of value and risk based investors, this is a wake up call for many and if its not yet, it soon will be:
Ok let’s take a look at the MEGA8s data which now has Berkshire. As far as the hedge this week, we originally targeted the 520C but its apparent that won’t be possible. We will probably look at the 505Call but will see after today’s close:
We retooled our Market Cap MEGA8s chart to include the 200pMA, it should provide some relief, but maybe just maybe this is a real selloff and we won’t find a bottom, till we see a real panic:
The MEGA8s haven’t broken the trend channel, yet:
But the damage is now starting to add up, when we look at the market caps and their current retreat levels, TSLA is leading the way -40.7% with Broadcom and Nvidia down 20% plus, so losses are starting to mount:
As far as the QQQs well the chart is ugly, to us, the sell off hasn’t even begun and that is a scary premise:
Ok the final data point is the StrategyB data which for our data purposes continues to show weakness in this covered call strategy:
As far as Bitcoin, well they made a big up move on the strategic crypto announcement but it didn’t mention Bitcoin, nor should it, but it did jump but that move has been fully taken away:
Ok let’s look at a few technical charts for the futures markets we cover, here is the SP500 futures where 5851 is a key level now, a breach here and mechanicals will be drawn in and be better and more consistent sellers:
As far as the Nasdaq futures we are breaking the trend channel and 20216 is key a weekly close under here and this opens up a very large downside move:
When we look at the spread between the two this spread is also confirming the diversification of risk and an impending larger move lower in equities as this bottoming pattern is 9 months in the making:
Our last technical chart is Crude Oil, a weekly close under $68 will most likely lead to a much bigger decline to the $50s handle:
Ok that is it guys, we hope you received our message well today! Please everyone if you can hit that subscribe button, share our work or at least give it a like. We are giving you a mindset that over time will greatly enhance your understanding of not only financial markets, but life itself. Thank you for giving us your time today, have a great day, change someone’s life, be kind, do something out of your comfort zone and realize, that no matter what, your attitude shapes your reality so always try to look at the positive side of things. Even if you feel the opposite way, just tell yourself, good, I am glad this happened to me, start saying that, start looking at everything is good. I can guarantee you, your mindset will start to see everything differently, Till next time, cheers!
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