Risk Gets Slammed Post Powell Hawkish Rhetoric

So we hope you had time to listen to our pre FOMC podcast yesterday where we outlined the potential for the FOMC decision to be an important “marker” for some to take profit. Boy did the sellers come out in droves!

The Nasdaq futures lost 3.6% down -812.75 points yesterday. The daily chart has the 21d MA at 21366 and it put a dead stop to the selling both yesterday and today:

This was a strong move and erasing over 1000 points from the highs now. This was a forceful move, one which should be respected and we would think this move will have sellers now on up moves and that we will not see that steady grind back up. This had the smell of something completely different. The SP500 was also hit very hard, The SP500 futures were down 3% yesterday -187 points and now the SP500 is below our bull line in the sand, this technically does not look good for any bulls out there:

US Govt bond yields all jumped yesterday across the board as the FOMC dot plot was revised upward a bit. We still think they are bluffing, but then again all this Bitcoin talk and maybe just maybe the FOMC wants to show the world whose still boss!

As far as the US govt 10Y it is now above our trend channel. This does open the door for rates to stay elevated and only a move back below 4.35% will change this theme:

Another big concern for us and the rest of the world for that matter is the ongoing US Dollar strength. The magnitude of the absolutely short US Dollar base in the midst of a rising dollar is a massive problem for many countries. If we start to see currency strains have an impact on global markets, well this could be the beginning of something far larger in the works. We really can’t see anything standing in the way of a continued US dollar move higher:

Ok we won’t go into too much today because this really isn’t anything other than a risk off move by large market participants on the heels of JPowells hawkish rhetoric. We told you that participants use events like this as an excuse, we also know many insiders have been selling this whole way up, Warren Buffett case and point, so this move shouldn’t surprise anyone. The big key now is to see how the markets react over the next few weeks, will we see up moves rejected? Will we simply consolidate? Will the markets continue to pressure risk lower? These are all TBD.

Ok let’s take a quick look at the settlements from yesterday, pretty much a sea of red with the Nasdaq the big contract loser on the day and the dollar index the winner:

As far as the rolling returns:

The Dax is the 30 day winner in regards to futures markets with Bitcoin +8.77% over this time frame. Speaking of the DAX, let’s just say this is as technical of a short set up as one will find on a weekly chart:

When we look at the MCA Markets Sentiment Tracker we have added a column “Yesterday” so viewers can see if there was any change to our sentiment. As far as the notable changes yesterday:

-Prior Longs now Neutral = SP500, R2K, Gold, Copper

-Prior Neutral now Short = Nat Gas

Flipping over to the MEGA8s, well this was not a good day for the group:

The options hedge did its job this week and we will continue to explore the strike price for next weeks hedge. The market cap of the group dropped 3.7% losing $719 Billion:

Moving over to our MicroStrategy Tracker. MicroStrategy equity took a hit yesterday dropping -$36.78 to $349.64. Our options hedge is the reason why this is still above water, but it will be interesting to see how many are willing to hold onto this strategy, our bet is everyone will ride this down:

Ok that is it guys, we just wanted to get this out there to you quickly. Till next time Cheers…oh yea subscribe, like or share at the least, please we are moving into some very interesting times and the more we collaborate, share and research, the more knowledge we all can obtain!

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