The Mars Market Update — Live Research

US equity markets have now achieved upside objectives to complete respective wave 5 of (3) so risk is now firmly to the downside. Bonds have rallied into our sell zones but there is a risk that these waves are impulsive - high risk of failure for the bear trade. US$ shorts are a heavily one-sided trade but remains shy of our downside targets. Is Gold setting up for a strong rally? That will have important implications for the Yen and US bonds. One chart that has been exercising my mind about...

Some equity markets made new ATH's last week as we had been anticipating while the US$ continued its decline as a reaction to weak economic data and a more accommodative Fed. While we see further US$ weakness to come across the board, the near term bearish US$ sentiment is approaching extreme levels so be careful shorting in the hole here. We are looking for a bearish turn in equities this week. I am expecting increased US$ volatility later this week as the short US$ trade is very crowded and...

Last week saw a continuation of the rising global bond yields we had been focusing on. This trend was supported by a weakening Yen and Precious Metals. Global equities mostly churned sideways in non-directional trade. In an ideal world, we would like to see one more marginal new high in the SPX, DJIA and RUT to complete this most recent impulsive wave higher. We would then be looking to trade a bearish reversal. I remain flat equities, bearish bonds (but alert to a near term low) and looking...

Last week we got the major bond bearish reversal we had been tracking closely. This will likely have significant implications for the FX, commodity and equity markets over time. The "price of money" and "global liquidity" is determined by the bond market. Fortunately, our technical analysis helped us see this coming before everyone else! Central are clearly signalling an END to this global liquidity cycle. Take note. Importantly, these rising yields are occurring at a time when global equity...

As noted last week, global equity markets remain in near term topping patterns - I see no value in being long equities at this point in the cycle. There remains no convincing evidence of a sustainable top in place so I remain flat equities until further notice. I just don't see the risk/reward here for long positions. I am watching for a potential bearish reversal in Bonds.  Last week I highlighted the potential for a triangle thrust higher in the SPX which is what we got on Monday. There are...

Sometimes, when the markets are quiet, it helps to step back and look at where we are in the bigger picture. This helps anchor our risk/reward trading decisions on the shorter time-frames. I continue to posit that we are late in the 9th inning of an ending multi-decade bull market. It is important to keep this in mind when positioning long term portfolios. What we can see on the monthly SPX chart below is that we are nearing the end of wave 5 of V. The expectation being that when this bull...

Last week's volatile price action has created a lot of uncertainty in the charts with a lot of trend momentum breaking down. As such I have flattened positions until we get a clearer picture of market structure. FOMC later this week should help provide clearer market direction. The clearest trade potential is for ES shorts against Friday's highs but this is a very risky trade to try and pick tops in a bull market. The near term trends in JPY, PM's and Bonds appears to have broken down near...

Last week, our themes of bullish bonds and PM's and bearish US$ continued. The global equity markets have remained resilient with some indices breaking out to new ATH's despite the conflicting signals sent out by the Yen, Bonds and PM's. While we expect these themes to continue, the US equity markets are challenging important resistance zones - most importantly, the Russell 2000 which is threatening to break out of a 3 month symmetrical triangle. With our risk-on indices threatening a breakout...

Last week saw US equity bulls push markets to new cycle highs invalidating our near term bearish count. The question is whether this latest rally was the start of wave (iii) of 5 higher or wave B of a more complex wave 4 correction (Expanded Flat or Running Triangle). I am looking for early strength this week to be reversed in line with a wave B fake-out high. I am bearish USDJPY and bullish bonds and PM's. I am awaiting signs of a bearish reversal for equities. What we know: Global equity...

Late last week I posted an interim market update highlighting the key market risks right now. My base case is that last week's decline was only the first leg of a larger decline for wave (c) of 4. Ideally, the next week is a period of risk-off where we see equities decline while Bonds, PM's and Yen rally. New ATH's in the SPX will invalidate this scenario. We had a pretty good week identifying topping patterns in the equity markets that led to a 50pt flush in the ES. The USDCAD and Palladium...