Distribution Price Action Pattern

I predicted BTC crash three days before it happened, based on this chart pattern.

S&P chart pattern looks similar “Three Peaks and A Rebound”

Could it happen again?

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Phases of The Market - Bloomberg Commodity Index

 

Bloomberg Commodity Index

This chart adds to my conviction that we have entered a Commodity Supercycle.

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Straits Times Index - Early Sign Of A Technical Breakdown

 

Straits Times Index - Early Sign Of A Technical Breakdown

This week, we are beginning to see a small crack in the STI uptrend after a stellar March-April price surge, it has spent the last four weeks consolidating in a narrow range between 3,134-3,145 and 3,211- 3,221. This week weakness it broke the support at 3150 and it also broke the support provided by the 200 Days MA . This leaves the market vulnerable to further weakness in the coming session, with the breakdown pointing to a downside target of 3,019.

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Ethereum - The correction have Begun!

 

Ethereum - The correction have Begun ! After a stellar 2 months breathtaking run , it’s taking a rest . First target for the short term is 3382 .

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Bitcoin - The Price Action is setting it up for a steep fall

 

Bitcoin - The Price Action is setting it up for a steep fall . Having consolidated between 4500 to 60,000 since feb 2021 , the price action is suggesting we are in a distribution phase where the big boys could have or are on the process of exiting . The 47224 level is a crucial one , if it breaks we could see prices heading for 39115 which coincides with the 200 days MA.

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US 10 Year Treasury - Breaking Out

US 10 year treasury breaking out after a 1 month consolidation. Stock market could correct if it challenges the last high at 1.71.

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Bitcoin - Bearish Price Action

Bitcoin broke its 4 months uptrend channel and is threatening to break below the Ichimoku Cloud.  It could be heading for the next targets 44700 and 39115. 57000 is a key level.  In the short term, do not turn bullish unless price breaks above 57000.

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JD.com (9618.HK) Bearish price action

 

JD.com is exhibiting a short-term bearish price action and is trading below its 100-MA (347) today.

Its current support is at 323, could correct to support levels of 300 and 281 in the short term from its current price of 323.

Stop loss at 358.

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DBS (D05.SI) Bearish Price Action Today

 

After a week of bullish uptrend, the stock is exhibiting a short-term bearish price action today.

Resistance is capped at 28.60, could correct to support levels of 27.33 and 26.49 in the short term from its current price of 27.85.

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My chart on UST10 Year Treasury is pointing to a target of 2.5% from the current 1.6% (could potentially spark off a valuation reset in equities)

 

UST10 Year Treasury – The chart is pointing to a target of 2.5% and the uptrend has started and it is resisted currently at 1.6%, it should break above the 1.6% mark to ahead for the 2.00% level.

The key resistance remains at 2.50% and I expect the Fed will not tolerate rates above 2.5%. This could be the level the Fed will act to bring the long term yield down. The impending yield increase will inevitably result in valuation reset in equities especially the Tech stocks.

The IIF recently released its Global Debt Monitor which reported that total global debt had reached US$280 trillion and the worldwide debt-to-GDP ratio is now at 355%. How this will ever be repaid I have no idea. How this will be serviced if interest rates were to rise is another matter to ponder. debt servicing costs would increase by several trillion dollars should average interest rates simply rise to pre-GFC levels …..more money printing to get out of the debt hole?  US personal savings rate has now risen to 20.5% from 13% with the potential to rise even more if biden 1.9 trillion stimulus reaches the US household. The stage will be set for a consumer spending  boom , all these are pointing to higher rates and inflation.

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China Construction Bank (0939.HK) Bullish Price Action, More Potential Upside.

 

China Construction Bank (0939.HK) broke out from its recent year high of 6.55 trading at a high of 6.65 today (08 March 2021) before retracing to 6.59. 

It is heading towards testing my first target at 6.66 and if it breaks out further it could be heading towards my second target at 6.84.

If prices break below 6.30, the trade plan is not valid anymore.

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Nasdaq-100 broke down from its upper trend channel

 

Nasdaq-100 broke down from its upper trend channel

Prices broke down from the uptrend today, it also broke below the 50 days moving average.

Next target 12,080 and if 12,080 is breached if could head to 11,135 and 10,785.

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China BlueChem (3983.HK) – More Potential Upside Ahead.

 

The fundamentals of China BlueChem (3983.HK) looks promising with Crop price at 7-year high, driving fertilizer demand and global tight supply of urea. Domestic urea price rose Renminbi 200/ton MoM to Renminbi 2,100/ton in early-Feb, due to spike in global pricing (up more than 30% since end of 2020).

 

The stock is poised to benefit from the year on year jump in urea given its relatively stable natural gas cost under long-term contracts.

 

Looking at the technicals, the stock has broken out from its long-term downtrend, trading at a day-high of 2.12 (at the point of this write up) today and its bullish chart pattern showing further potential upside.

First Target – 2.30

Second Target – 2.48

Third Target – 2.95

Stop Loss – 1.75

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Pacific Basin 2343.HK - Provides Dry Bulk Delivery Services , A Commodity Recovery Theme Play

 

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Commodity Super Cycle That Will Last for next 7-10 Years Could Just Have Started

In the past 120 years we have seen four major cycle peaks in the Broad Commodity Index measured by its 10-year rate-of-change indicator, with the most recent peak in 2008. This historical supercycle pattern shows that commodity prices could be sets up for the next secular bull market. Bull market in commodities are volatile, don’t expect a smooth ride.

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Bitcoin Hit Channel Line Chart Point At 52,600, Could Retrace In The Short Term.

 

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Inflation on the rise

Inflation is on the rise , question is, does the market really care. Obviously, it hasn’t cared yet. I think it’s the biggest risk. Nobody is really bother because of the belief there will be fiscal stimulus and that it’s going to be highly supportive of economic growth and the stock market.

The House has just given its approval to Biden's 1.9 trillion stimulus plan and when this money gets into the hands of the American people it will unleash another wave of spending spree that will cause prices of goods and services to skyrocket.

The US ISM Manufacturing Price Paid Index was up 5.8% MoM and 54% YoY in January to the highest level since April 2011 . While core inflation in the Eurozone soared to 1.4% YoY in January, way above expectations

On Wednesday (Feb 3, 2021) , the 5-year breakeven inflation rate, a Treasury market metric of inflation expectations, was at 2.30, the highest since April 2013. That means market pros expect inflation to average 2.3% over the next five years. The measure compares the 5-year Treasury yield to the TIPS note of the same duration.

The market has not priced in the ballooning debts but rather the positive outcome of the relieve stimulus package.

If inflation gets too hot, that could turn into a negative for stocks, and it would crimp corporate earnings by pressuring margins

CEIC Data, Eurostat

ISM, CEIC Data

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Bitcoin Goes On The Main Stream

Central banker indiscriminate easy money policies has flooded the world with fiat money with Federal debts held by pubic equivalent to world war 2 levels . We are in the midst of the largest monetary experiment in human history, with no foreseeable end. Governments worldwide are adopting quantitative easing policies while simultaneously running progressively larger deficits on top of increasingly untenable debt levels. Considering that 25% of all US dollars ever created were made in 2020, bitcoin could also act as an insurance policy against monetary and fiscal irresponsibility from central banks.

Bitcoin's reflexivity

In the past institutions couldn't buy bitcoin . Today bitcoins is a viable investment asset class with liquidity, a regulatory framework, established exchanges and its market cap.

Stanley Druckenmiller and Paul Tudor have both invested in cryptos and they highlighted its potential as a hedge against inflation

An increasing number of reputable firms and respected investors have acknowledged and purchased bitcoin, lowering the career risk for investment managers who want to incorporate the cryptocurrency into their professional portfolios. US market regulators are also opening up to the concept of institutional money flowing into bitcoin. In addition, central bank digital currencies will naturally push people towards further acceptance of digital value accrual.

At the time of writing, Ethereum continue to scale new high on track to my 1800 target and Bitcoin should test 39700 resistance before attempting for its ATH at 42K.

Ethereum

Bitcoin

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US Major Indices Price Action Trend Cycle Are Maturing, A Major Correction Could follow

The charts of US Major Indices are showing the narrative that their respective Price Action Trend Cycle are maturing at the same time. 

Both the S&P 500 & Nasdaq-100 are currently trading at the upper band of the Bollinger with the S&P 500 trading at 15% premium to its 200-MA while Nasdaq-100 is trading at 20% premium to its 200-MA.

Since 1997, the S&P500 has traded at a 15% premium to its 200-day MA on 14 occasions with a subsequent average drawback of -0.9% from these levels.

As for Nasdaq-100, it currently trades at the upper band of the Bollinger and 20% premium to its 200-day MA. This is the 18th time the Nasdaq 100 has traded under these conditions with subsequent average pull-back of -0.95% after reaching these levels. 

We at the stage of the financial market where the market’s most aggressive energy has gone racing toward “pre-profit” growth companies, long-shot emerging growth and massive SPACs listing and acquisition spree.

Stock like Gamestop or a Plug has been dramatically surging within a one-month period with momentum investors chasing on them.

Such a euphoria bears a resemblance to that of the 90’s dotcom bubble where this sort of thing kept rolling until the Nasdaq doubled in less than a year and a few-hundred IPOs hit the market before an inevitable correction.

Nobody knows when the market is going into a meltdown. However, the ingredients of a significant correction are in place. 

The charting model used has been spot on many occasions and there is reason to believe that a correction is impending. 

Figure 1: S&P 500 Valuation

Figure 2: What type of bubble are we in 

Figure 3: Dow Jones’s Price Action Trend Cycle Is Maturing

Figure 4: S&P 500 ‘s Price Action Trend Cycle is Maturing

Figure 5: Nasdaq-100 ‘s Price Action Trend Cycle is Maturing

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China Railway Construction (CRCC, 1186.HK) Positioning for a rebound?

Like China Mobile, CRCC (1186.HK) finds itself being in the crosshair of the US government.

US funds are barred from investing in CRCC as the company is controlled by the Chinese government.

The stock showed potential signs of bottoming from market capitulation (5 January 2021) trading at low of 4.10 after the stock was being removed from the major index providers such as the S&P, Dow Jones, MSCI and FTSE.

The stock has since rebounded by more than 20% after China enacted new countermeasure rules to shield its companies from “unjustified sanction”.

The stock currently trades at 5.03 (at the point of this write up), the immediate target level could be 5.51. If the stock does breaks 5.51, it could reach target of 5.70 and 6.00 with a long-term target of 6.55.

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