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Tim's Guess for Mortgage Rates for 2023I thought I would publish this "guess" for the sheer entertainment value to show the dramatic increase in mortgage rates and to put in perspective the damage that has likely been done to the purchasing power of home buyers. The Fed has engineered an attempt to shut down an excessive spending to cool the economy down and we are all waiting for reverberations to indicate that they have been successful. M2 money supply, which I will add on a follow-on chart, is declining at a sharp rate which is indicative of recession ahead. I believe this M2 money supply contraction is a sign that mortgage rates will fall and here is a "guess" just to put a guess out there. There is 1 datapoint per week for this series and you can see the box that represents a week as shown with a gray box around the blue line. I added the 2008 contraction for reference. Let's see what happens. I hope this is wrong because it will mean that the economy is falling sharply, but also it would imply that the Fed believes it will have conquered inflation. Tim West April 26, 2023 9:54AM
FRED:MORTGAGE30USShort
by timwest
16
What is GEX?Gex is short for Gamma Exposure. I started tracking gamma exposure over a year ago. In fact I posted an idea with a really good explanation idea of gamma exposure but the idea was banned and I never got around to reposting. So many private messages asking me to explain GEX, I decided to repost the banned post without the restricted content in it. If you want the restricted content, send me a message and I will send you the link ==== Original Idea posted March 6th 2022 ======== I finished updating the simple GEX tool. This tool is for educational purposes only and gives a very basic/naive overview of gamma exposure for any Ticker. So What is GEX? GEX stands for Gamma EXposure. Options are derivatives of financial assets that give investors more.. options. Gamma is the rate of change in an options delta per 1-point move in the underlying asset's price. When someone buys an option, there is typically a market maker (dealer) that needs to sell that option to you. Because the dealer does not want to take directional risk on the other side of the option, they hedge the option by buying or selling the underlying asset. As the price changes, the dealer must continuously make changes to that hedge to remain delta neutral. Gamma Exposure, in this tool's case, Naive Gamma Exposure is an estimated measurement of gamma exposure that a dealer has taken on based on the full options chain's open interest. It is an estimate because nobody really knows if an option's open interest was bought or sold to a dealer. Negative\Positive Gamma is hedged differently by dealers. If a dealer is positive gamma they will sell the rally (price up) and buy the dips (price down). Positive gamma creates a supportive and less volatile, more liquid market. If a dealer is negative gamma they will buy the rally and sell the dips. Negative gamma creates more selling pressure and more volatility, an illiquid market. Zero Gamma or Gamma Flip is the assumed point at which dealers would flip from negative gamma exposure to positive. When the dealer is positive gamma, the Zero Gamma strike will usually act as support. When the dealer is negative gamma, the Zero Gamma strike acts as resistance. GEX can measure individual asset gamma exposure but is more effective at measuring overall market indexes such as SPX and NDX. GEX shouldn’t be used as a directional measurement, but more of a volatility indicator. Notional GEX is the dealers notional (total dollars) exposure in 1% move in the underlying assets price. If SPX is -20B for example, dealers will have to buy 20 billion in underlying shares for every 1% move up, or sell 20 billion for every 1% move down. Option Quotes are delayed by 15 minutes from the open and close of the Regular Trading Hours. Disclaimer: The GEX tool is meant to be used for educational purposes only. It is NOT meant to be used for/as financial advice. Use at your own risk. The reason I included the JHEQX HEF Pin is because of how the different expirations effect the markets at different times. The general idea I like to emphasize in my naive understanding of these market mechanics is TIME. Notice in the following ideas from the past 3 months all have the 4165 HEF Pin in the forecast. This is only possible by calculating the Gamma Exposure of the options sold to JPM and making some assumptions (next time).
SP:SPX
by SPYvsGME
51
GDP & Money SupplyThe trajectory of global GDP & Money Supply keeps going up. The World's GDP was 103.86 trillion in 2022 and is forecasted for 112.6 trillion in 2023. As of Nov. 28, 2022, the total global value of the M2 money supply is $82.6 trillion. Gross domestic product (GDP), is an estimate of the total value of goods and services produced in a country during a specified period, it is currently calculated yearly to understand the growth metrics of the country. The calculation is based on nominal GDP, also called GDP at current prices or in value. Countries by GDP is the single most indicator to capture economic activity of all the countries. The largest economies and top 10 countries by GDP in the world are United States, China, Japan, Germany, India, United Kingdom, France, Canada, Russia & Brazil. The United States economy is the largest in the world, measured by nominal GDP, followed by China, the world's second largest with annual growth that consistently outpaces the United States. Below is the latest top 20 list of Countries by GDP, ranked as per the economic activity of each country in 2023. Rank 2022 2023 2024 1 USA 25,035.164 26,185.210 27,057.202 2 China 18,321.197 19,243.974 20,699.148 3 Japan 4,300.621 4,365.976 4,568.729 4 Germany 4,031.149 4,120.242 4,337.385 5 India 3,468.566 3,820.573 4,170.220 6 UK 3,198.470 3,479.468 3,757.403 7 France 2,778.090 2,806.690 2,932.363 8 Canada 2,200.352 2,326.620 2,420.683 9 Russia 2,133.092 2,136.222 2,146.696 10 Brazil 1,894.708 2,059.443 2,200.916 11 Iran 1,973.738 2,044.152 2,135.731 12 Italy 1,996.934 1,991.008 2,059.410 13 South Korea 1,734.207 1,792.467 1,879.043 14 Australia 1,724.787 1,787.948 1,837.686 15 Mexico 1,424.533 1,476.407 1,527.077 16 Spain 1,389.927 1,421.012 1,508.902 17 Indonesia 1,289.429 1,388.683 1,506.988 18 Netherlands 990.583 1,019.762 1,076.955 19 Saudi Arabia 1,010.588 996.390 1,016.690 20 Turkey 853.487 941.551 1,037.858 (Source "populationu GDP List Updated Jan 2023 IMF gdp data in Oct 2022") How Money Supply Is Measured: M0: Referred to as the monetary base, M0 includes all the money in circulation, including money banks hold in reserve. According to the Federal Reserve, there was about $2.3 trillion in circulation as of January 2023. M1: It includes all the M0 money supply, adding the money held in travelers’ checks, demand deposits, other types of checkable deposits and negotiable orders of withdrawal. As of January 2023, the seasonally adjusted stock of M1 totaled $19.64 trillion. M2: It includes all of the currency from the M1 money supply, and expands to include mutual funds, smaller time deposits, money market securities and other types of time deposits. M2 currencies are usually less liquid than M1, meaning you can’t convert M2 money into cash as easily. The total stock of M2 was $21.27 trillion in January. M3: It includes all the elements of M2, plus institutional money market funds and large time deposits. As compared to M1 and M2, M3 assets have the lowest liquidity. The Fed no longer calculates M3. How Much Money Is in the World? The total amount of money in the world can be measured and expressed in many different ways, so it’s difficult to give a specific answer. If you’re curious about the total value of notes and coins in circulation, the Bank for International Settlements estimated it to be 8,275,000,000,000, or $8.28 trillion U.S. dollars, across 20 major countries plus the euro area in 2021, its most recent estimate. Of course, there are nearly 200 countries in the world, so this is just a rough estimate of the most narrowly defined — and perhaps easiest to quantify — category of money. The global M1 supply, which includes all the money in circulation plus travelers checks and demand deposits like checking and savings accounts, was $48.9 trillion as of Nov. 28, 2022, according to Visual Capitalist. That publication estimated the total value of the M2 supply to be $82.6 trillion. Money is also present in the form of investments and derivatives. The total market capitalization of just the New York Stock Exchange and Nasdaq is over 48,000,000,000,000 USD as of December 2022, according to Statista. The sum of Market Capitalization of Shanghai Stock Exchange and Market Capitalization of Shenzhen Stock Exchange accounted for 12,360,284,655,000 USD in March 2023. The total market cap of cryptocurrency, as reported by CoinMarketCap, adds another $1.16 trillion to that figure. (Source "gobankingrates, By Scott Jeffries March 16, 2023")
ECONOMICS:USGDP
by Options360
7
Tesla's net income is down 22.6% YoY, down 31.5% QoQYesterday, after the closing bell, Tesla announced its earnings for the first quarter of 2023. The company reported a net income of 2.539$ billion and total revenue of 23.329$ billion. Net income saw a double-digit decline on a yearly and quarterly basis, while revenue declined only on a quarterly basis. In 1Q23, Tesla produced 440 808 vehicles and delivered 422 875 of them. During the same period, the company rapidly grew its energy storage production capacity at a mega-factory in Lathrop and announced a new mega-factory in Shanghai. In addition to that, Tesla cut its vehicle prices multiple times, intending to attract more buyers and get a competitive edge against its rivals. That proved a good strategy, with Model Y becoming the best-selling vehicle of any kind in Europe during 1Q23. The report also states that energy deployments increased by 360% YoY, and solar deployments rose by 40% YoY. In regard to the future outlook, Tesla plans to grow production as quickly as possible. In line with that, it plans to launch the production of Cybertrack at Gigafactory in Texas and reach a total production of vehicles of 1.8 million by the end of the year. Net income = 2.539$ billion (-22.6% YoY, -31.5% QoQ) Total revenue = 23.329$ billion (+24% YoY, -4% QoQ) Total production = 440 808 (+44.3% YoY, +0.2% QoQ) Total deliveries = 422 875 (+36.4% YoY, +4.3% QoQ) Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
NASDAQ:TSLAShort
by Tradersweekly
36
Extreme fear in $SPY at close yesterdayIf you track the CBOE:SKEW index, it reveals when put options on the S&P500 ( AMEX:SPY , FX:SPX500 ) are at high levels relative to calls. Sometimes that means there is a big event ahead and the market participants are buying "insurance" against a sharp drop in the market over the life of the options contracts. So, I think it is important to track CBOE:SKEW and to show you what that high CBOE:SKEW looks like in options prices, I have pulled up the prices of one month options on AMEX:SPY from the close yesterday (I did this work at the open today and posted it at my Key Hidden Levels chat room here at TradingView). I have plotted just 3 different options for calls and 3 for puts to show you. The green boxes are the call options that are just "out of the money". The bottom of the box is on the strike price and the height of the box is the option premium which means the top of the box is the "breakeven price" where the AMEX:SPY would have to rise to at expiration to be worth exactly what you pay for it (in this example). I plotted the boxes at the expiration date as shown by the black line at May 19th. 410p = 410 put option = $492/contract ($4.92 per share, but a contract is 100 shares). The 400p is $2.77 or 277 dollars for 1 contract which is 15 points down from the close yesterday. That compares to a 430c or 430 call option at $1.34 or $134/option contract. So the result is the market is willing to pay twice as much to protect against a decline in the market and only half as much to participate in an advance. If you track this data day-to-day and week-to-week or after a large move in CBOE:SKEW you can see how the market is thinking ahead of key news like the Fed Meeting Date on May 3rd. I graphed the Fed Meeting Dates with red-dotted lines to show you some key risk dates ahead. We are also in earnings season here and plenty of fears of recession or inflation, but mostly of the Fed hiking further. I hope this graph is useful to visualize and understand options prices and how the market is positioned at the moment. Cheers, Tim 12:06PM EST, April 19th, 2023
AMEX:SPYLong
by timwest
18
Meet The Five TradingView Wizards of 2023Today, we're announcing our new TradingView Wizards program, an initiative that celebrates the traders & investors who consistently share high-quality content including written ideas just like this, but also videos, live streams, and comments. TradingView Wizards help others, provide feedback, and make TradingView a better place for everyone. To acknowledge the incredible contributions of our sharpest and most thoughtful community members, we've created a special TradingView Wizards badge, which will be displayed on their profile, and brings them into our Wizards family, giving them direct access to our team, hidden merch, and other perks. Let's meet our inaugural class of TradingView Wizards 🧙‍♂️🧙‍♀️ 🪄 timwest Tim West has been with TradingView since the very beginning and has been sharing his extensive stock trading knowledge for well over a decade. Insightful and detailed analysis based on a powerful yet elegant trading method is his hallmark. Tim was part of the original mod team, suggested countless features to our developers and hosts his own chat room. Our community would not be the same without him. Check out his profile badge 👀 🪄 Norok Making his first appearance on TradingView in 2014, Norok has consistently provided us with well thought out higher time frame ideas combined with high quality educational ideas or macro perspectives. Crypto, Stocks and Indices are his favorite playgrounds. He also occasionally codes in Pine Script and live streams his thoughts, welcoming all traders to join in on the conversation. 🪄 This_Guhy This_Guhy has been sharing his ideas for 5 years and lets his analysis do the talking. Clear annotations coupled with elaborate, thoughtful descriptions, mainly about the crypto market, allowed him to gain trust with our community. He makes an effort to explain methods and concepts before applying them masterfully to the chart, sharing many valuable nuggets of knowledge along the way. A real gem in our community. 🪄 Akil Stokes Akil is a professional trader and trading coach with many years of experience, mostly in the Forex markets. He stands out with a strong focus on risk management, discipline and patience. His main tools are fibonacci, harmonic patterns and structure, “Look left, structure leaves clues” is one of his favorite phrases. 🪄 MarcPMarkets MarcPMarkets has been on TradingView since 2012, publishing charts, ideas, and educational material for all. Today, he is an active live streamer, taking requests from traders around the world, answering questions, and sharing live analysis of his favorite symbol: Bitcoin. His charts are crisp, easy to understand, and often focus on risk management principles. He’s also an official CMT holder (Chartered Market Technician). We'll be adding new members to the Wizards Hall of Fame every year, so keep sharing your ideas, engaging in discussions, and helping others grow. If you code in Pine Script, there's a long standing Pine Script Wizards program for you . Keep contributing – you could be our next TradingView Wizard! ❤️ Congratulations and a big “Thank you!” to all of our Wizards. You inspire us all to learn, share, and grow together. - TradingView
CRYPTOCAP:TOTAL
by TradingView
76
5 Things to Watch in the Next 2 WeeksCME: E-Mini S&P 500 Put Options ( CME_MINI:ES1! ) Important data releases in the coming weeks would shed light on the health of the US economy and could have significant impacts on global financial markets. We will focus on a number of critical datasets, mainly the following, in the upcoming weeks: • Federal tax revenue (Tax filing deadline: April 18) • Existing home sales (April 20) • Personal income and outlay (April 28) • Fed rate hike, or the lack of it (May 3) • Gasoline price trend (before peak summer driving season) Federal Tax Revenue According to the US Treasury Department, the sources of tax revenue for US federal government in 2021 were: • Individual taxes: 42.1% • Social insurance taxes: 23.8% • Consumption taxes: 16.6% • Property taxes: 11.4% • Corporate taxes: 6.0% The annual tax filing deadline for individual and corporation is April 18th. In practice, income tax, social security and Medicare are withheld from each paycheck for employees. Corporations pay estimated tax on a monthly basis. Property taxes are assessed annually. Sales tax is paid whenever you buy products or services. Tax filing is a process where taxpayers calculate tax liability and claim tax credit. If you’ve paid too much, ask for a refund. If you didn’t pay enough, send Uncle Sam a check. We could track government tax revenue and expenditure using the Monthly Treasury Statement (MTS) data published by the Treasury Department. Here are what I found: • In the first three months of 2023, gross tax revenue is $2.268 trillion, while tax refund amounts to $219.8 billion; The resulting net tax receipts are $2.048 trillion; • Comparing to Q1 2022, gross tax revenue is down 0.2%, but tax refunds are up big time by 45.8%. Net tax receipts are down 3.5% year-over-year; • Q1 individual income taxes $1.22 trillion, tax refunds $192.4 billion and net tax receipts $1.03 trillion; Y/Y changes are -1.9%, +59% and -8.5%, respectively; • Q1 corporate income taxes (in billions) $159.0, refunds $19.0, and net tax receipts $140.0; Y/Y changes are +5.1%, -20.7% and +10.0%, respectively; Individual taxes are the most important revenue source for the United States. A declining tax receipt would push the federal budget deeper in the red. But with unemployment at record low and wages on the rise, why is income tax revenue going down? In 2020, the top 1% of income earners earned 22% of all income and paid 42% of all federal income taxes – more than the bottom 90% combined (37%). For the top earners, most of their income taxes come from capital gain, not from wages. In 2021, Dow Jones Industrial Average gained 18.7% while the S&P 500 and Nasdaq 100 had annual returns of approximately 27%. I examine the MTS data for April 2022, which covered the tax filing period for year 2021. Net income tax receipt was $1.72 trillion, up 68.5% y/y. This shows positive correlation between stock market gains and growth in individual income tax revenue. In 2022, the Dow declined 8.8%, while S&P and Nasdaq were down 19.4% and 33.0%, respectively. The individual income tax in Q1 2023 was down 1.9%, but tax refund was up 59%. This again shows positive correlation – stock market losses and decline in income tax revenue. March MTS data strongly indicates that investors are writing off big capital losses from last year. When the tax season is over, I expect to see bigger tax refund and widening net receipt shortfall in the April MTS data vs same period in 2022. Implications: Urgency for Debt Ceiling Negotiation In January, in a letter addressed to House Speaker Kevin McCarthy, Treasury Secretary Janet Yellen warned the US has once again reached its debt limit. The Treasury Department started taking extraordinary measures to keep paying the federal government’s bills, but it would suspend new investments until June 5, 2023. Yellen warned both moves are subject to “considerable uncertainty” if Congress does not pass the bill to increase the debt ceiling. US financials have deteriorated since. According to USDebtClock.org: • US National Debt: $31.69 trillion • US Federal Spending: $6.03 trillion • US Federal Tax Revenue: $4.61 trillion • US Federal Budget Deficit: $1.42 trillion We now expect tax revenue to decline by at least tens of billions of dollars, while spendings on Defense, Medicare, Social Security, and Debt Interest are all going up. As a result, federal budget deficit could be underestimated by well over one hundred billion dollars. Would the federal government have enough money to keep the light on until early June? I suspect the insolvency time bomb is ticking closer and closer. Short-term Trading Strategies Although we had two rate hikes and a banking crisis in the first 100 days of 2023, major stock market indexes are all in the positive territory. The Dow gained 2.2%, S&P 500 rebounded 7.8%, and the Nasdaq pushed up 19.6% YTD. While investors managed to brush off bad news so far, balance sheet deterioration in government, corporation and household would eventually catch up. I am seeing a 5-10% correction in the S&P 500, if some of the following conditions materialize: • Federal tax revenue comes in significantly lower than expected. April MTS report would be released around May 12th; • May 3rd FOMC: If the Fed raises rates and does not signal an end of the tightening cycle, both corporate earnings and household spending would suffer; • US banks could tighten lending standards in the wake of banking crisis. This would add to higher borrowing cost on top of the rising interest rates; • Debt ceiling negotiation: if the White House and the Congress could not reach a deal quickly, we may be heading for the technical default of US government debt. Right now, they are not even sitting at the negotiating table. Options on CME E-Mini S&P 500 may be a way to express a bearish view. The E-mini S&P 500 Index Futures June contract (ESM3) is quoted 4171.75 last Friday. With a notional value of HKEX:50 x S&P 500 Index point, each contract is worth $208,587.5. Put option with a 4070 strike, which is about 100 points below market value, is quoted 76.25. To acquire one option requires an upfront premium of HKEX:3 ,812.50 (=76.25 X HKEX:50 ). Put option carries a nonlinear payoff diagram. Your loss is limited to the premium you paid, but potential gain is unlimited. Hypothetically, if the S&P futures price falls to 3900, put option will be 170 points in the money (=4070-3900). The gain on the account would be HKEX:8 ,500 for each contract. If our view proves to be incorrect and the S&P goes up instead, put premium could decline in value, resulting in a loss. The worst-case scenario is that options would expire worthless. Happy Trading. (To be continued) Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME_MINI:ES1!Short
by JimHuangChicago
19
230% vs 110% returns which one will you choose ?So I recently got an Apple Watch to keep track of my fitness goal. It can help track my running distance and better still, my swimming log as well. It is pretty cool except for one thing I noticed. It syncs with your Apple Phone and all your apps that are in there will automatically sync with your Apple Watch. So, I have finance, fitness, social media, etc apps that keep sending me notification. It can be pretty annoying and disturbing to become a slave to these tech items, haha. I believe the trends globally is quite the same maybe for a few European countries like Switzerland ( I could be wrong) Finland, Norway,etc. Taking a train to work, I can see almost 95% of the commuters glued to their phones. What happened to reading a book , I mean a hardcopy book? Sadly, all the bookstores in Singapore are closing one after another. Read article here Anyway, this trend is so massive and has become a part of everyone's daily lives that buying its stock to me is a no brainer. Just taking the last 3 years performance, buying Apple shares will generate a 230% returns versus 110% returns for SPX500 index. What other deep seated trends can you identify in your own country ? Find the Apple alike competitor in your own country and buy it.
NASDAQ:AAPLLong
by dchua1969
28
I cannot cannot short this...Today's CPI data (down to 5.0% from 6.0% YoY) created interesting and actionable price action this morning... more on my thoughts about it later. Technically the data release created a Spike Alert by punching through the pre-market high and then closing back inside it before the cash open. This is happening within two important contexts: A double top for the price action of April's highs The 4155.25 level which is the most important level of 2023 4155.25 is the 50% Retracement for the entire 2022 bear market. This is THE level which the S&P 500 has been holding all year and stubbornly refusing to break higher. The first time it was hit was the December 2022 CPI data. That signaled the December bear trend to yet another key 50% Support. The next time was the top of the January 2023 rally that got everyone excited. Following the recent February/March malaise price is once again testing this level. The CPI data release has very much driven the highs and low (October CPI being the major bottom) for the last many months. Inflation, and how the Fed handles it, has driven this current era of the stock market (and all risk assets). While the news is that inflation is coming down it is still well above the Fed's target 2.0% rate. There is no guarantee or sign that the Fed will change its mind. Yesterday I sat in on a presentation that juxtaposed the current GDP numbers (which have been recently positive) with the LEI (Leading Indicators) which are sending up a recession signal. I am ALWAYS hesitant to take FUD into account in my analysis. However, the signal is the signal. The trade of this post is based upon a confluence of four factors (news event, spike, double top, 50% Retracement). My rules state that I must trade this... win or lose. The LEI is also a signal that has a high probability of efficacy. It should also be heeded.
CME_MINI:ES1!Short
by norok
39
OKXIDEAS contestCheers to all traders out there! Today we are kicking off our OKXIDEAS Trade Ideas contest! All you need to do is publish a trading idea with the tag " OKXIDEAS " and make it go viral! The top 10 best and most popular submissions will share a 13 ETH Prize Pool + Trading View Premium plans + OKX Product Partnership Wildcards! 1st Prize 2 ETH 1 year TradingView Premium Plan OKX Product Partnership Wildcard, giving you the exclusive privilege to have your future ideas published on the OKX Ideas feed, a chance for an appearance on the Web3 Breakdowns Podcast, prefunded trading accounts, OKX swag and more. 2nd - 3rd Prize 2 ETH each 6-month TradingView Premium Plan Get shortlisted for a Product Partnership Wildcard 4th - 5th Prize 1 ETH each 6-month TradingView Pro Plus Plan Get shortlisted for a Product Partnership Wildcard 6th - 10th Prize 1 ETH each 6-month TradingView Pro Plan The Rules 1. Connect your OKX account to your Trading View account. 2. Post your best crypto trade idea with the OKXIDEAS tag. IMPORTANT : make sure you use an OKX price feed, e.g. OKX:ETHUSDT or your idea will not be eligible to win the prizes. 3. Your idea's time horizon can be anything from one week all the way up to several years in duration. Be sure to respect TradingView's House Rules and add a solid description that explains the reasoning behind your idea. 4. Once you have published your idea, it's time to make people notice it! Share it on social media and make as many people engage with it as possible to increase its popularity on TradingView. Feel free to also update your idea whenever you want. You can follow other submissions by searching TradingView for ideas with the OKXIDEAS tag. Submissions close on May 11th at 10:00 am UTC . Winners will be selected within 14 days after the contest ends and we will reach out to the 10 lucky ones via direct message on TradingView. We will be judging ideas based on three criteria: popularity, the quality of the idea/explanation, and conformity with the campaign rules. Only one entry per user - if you post multiple ideas from your account, or through multiple accounts, only the highest ranking one will be considered! Let's see your crypto trading ideas go viral! OKX Team.
by OKX
55
Exploding MOVE/VIX Ratio: A Major Warning SignHey everyone 👋 Guess what? This post was created by two TradingView users! @SquishTrade and I collaborated on this post. We wanted to share our thoughts about the MOVE/VIX ratio, which has been exploding recently, and which may be presenting a warning about the future movement of the S&P 500 ( SPX ). Before we begin, here's a bit more about the MOVE index: The MOVE Bond Market Volatility Index measures the expected volatility of the U.S. Treasury bond market. It is calculated based on the prices of options contracts on Treasury bonds. The higher the price of these options, the higher the expected volatility of the market. The MOVE index is widely used by investors, traders, and analysts as a measure of risk in the bond market, as changes in market volatility can have a significant impact on the prices of bonds and other financial instruments. The above image shows a 10-year U.S. Treasury bond issued in 1976. Here's a bit more about the VIX volatility index: The VIX is a measure of volatility in the stock market. More specifically, the VIX measures volatility by using weighted prices of SPX index options with near-term expiration dates. When the VIX volatility index was created by the Chicago Board Options Exchange (CBOE) in 1993, it was calculated using at-the-money (ATM) options. In 2003, the calculation was modified to include a much wider range of ATM and out-of-the-money (OTM) strikes with a non-zero bid. The only SPX options that are considered by the volatility index calculation are those whose expiry period lies within more than 23 days and less than 37 days. The above image shows the highest VIX ever recorded at the close of a trading day. It occurred near the start of the COVID-19 pandemic shutdown. Recently, @SquishTrade discovered that the ratio between the MOVE bond volatility index and the VIX volatility index has been rising along a trend line (as shown below). Indeed, since 2021, the MOVE/VIX ratio has been exploding higher and is now approaching the highest level ever. @SquishTrade identified that the daily chart of the MOVE/VIX ratio has shown a moderately strong positive correlation to moves in the S&P 500, this correlation appears to be statistically significant. Citing the above chart, @SquishTrade further explains that: The peaks in MOVE/VIX seem to correlate with peaks in SPX, especially since late 2021 (exceptions in yellow circles). This makes sense. When a rise in MOVE occurs, but VIX stays low, this raises the ratio. Of course, when VIX stays low, it's almost always because SPX price has risen or remains supported. Overall, higher MOVE and lower VIX suggest underlying problems in broader bond markets / financial system / economy AND that this is not being reflected in implied volatility (IV) for SPX. In other words, for a variety of reasons, some of which may have to do with volatility players, equity volatility shows that equities don't care yet. When the VIX rises, the ratio falls. The interesting thing is that the peaks in MOVE/VIX correspond with the peaks in the SPX. The other interesting thing is the general trend up in MOVE/VIX and the corresponding trend down in SPX since late 2021. So when MOVE/VIX peaks, it is as if rates markets are flashing red, and SPX is rallying like all is well. That process continues until a top in both SPX and MOVE/VIX occurs, at which time SPX gets the memo, VIX rises, and the MOVE/VIX and SPX fall together. My response to @SquishTrade's above analysis is that: It is my belief that the explosive move higher in the MOVE/VIX ratio relates to the capital dislocation hypothesis, which I explain in further detail in my TradingView post below: In short, the capital dislocation hypothesis is that there is far too much capital in the stock market (SPX) for bond yields to be as high as they are (and while GDP growth is also as low as it currently is). Similarly, S&P 500 volatility (VIX) is far too low for bond volatility (MOVE) to be as high as it is, as @SquishTrade alludes above. Exeter's inverted pyramid (shown below) ranks financial assets according to safety, with the safest assets at the bottom of the inverted pyramid. Whenever an asset lower down on the inverted pyramid becomes volatile, riskier assets above it tend to experience some greater degree of volatility. This often occurs on a lagging basis since macroeconomic processes are not instantaneous. Therefore, we can extrapolate that the extreme volatility of U.S. Treasury bonds will likely precede extreme volatility in riskier asset classes, including stocks. Consequently, the exploding MOVE/VIX ratio is likely a warning that the VIX may move much higher soon. Chart analysis of the VIX, as shown below, potentially supports this conclusion. Bond volatility, as measured by the MOVE index, has likely increased due to the market's extreme uncertainty about the future of interest rates and monetary policy. This extreme uncertainty underpins the stagflation paradox: persistently high inflation pulls the central bank toward monetary tightening (higher bond yields) while liquidity issues and slowing economic growth pull the central bank toward monetary easing (lower bond yields), thus resulting in bond volatility. The explosion of bond volatility is likely a sign of impending stagflation, which may be severe. For more of my stagflation analysis, you can read the below post: Certain futures markets, such as the Eurodollar futures market, which typically guides the Federal Reserve's monetary policy, have been experiencing historically high volatility, as shown below. The above futures chart suggests that the uncertainty about future interest rates stems directly from ambivalent market participants. Since the Federal Reserve generally follows the market, if there is extreme uncertainty and ambivalence about the future of interest rates among market participants then the result will likely be a period of whipsawing monetary policy (whereby the Fed hikes, cuts, hikes, and cuts interest rates in rapid succession). In the quarters and years to come, we will likely see extreme monetary policy whipsaw as the Federal Reserve grapples with the dueling high inflation and slowing economic growth crises that characterize stagflation. Be sure to follow @SquishTrade on TradingView, and let us know in the comments below if you would like us to collaborate on additional posts! If you're interested in collaborating with us, also let us know! Important Disclaimer Nothing in this post should be considered financial advice. Trading and investing always involve risks and one should carefully review all such risks before making a trade or investment decision. Do not buy or sell any security based on anything in this post. Please consult with a financial advisor before making any financial decisions. This post is for educational purposes only.
TVC:MOVE
by SpyMasterTrades
180
Debunking Kerrisdale Capital's Bearish Take on C3.aiI'm long on C3 - so I'm as biased as Kerrisdale here, but apparently, that doesn't keep people from taking their word for granted, either. I have a degree in Finance, worked at a big-four accounting firm, in the financial industry (upper management), and am now a business owner (that was too lazy to create a new account for posting this - that's why you'll find me posting all kinds of UE5 stuff, otherwise. My dirty hobby...) But I'm a hopelessly logical investor, meaning I couldn't figure out why Kerrisdale's letter to Deloitte yesterday moved the markets at all. So I needed to understand the whole situation better and digged deeper. I went through C3's financials and Kerrisdale's report and looked at their letter to the Auditor, and here are my two cents on their March 6th report and their letter to Deloitte. Apologies for the lengthy post, but it's a complex topic. It is worth questioning whether Kerrisdale's attempt to undermine C3 serves to manipulate market perceptions, particularly when considering the firm's history of short-selling and ongoing legal scrutiny. Let's start by shortly going over Kerrisdale's report from March 6th. Kerrisdale's report conveniently overlooks C3's unique value proposition and casts doubt on the company's competitive advantage. However, this dismissal seems disingenuous, given the distinct position C3 occupies in the AI software market. Contrary to the report's implications, C3's industry-specific AI solutions set it apart from the likes of IBM, Google, and Amazon. The company's focus on sectors such as energy, manufacturing, and financial services demonstrates its commitment to providing tailored solutions that address the unique challenges faced by these industries. The report also paints a bleak picture of C3's growth rates, suggesting that they are unsustainable. However, the data and industry trends tell a different story. AI adoption is in its early stages across a variety of industries, with tremendous potential for growth. The ongoing digitization of industries and the increasing demand for AI-driven solutions are good for C3's prospects. C3's ability to secure long-term contracts with major clients demonstrates the trust and satisfaction customers have in its products and services. This contradicts Kerrisdale's pessimistic outlook and raises suspicions about the firm's motives. They basically take one of C3's strengths (their ability to build long-term partnerships and client relations) and give it a negative spin. Kerrisdale's report attempts to pigeonhole C3 as a company reliant on the energy sector, potentially to create uncertainty and fear in the market. But this claim conveniently omits the company's broader diversification strategy. C3 has made significant strides in expanding into healthcare, manufacturing, and financial services, proving its ability to penetrate new markets and adapt to different industry needs. This diversification not only mitigates the risks associated with dependence on a single sector but also showcases C3's resilience and growth potential. The report also casts doubt on C3's future competitiveness by highlighting declining R&D spending. This interpretation, however, seems deliberately misleading when considering the broader context of the company's strategy and expertise. Streamlining R&D spending could be a strategic move by C3 to optimize resources and concentrate on the most promising projects. It is important to recognize that R&D spending is not always directly proportional to innovation or product development success. Moreover, C3's existing technological expertise and intellectual property provide a strong foundation for future growth. The report's attempt to misrepresent the company's R&D spending is... questionable. All in all, I'd say that C3's unique competitive advantage, growth potential, diversification strategy, and technological expertise paint a more optimistic outlook for the company's future prospects than Kerrisdale's report suggests. As AI continues to transform industries, C3's targeted offerings are well-positioned to capitalize on these opportunities, in my opinion. Of note to me is their ESG product - ESG will be a really, really big thing in the near future, especially here in the EU, in the near future. My opinion: investors and market participants should be mindful of the potential for market manipulation and misinformation, especially when considering reports from firms with questionable motives and legal standing. Let's finally move on to what caused yesterday's market movements. Kerrisdale's letter to the auditor, Deloitte. Keep in mind that this is just my take on it. But I think that my opinion is not entirely unqualified. TL;DR: Deloitte is the biggest accounting firm in the US, and it basically comes down to this: you either trust a short-seller publishing an open letter going hand-in-hand with a well-timed media campaign at a conspicuously opportune moment (C3 was about to really take off and obliterate their short position), or you trust that C3's financials, on which Deloitte signed off on, are correct. Your call. Slightly longer version: Kerrisdale Capital sent a letter to C3's auditor, raising concerns about the company's accounting and disclosure practices. The letter questions the company's revenue recognition methods, particularly for long-term contracts, and the impact on financial results. C3 has consistently provided transparent financial results, as evidenced by their fiscal Q1, Q2, and Q3 2023 reports. The company has experienced steady revenue growth and diversified its client base, showcasing a strong business model. C3's financial reports adhere to US Generally Accepted Accounting Principles (US GAAP), ensuring that revenue recognition and other financial practices are in line with industry standards. As per US GAAP guidelines, companies recognize revenue when the performance obligations under a contract are satisfied. C3's long-term contracts are structured to deliver AI software solutions and services over time, and the company recognizes revenue accordingly. It is essential to emphasize that C3's revenue recognition practices are compliant with the accounting standards and have been consistently applied across all financial reporting periods. In their own March 6th report (page 13), Kerrisdale calls out C3 for their long product cycle (6-18 months). Considering C3 is a rapidly growing company that closed bookings of about $650 million in Q3 FY 23, it's hardly surprising that "the company’s accounts receivable have ballooned", according to their letter to the auditor. With C3.ai's strong bookings performance in Q3, it is reasonable to expect a corresponding increase in unbilled receivables. This growth in receivables is a natural consequence of the company's expanding business and long-term contracts, reflecting the ongoing demand for its AI solutions. On page 13 of their report, Kerrisdale acknowledges that C3 has a long product cycle, ranging from 6 to 18 months. This admission, coupled with the growth in unbilled receivables, suggests that Kerrisdale's claims are inconsistent and contradictory. The long product cycle means that C3's revenue recognition is spread across multiple reporting periods, which naturally leads to a growth in unbilled receivables. This growth aligns with US GAAP guidelines. The contradictory nature of Kerrisdale's claims raises questions about their understanding of US GAAP or their willingness to misrepresent financial information intentionally. It is essential to consider the possibility of malicious intent, particularly in light of the firm's ongoing legal scrutiny and history of short-selling. The US Department of Justice and the SEC are currently investigating dozens of firms, including Kerrisdale Capital, for potential market manipulation through short-selling schemes. I found relatively little information on this, but little or unsubstantiated information apparently suffices. I quoted one of several articles earlier in this post. Given this backdrop, Kerrisdale's claims regarding C3's accounting and disclosure practices might be an attempt to manipulate market sentiment and cast doubt on the company's financial integrity. In light of the transparent financial results provided by C3 and the company's adherence to US GAAP guidelines, Kerrisdale's claims regarding accounting and disclosure issues appear to be unfounded. In conclusion, C3.ai's growth in unbilled receivables is a plausible outcome of its strong Q3 bookings performance and long product cycle. Kerrisdale's contradictory claims and potential misunderstanding or manipulation of US GAAP guidelines warrant skepticism and caution, IMO. I expect Deloitte to back up C3 in their FY 23 audit opinion, voiding Kerrisdale's claims. I think the whole thing is a well-executed publicity stunt by a short-seller that was facing serious trouble from the stock being about to take off. I would have done it the same way. Even including the SEC, which is/was investigating Kerrisdale, in their letter is a bold move, but implying regulatory action/fraud, is exactly what Kerrisdale needed to "cover their ass" here and get the much-needed market reaction. Hats off to them, textbook execution. So that's it. Thanks for reading, if you even made it this far. Make of it what you want, as I'm as biased as Kerrisdale on this.
NYSE:AILong
by Donfelice
29
MicroStrategy - Bitcoin Holdings Chart & Purchase HistoryPrices and volumes of Bitcoin purchases at MicroStrategy Over 9k BTC at an average price of 58000. 19452 Btc at $52765. Even these whales are buying at the tops and sitting in the minuses for years The largest holder of Bitcoin on the planet is not Microstrategy , but the Chinese government, cryptoanalysts found (twitter.com/cryptoquant_com). In 2019, Chinese authorities confiscated 194 thousand #BTC , 833 thousand #ETH and other coins as a result of an investigation into PlusToken fraud. To this day, the confiscated crypto lies in the wallets of China's national treasury. In comparison, MicroStrategy has about 130,000 bitcoins . 27 march MicroStrategy repaid its $205M Silvergate loan at a 22% discount . As of 3/23/23, $MSTR acquired an additional ~6,455 bitcoins for ~$150M at an average of ~$23,238 per #bitcoin & held ~138,955 BTC acquired for ~$4.14B at an average of ~$29,817 per bitcoin . Best regards EXCAVO
BNC:BLX
by EXCAVO
44
The Golden Elephant-- Prologue -- Crises don't come when everybody expects them to. I have said this over and over again, for the last year I've been in this platform. I don't take it back. Finding out the kind of crisis that will come, the time and the severity, is hard. Trading, investing, living, is hard... Some have called me schizophrenic. This is funny. When you say what they want to hear, you are a genius. When science presents something we aren't used to, we take it as impossible. In my last few ideas, I received the "kindest" comments of all. How is it possible... when a chart shows weakness on equities and strength on commodities, it is loved. How is it possible... when a chart shows weakness on gold and strength on dollar, it is hated. In my bio I warned you. You will have to deal with my presence for much, much longer. So here I am again. In front of your face. -- Analysis -- Price discounts everything. The magic of the fractal nature of the stock market satisfies me every time. Chart patterns like flags, wedges, channels, triangles, rectangles, rounded tops, appear everywhere. Some of them have greater strength than others. But each one of them has it's meaning and importance. To get the elephant out of the room, let's look at the historical Gold chart. Do note that this chart measures: How much one ounce of Gold is worth in dollars? In a sense, how precious is a piece of colorful paper compared to a piece of yellow metal? After decades of QE, Gold has trapped itself inside a MASSIVE wedge, that engulfs it's entire lifespan (inside stock market). What is the outcome of such a trap? Usually down. Fractals at their best!!! If one believes in the Dollar Milkshake, they must not believe that Gold/USD will explode. And with Bull-Flagging dynamics in the scarcity of Dollar, what will the outcome be? -- Thought Experiment -- IF a food crisis comes, and you have invested in gold, what would you do? - Find a food market that accepts gold, and purchase food with gold. - Find a gold market and sell gold for dollars, and purchase food everywhere with dollars. Even if you buy stuff with gold coins, the receiver of the coin will go out and exchange it for dollars to pay out their business responsibilities. In both scenarios, gold is taken out of the picture, exchanged for dollars. Either we like it or not, by default we give more value to money because we use it as money. We don't use gold as money. -- Conclusion -- There are two ways price increases. Scarcity and demand. Gold is scarce but who demands it and for what? Dollar is plentiful and everyone uses it. And now, it gets less and less plentiful. Tread lightly, for this is hallowed ground. -Father Grigori -- Extra Charts -- Commodities like oil could very well overperform equities. I don't advice for or against any investment. I am not an investor. Trade at your own risk. If one believes in the Dollar Milkshake, then they should invest either in dollars, or in dollar-denominated investments. Question is: What could these investments be, and how will they perform? For more information, I have linked below my two hated ideas.
TVC:DXY
by akikostas
95