Tracker Updates and a Tech Chart
Sorry for the delay guys, we just have a couple of items to share, first let’s look at the technical chart of the Nikkei:
With the BOJ simply lost and the PBOC cutting rates, its no wonder the Yuan and Yen are so weak! This is not indicative of strong economic growth prospects, rather we view Asia as a contagion ready spread global fire. Not that we need any more cannon fodder or kindling. Anyway this chart is super important. This technical setup is a major one backed up by the all important longer term 0.786 Fib. A trade below 31000 will drop us to 27000 area once again and this will end up dragging all global equity markets with it. This kind of drop could lead to further accelerations lower as well so we can’t stress enough about watching the Nikkei. If it can regain 32808 then maybe bulls have a chance to negate the signal, for now, sellers are in control.
Secondly Mish Shedlock put out this New homes chart. A couple of take aways, we are already down 16.4% off the median sales price highs. Secondly we would suspect New Homes Sold will have to catch up here eventually as supply comes on board. With interest rates as low as they are in existing mortgages, barring any massive depression and negative non farm payrolls, housing should stay tight as people opt to not move and keep their low mortgages. This is where new home supply will come in play and builders are trying to keep up with demand, but we don’t expect this to increase the median sales prices by any means, more supply should eventually dampen those price increases:
Alright onto the Trackers and settlements page, we included 8/14 data as the SOFR futures settle was missing as you can see another sea of risk off red:
As far as Magnelibra’s Futures Models no changes made:
When we look at the MEGA8s we can see that the hedged option selling program P+L is near back to even with the unhedged. If the market continues lower, we would suspect this trend for the hedged to outperform and its why we demonstrate this to you. The hedged program will cover the current short option on a trade below .20 and resell another call for next weeks expiry:
Ok that is it. We know the sellers are in control of the markets now. Risk off seems obvious and the pressure will be put on once again the FRB to decide whether or not they have gone too far. We know they have, but it seems like they are tolerant of further spikes lower in all risk classes.
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