Asia & EU Session Equity Weakness -Bonds Bid

3165 SP level Respect

We have highlighted prior the importance of the longer term time frame of that 3165 Emini-SP500 futures level and it seems like we aren’t the only ones. We like to think like a bigger shop even if we aren’t and often we dream of managing big dollars one day and when levels like that present themselves, well we have to take notice.

No matter if you are a small player or a big time whale, trading mentalities are a matter of perception and we would have to think given the recent price action that the 3165 is seeing a whole host of players fading this current up move.

Yes we know equities don’t fall, but in the short term they do and depending upon your trading strategy whether a longer term portfolio buy and hold/hedger or a short term sub-second Algo-HFT, two way market flows are inevitable. (although in equities quite rare these days)

So with another rejection of this 3165 Emini-SP500 futures level, we can’t help but think a few larger players have drawn their lines in the sand for now.

With this we expect increased Covid rhetoric to drive pricing and weakness (yea its a bit of a conspiracy type logic but then again we think like a big shop and no doubt if we were the whale we would have our own social media narrative spinners on payroll, remember Sun Tzu the art of war, if weak appear strong, its all perception weave)

We also have central bank balance sheet weakness over the last month as well as we noted in our last note FED ASSETS TUMBLE and we know damn well equity markets react directly to this expansion/contraction.

On the flip side we know POTUS controls the FED and we will expect further stimulus in any and all shape possible including another round of stimulus dollars to main street.

So it is within that construct that Magnelibra views the current situation. With that lets check the SP chart:

We noted the Ultra Bonds strength lately and it continues to outpace the overall bond market in a bull flattening which is an expected yield curve move given the current environment, if curious as to why, reach out, we consider ourselves experts in this arena spending over 20 years in fixed income US Treasury Arbitrage. So after a brief fake out to 221-23 the Ultra Bond has rallied smartly but coming into a very big longer term time frame resistance in the mid 225s:

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