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5 Day Uptrend Busted in AM 1/13/23

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2 minutes ago, SiP said:

One of the most beautiful technical charts - the Dow Jones Industrial Average: 

- 38.2% of the bull market abolished,

- successful test of the 11.2020 gap,

- broken down trend of the bull market and SMA200,

- Successful defence of the breakout: support at the previous downtrend and SMA200.

 

 

Trade what you see?

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so we rally till june?

Yellen warns of U.S. default risk by early June, urges debt limit hike https://www.reuters.com/markets/us/yellen-urges-us-congress-act-quickly-debt-limit-2023-01-13/

this would be perfect fuck of every economist since every outlook of more than 40 banks that i read talked about worse h1 and great h2 of 2023

 

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U.S. Treasury Secretary Janet Yellen said on Friday the United States will likely hit the $31.4 trillion statutory debt limit on Jan. 19, forcing the Treasury to launch extraordinary cash management measures that can likely prevent default until early June.

 

As of Wednesday, Treasury data showed that U.S. federal debt stood $78 billion below the limit, with a Treasury operating cash balance of $346.4 billion. The department on Thursday reported an $85 billion December deficit as revenues eased and outlays grew, particularly for debt interest costs.

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Doc said the other day that debt ceiling is bullish. So I guess the rally will go on. Bitcoin will go to 100k and Gamestop will go to 100. Welcome to La La Land. Oh, and the chinese guy with the fat glasses from CNBC will get the Nobel Prize.

Or maybe not. 😇

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20 minutes ago, fxfox said:

Doc said the other day that debt ceiling is bullish. So I guess the rally will go on. Bitcoin will go to 100k and Gamestop will go to 100. Welcome to La La Land. Oh, and the chinese guy with the fat glasses from CNBC will get the Nobel Prize.

Or maybe not. 😇

Yes, Ive seen this.

Im not sure about 100k of BTC but a really nice rally that fuck up most people in q1 2023 would be nice. Many are waiting for correction of this rally to enter the market or just to see the strenght of the current move. At the end of the week there was small profit taking since the market is overbought (like 75-80 on daily rsi at several EM in indices priced in local currency). Lets see how the rest of Jan will look like. If EM will go at least sideway than H1 will be nice and you have to jump in to the bandwagon and be invested. there was just massive rally in most assets like gold, copper, EM, euro, crypto. Just a huge bull wave repricing probably a lack of new GFC + we saw inflation peaking and I see huge discussions about disinflation and even deflation in goods.

 

the only joker cards that bears have are the following

- sticky inflation (services) / core cpi will not go so much lower. Labour markets all around the word (Asia, Germany, even Spain Poland or US) are resilient. Lowest unemployment in decades. Ive seen headling one month ago that employment in Spain is close to records and in Germany new records or like a 30y new peak of employment. same everywhere. So consumers have plenty of cash and want to spend this on services and goods. In other words the narrative that CPI is geting lower will disappear probably somewhere in q2 2023 or even maybe q3 2023. If CPI will not decrease than we would have rates "higher for longer" which will kill some animal spirits in h2 2023 so the whole 2022-2023 will be treated and huge sideway move.

- Fed sticking to rates, not lowering them as market wants in h2 2023

- some blowups in h1 2023 like mortgage market freeze will kill big part of economy

- Putin - we dont know what will happen in h1 2023. Currently Putin is loosing the war which is amazing! Slava Ukrainie! The west will send even tanks next week, missiles like Patriots etc so its geting serious. The question is what will Putin do if people will see in Russia that the war was lost? Based on his ego Im not quite sure he will just sign peace. I keep thinking that maybe we will see something idiotic move like small nuke attack? just to show that he is not sane and present him and mad guy with whom you have to deal with.

I dont believe in any tragic stories in global economy to show up, like coming from China, in h1 2023, due to dolar weakness and a lot of liquidity. Just take a look at USDCNY - what a waterfall!!! China open up economy, helped RE market and pump zillions to economy.

 

Whats your view?

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"Very Bullish Market Signal📈   - For week leading into AAII Sentiment Survey - S&P 500 returned 4.6% - Yet Bull-Bear Spread still -15.9% - So still no belief in this rally - Such a move with equally poor sentiment has happened 5 other times since '87 "

 

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"Bifurcated Fed liquidity.   QT trims Fed liquidity by $95bn a month, or equivalently US equities by -6% over 1Q23.  Debt ceiling-led TGA injections to fuel Fed liquidity by $300bn over 1Q23, or equivalently US equities by +6%.  US equities likely to seesaw for months.Bifurcated Fed liquidity.   QT trims Fed liquidity by $95bn a month, or equivalently US equities by -6% over 1Q23.  Debt ceiling-led TGA injections to fuel Fed liquidity by $300bn over 1Q23, or equivalently US equities by +6%.  US equities likely to seesaw for months."

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So to sum up what's next.
- Q1 2023 should be further bullish but a lot of growth behind us. I expect further increases, but very diversified (tiring up-down phase).
- any rises should stop at most in May 2023 (April is bullish because there are tax inflows in this month by which the government reduces debt issuance which increases liquidity)
- while we have near deflation in goods prices and see a decline in the CPI, inflation in services and core prices remains dangerous for markets. No increase in unemployment, even record employment in Germany, Asia, Spain, the US + increased liquidity (no debt issuance, and QE printing at the BoJ which is now on track to spend $200-300 billion in January to defend debt!!!) may result in persistent higher inflation which will burnish the "end of inflation and CPI peaked" narrative, which will translate into a bad environment in H2 2023. Quite different from what economists forecast and what I read in the 40 annual IB outlooks and mass media, which said in fall that Q2 2022 and H1 2023 will be bad and H2 2023 will be good for economy.

The biggest increases in indices could be over. We are slowly entering a period of market turbulence. It is possible that we will return to declines in H2 2023.

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