Good morning everyone, hopefully you are all having an excellent start to your week thus far. Thank you for joining me and welcome to Episode 4 of Season 2 brought to you by Magnelibra Trading & Research. This episode is entitled “Global Bond Players Calling the FOMCs Bluff - Leverage Purge Inbound”
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.
Ok so the post NFPayroll reaction is quite eye opening. Now its not the NFP data that really concerns us, as you guys know we don’t believe these numbers and it seems the US markets don’t believe them either, but something much larger seems to be brewing here. The NFP print came in at +256k a 65% higher than expected print with Unemployment coming in at 4.1% a tenth lower than expected. However both he Equity markets and Bond markets took it on the chin. Here take a look at the US bond market yields close from Friday:
The front end was the biggest loser as bond markets revalue the veracity of FOMC future rate cuts. All yield spreads fell except the 2s5. This is a very interesting move and when we look at the long end chart and the 10Y is +67bp in just over 2 weeks:
This move in the bond market is undoubtedly crushing global leverage and there is no doubt that the move in the FX markets is confirming this as the US Dollar is kicking ass and taking names and plenty of upside to go:
The move in Crude Oil is also confirming this debt debacle brewing as Crude Oil is up 18% in the last few weeks. Higher energy prices are going to further constrain capex and consumer discretionary spending:
So has the FOMC lost control of the long end? Are bond spreads going to continue to steepen and force the FOMC to halt their cuts for now? It sure seems that way, but if this is indeed the case, Equities have the most to lose here in the short run and it seems the whale selling that retail has been buying into for the last 2 months, is about to get smacked in the face, hard. We warned you guys of a trade on the weekly below 21600 in the March Nasdaq and now we are 1000 points below and bear mechanical programs are all in place and will sell any and all rallies up to that point:
The only saving grace for the Nasdaq now is the weekly 21VWMA and we would suspect first support there at 20600, but we suspect any rally off there will be short lived and sold into. The SP500 futures however are already below their 21VWMA and this does not bode well for the NQ! Just so you guys know, Warren Buffett does raise $330bn in cash at market bottoms…
So it is obvious that the higher bond yields have awakened the equity bears enough to bring in the systematic sellers, this is obvious and now will see just how quickly retail picks this up, generally retail grabs the falling knife, giving ammo to all the systematics to sell into and 5500 in the SP is the real retail line in the sand a trade down there will force a mass liquidation from there. So the lines have been drawn and its now the equity bulls that are having to battle heavy handed systematic mechanicals whose programs are now in sell mode!
This week is pivotal for the ES/NQ spread chart, we love this chart and it will confirm the overall US equity market reversal and we are witnessing the beginning of the Nasdaq strength finally giving way to the broader SP500 market vis a vis:
Lets take a look at the MEGA8s now as META the only winner in the group on Friday, but overall they were down $305Bn in market cap. We are targeting the QQQ 512C this week as the hedge for the group:
As far as the MEGA8 market cap total chart it has rolled over and the bottom of the trend channel seems to be first logical support:
Let’s move to the MicroStrategy Tracker now which is back underwater since we have been tracking since Dec. 1 2024:
With the equity markets topping out, we suspect Bitcoin will follow all asset markets down as well, here is the current chart and you guys know our sell level indicator was a close below $97k on the weekly backed up by the 21/50 dVWMA cross:
We have said it time and time again, the price of Bitcoin at these levels is predicated on continued bids coming in, from whales, ETF, miners, whoever, but the minute the bids turn to sells and retail also sells, well, then who are the natural buyers??? So we know Saylor will continue to roadshow his one way Bitcoin plan, but the reality is, nobody can control total buys and total sells and if risk assets are coming off, well Bitcoin will come off with them! In fact another chart that confirms the over valued-ness of Bitcoin is our BTC/Tether factor chart:
Assuming Tether doesn’t burn or reduce their total market cap by any significant amount, if this factor chart returns back to a 5.0x spread, then the Bitcoin price is right around $35,000 for that and from its current $92,000 that is a loss of 62%! Saylor’s position would be down about $12.3Bn unrealized!
We will save this picture if and when that time comes:
Anyway for now his DCA is around $62,500 so he has plenty of room, but if euphoria and hype wane…well look out below!
Ok let’s move to last weeks settles page and Market Sentiment Tracker you will see that the equity futures account for both Thurs and Friday as Th. was a holiday, so we reverted Th. futures action in equities to be reflected in Friday’s net change from Wednesday’s close. It was a sea of red sans US dollar, Energy and Metals and we rolled RBOB to March:
As far as the rolling changes Nat Gas the % winner and Bitcoin % loser on the 5 day and 30 day wise Nat Gas the standout and Russel2k and Ultra Bond the big losers:
As far as the Magnelibra CTA market sentiment tracker, the entire equity markets have moved to a neutral “0” positioning with RBOB now a +1.
Ok we have PPI tomorrow, CPI Wednesday and Retail sales Thursday. We expect the sell side programs in the equities to continue to dominate flows, we expect the bond markets reactionary higher yields to start to stabilize because of the equity outflows and we would suspect that we continue to hear higher rates stifling any pathways to growth here early on in the year. Volatility is here as we expected! Please subscribe and support our work if you can its greatly appreciated and as always share and give a like or comment if you would like. Till next time, cheers!
Support directly to our BTC address:
3DvDvPnjwu5Fd6sagAYmiFXA2fPkjJf2cp
Share this post