Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Well defined flat range breakout points in the SPX and DJI call for an exhaustive push to register a minor new SPX high before the next pullback cycle. Trendline support at 4,370 is the risk inflection support.SPX daily RSI has room to push to the 70 sell zone that sets up a top. The intraday chart pattern shows breakout points at 4,370 and 4,420. Flat ranges typically break to the upside.SPX rise toward 4,430-50 at the top end of the range where risk to reward turns less favorable in August when seasonality bends to bearish.

Well defined flat range breakout points in the SPX and DJI call for an exhaustive push to register a minor new SPX high before the next pullback cycle. Trendline support at 4,370 is the risk inflection support.SPX daily RSI has room to push to the 70 sell zone that sets up a top. The intraday chart pattern shows breakout points at 4,370 and 4,420. Flat ranges typically break to the upside.SPX rise toward 4,430-50 at the top end of the range where risk to reward turns less favorable in August when seasonality bends to bearish.

SPX Flat Range Push and Risk Break Points

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

While the FOMC formally maintains an accommodative stance (including the promised purchase of US$120 billion worth of bonds monthly), the US monetary base has declined by US$15 billion between April and June 2021. Despite this stealth taper of the monetary base, M2 was still up 11.1% YoY in June 2021 -- faster than the fastest pace of M2 growth reached during QE1 and QE2 (10.4% YoY in January 2009 and January 2012) -- despite the high base of 20.6-27% YoY growth in M2 during April 2020-March 2021.  The excessively rapid pace of monetary growth inevitably is contributing to inflation: the broadest measure, the GDP deflator, was up 6%QoQsaar in 2Q 2021, core PCE inflation was 6.1% and PCE inflation was 6.4% annualized in 2Q 2021. The YoY pace of core-PCE inflation (3.5% in June) and core CPI inflation (4.5%) are at 29-year highs, but do not yet reflect the impact of soaring house prices on OERs and rental rates: the Case-Shiller 20-city house price index was up 17% YoY in May 2021 (the fastest in its 30 year history), which will inevitably seep into the consumer inflation gauges during the course of 2H 2021. To pretend housing inflation is transitory is fatuous.  In the second half of July, the US overtook Indonesia for the dubious distinction of the country with the highest number of new Covid cases globally (569K in the last week of July, 400K in the previous week). But the 7-day moving average (80K) is still less than a third the new daily cases the US was reporting at the peak (11 January 2021), and nearly half the US population has been fully vaccinated. ISM manufacturing for July (with the PMI at 59.5 and new orders at 64.9, both still suggesting spectacular growth but 1.1 points lower than June) suggests a very mild impact from this second Covid wave: real GDP will decelerate in 2H 2021, but (having already surpassed pre-Covid levels) will continue to grow faster than the US economy's potential growth, keeping the pressure on inflation. We note that taper has already begun, but will have to be formally acknowledged by the November FOMC meeting, as inflation continues to print well above the 3% YoY mark for the rest of 2021. A premature rise in the Fed Funds is inevitable before the end of 2021, completely against the market's expectations. We would stay underweight equities.

While the FOMC formally maintains an accommodative stance (including the promised purchase of US$120 billion worth of bonds monthly), the US monetary base has declined by US$15 billion between April and June 2021. Despite this stealth taper of the monetary base, M2 was still up 11.1% YoY in June 2021 -- faster than the fastest pace of M2 growth reached during QE1 and QE2 (10.4% YoY in January 2009 and January 2012) -- despite the high base of 20.6-27% YoY growth in M2 during April 2020-March 2021.  The excessively rapid pace of monetary growth inevitably is contributing to inflation: the broadest measure, the GDP deflator, was up 6%QoQsaar in 2Q 2021, core PCE inflation was 6.1% and PCE inflation was 6.4% annualized in 2Q 2021. The YoY pace of core-PCE inflation (3.5% in June) and core CPI inflation (4.5%) are at 29-year highs, but do not yet reflect the impact of soaring house prices on OERs and rental rates: the Case-Shiller 20-city house price index was up 17% YoY in May 2021 (the fastest in its 30 year history), which will inevitably seep into the consumer inflation gauges during the course of 2H 2021. To pretend housing inflation is transitory is fatuous.  In the second half of July, the US overtook Indonesia for the dubious distinction of the country with the highest number of new Covid cases globally (569K in the last week of July, 400K in the previous week). But the 7-day moving average (80K) is still less than a third the new daily cases the US was reporting at the peak (11 January 2021), and nearly half the US population has been fully vaccinated. ISM manufacturing for July (with the PMI at 59.5 and new orders at 64.9, both still suggesting spectacular growth but 1.1 points lower than June) suggests a very mild impact from this second Covid wave: real GDP will decelerate in 2H 2021, but (having already surpassed pre-Covid levels) will continue to grow faster than the US economy's potential growth, keeping the pressure on inflation. We note that taper has already begun, but will have to be formally acknowledged by the November FOMC meeting, as inflation continues to print well above the 3% YoY mark for the rest of 2021. A premature rise in the Fed Funds is inevitable before the end of 2021, completely against the market's expectations. We would stay underweight equities. 

2 Months of Stealth Taper and Mild Delta-Driven Slowdown; but Inflation Still Surging

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

In May, the Nikkei released a market consultation on proposed changes to the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> covering capping the weight of new constituents in the index at 1% by using a Price Adjustment Factor, limiting the number of index changes at a periodic review to 3, and changing the index universe from stocks listed on TSE's 1st section to stocks that are listed on the Prime Market (post the reorganisation). Most of the proposed changes were subsequently approved.This is the first <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> rebalance after the market consultation that tweaked things around. The tweaks could ensure the inclusion of stocks that were historically not included in the index due to their high stock price, though the impact will be much smaller since their weight in the index will not exceed 1%.At the upcoming rebalance, we see a high probability of <a href="https://www.smartkarma.com/entities/nintendo-co-ltd" target="_blank" data-smartkarma-citation="entities:5415:1" rel="noopener">Nintendo Co Ltd (7974 JP)</a> and <a href="https://www.smartkarma.com/entities/zozo-inc" target="_blank" data-smartkarma-citation="entities:18379:1" rel="noopener">ZOZO Inc (3092 JP)</a> being included in the index while there is a lower probability of <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> and <a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix Corp (8591 JP)</a> being included.Potential deletion candidates are <a href="https://www.smartkarma.com/entities/toho-zinc-co-ltd" target="_blank" data-smartkarma-citation="entities:2796:1" rel="noopener">Toho Zinc (5707 JP)</a>, <a href="https://www.smartkarma.com/entities/sky-perfect-jsat-holdings" target="_blank" data-smartkarma-citation="entities:14097:1" rel="noopener">Sky Perfect Jsat (9412 JP)</a>, <a href="https://www.smartkarma.com/entities/maruha-nichiro-corp" target="_blank" data-smartkarma-citation="entities:20640:1" rel="noopener">Maruha Nichiro (1333 JP)</a> and <a href="https://www.smartkarma.com/entities/pacific-metals-co-ltd" target="_blank" data-smartkarma-citation="entities:3439:1" rel="noopener">Pacific Metals (5541 JP)</a>.There will be quite a large impact from passive trading on a few names.The changes will be announced early September and will be implemented at the close of trading on 30 September.

In May, the Nikkei released a market consultation on proposed changes to the Nikkei 225 (NKY INDEX) covering capping the weight of new constituents in the index at 1% by using a Price Adjustment Factor, limiting the number of index changes at a periodic review to 3, and changing the index universe from stocks listed on TSE's 1st section to stocks that are listed on the Prime Market (post the reorganisation). Most of the proposed changes were subsequently approved.This is the first Nikkei 225 (NKY INDEX) rebalance after the market consultation that tweaked things around. The tweaks could ensure the inclusion of stocks that were historically not included in the index due to their high stock price, though the impact will be much smaller since their weight in the index will not exceed 1%.At the upcoming rebalance, we see a high probability of Nintendo Co Ltd (7974 JP) and ZOZO Inc (3092 JP) being included in the index while there is a lower probability of Oriental Land (4661 JP) and Orix Corp (8591 JP) being included.Potential deletion candidates are Toho Zinc (5707 JP), Sky Perfect Jsat (9412 JP), Maruha Nichiro (1333 JP) and Pacific Metals (5541 JP).There will be quite a large impact from passive trading on a few names.The changes will be announced early September and will be implemented at the close of trading on 30 September.

Nikkei225 Index Rebalance Preview: Perennial Favourites Could Be In

Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Short term price action on both the <a href="https://www.smartkarma.com/entities/s-p-500" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 (SPX INDEX)</a> and <a href="https://www.smartkarma.com/entities/dow-jones-industrial-average" target="_blank" data-smartkarma-citation="entities:22887:1" rel="noopener">Dow Jones Industrial Average (INDU INDEX)</a> warn of a pullback this week.The S&amp;P 500 has completed ‘triple negative divergence’ which says the uptrend has run out of steam. Overnight the Dow Jones Industrial Average posted a bearish daily reversal – the last time that happened it fell more than 900 pointsWhile that may be ‘unfriendly’ in the near term if it repeats, such a development would likely lead to buying opportunities. Price action and levels are highlighted below…

Short term price action on both the S&amp;P 500 (SPX INDEX) and Dow Jones Industrial Average (INDU INDEX) warn of a pullback this week.The S&amp;P 500 has completed ‘triple negative divergence’ which says the uptrend has run out of steam. Overnight the Dow Jones Industrial Average posted a bearish daily reversal – the last time that happened it fell more than 900 pointsWhile that may be ‘unfriendly’ in the near term if it repeats, such a development would likely lead to buying opportunities. Price action and levels are highlighted below…

US Equities: Another Quick Pullback Before Higher?

The US consumer price index (both headline and core) rose at an annualized pace of 10.8% MoM in June 2021. For 2Q (April-June) 2021, the core CPI increased at an annualized pace of 10%, while the headline CPI increased 9.2% (annualized) in 2Q 2021. We had predicted precisely this outcome on 12 June 2020 (13 months ago) in <a href="https://www.smartkarma.com/insights/labour-market-slack-remains-but-fomc-will-need-to-tighten-by-mid-2021" target="_blank" data-smartkarma-citation="insights:40185" rel="noopener">Labour Market Slack Remains but FOMC Will Need to Tighten by Mid-2021</a> because inflation would rise markedly. While the FOMC has insisted that inflation is transitory, it actually began a stealth tightening in May 2021, engineering a month-on-month decline in the monetary base that month. CPI inflation is currently being under-estimated, because the Housing component is properly updated only half-yearly after a complete national survey of rentals and owners' equivalent rents (OER, the implicit rent that would be paid by homeowners were they to rent rather than own their home). The Case-Shiller 20-city housing price index was up 14.9% YoY in April 2021 (the latest data, released at end-June 2021), and this is bound to enter the CPI and PCE price index in 2H 2021. (Housing is considered an investment, not consumption, so rents and OER are the consumption portion; housing prices are not directly relevant to CPI, the cost of using housing -- rents -- are). Having risen just 2.6% YoY in June 2021, Housing is likely to rise much more sharply in 2H 2021, pushing up headline and core CPI (and also PCE, but less because of its lower weight). The labour market retains some sectoral slack in the hospitality and tourism-related sectors, but appropriately skilled labour is increasingly in short supply elsewhere in the economy.  Despite a high base from June 2020 (5% YoY), average weekly earnings (wages) were up 3.6% YoY in June 2021. Wage inflation will likely exceed 4% YoY in 3Q 2021, contributing additionally to inflationary pressure. St. Louis Fed President James Bullard (a non-voting member of the FOMC this year) has already called for tapering to begin (as "substantial progress" has already been made on the Fed's inflation and unemployment goals). While Fed Chair Powell insisted in his House testimony this week that tapering remains "a ways off", he told the Senate on the following day, "...of course we're not comfortable with" the fact that the reopening of the economy had "driven inflation well above 2%". The 27-28 July FOMC meeting will likely see more intense discussion of tapering, and we think formal (not merely stealth) tapering will be begin no later than the September meeting. We remain cautious about equities, although the strong recovery makes cyclicals and consumer cyclicals attractive.

The US consumer price index (both headline and core) rose at an annualized pace of 10.8% MoM in June 2021. For 2Q (April-June) 2021, the core CPI increased at an annualized pace of 10%, while the headline CPI increased 9.2% (annualized) in 2Q 2021. We had predicted precisely this outcome on 12 June 2020 (13 months ago) in Labour Market Slack Remains but FOMC Will Need to Tighten by Mid-2021 because inflation would rise markedly. While the FOMC has insisted that inflation is transitory, it actually began a stealth tightening in May 2021, engineering a month-on-month decline in the monetary base that month. CPI inflation is currently being under-estimated, because the Housing component is properly updated only half-yearly after a complete national survey of rentals and owners' equivalent rents (OER, the implicit rent that would be paid by homeowners were they to rent rather than own their home). The Case-Shiller 20-city housing price index was up 14.9% YoY in April 2021 (the latest data, released at end-June 2021), and this is bound to enter the CPI and PCE price index in 2H 2021. (Housing is considered an investment, not consumption, so rents and OER are the consumption portion; housing prices are not directly relevant to CPI, the cost of using housing -- rents -- are). Having risen just 2.6% YoY in June 2021, Housing is likely to rise much more sharply in 2H 2021, pushing up headline and core CPI (and also PCE, but less because of its lower weight). The labour market retains some sectoral slack in the hospitality and tourism-related sectors, but appropriately skilled labour is increasingly in short supply elsewhere in the economy.  Despite a high base from June 2020 (5% YoY), average weekly earnings (wages) were up 3.6% YoY in June 2021. Wage inflation will likely exceed 4% YoY in 3Q 2021, contributing additionally to inflationary pressure. St. Louis Fed President James Bullard (a non-voting member of the FOMC this year) has already called for tapering to begin (as "substantial progress" has already been made on the Fed's inflation and unemployment goals). While Fed Chair Powell insisted in his House testimony this week that tapering remains "a ways off", he told the Senate on the following day, "...of course we're not comfortable with" the fact that the reopening of the economy had "driven inflation well above 2%". The 27-28 July FOMC meeting will likely see more intense discussion of tapering, and we think formal (not merely stealth) tapering will be begin no later than the September meeting. We remain cautious about equities, although the strong recovery makes cyclicals and consumer cyclicals attractive. 

US Wages Are Resurgent, Even if Markets Haven't Noticed; Keep Your Eye on Inflation

United States

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Dow Jones Industrial Average (INDU INDEX)

Dow Jones Industrial Average (INDU INDEX)

SPX Flat Range Push and Risk Break Points

Well defined range breakout points in the SPX and DJI call for an exhaustive push to register a minor new SPX high before the next pullback cycle....

Thomas Schroeder

2 Months of Stealth Taper and Mild Delta-Driven Slowdown; but Inflation Still Surging

US base money declined by $15bn between April and June 2021, a stealth taper. House prices up 17%YoY will push up PCE inflation via OERs, & growth...

Prasenjit K. Basu

Nikkei225 Index Rebalance Preview: Perennial Favourites Could Be In

Nintendo could be included in the NKY at the upcoming rebalance though the impact will not be very large. The new methodology could also result in...

Brian Freitas

US Equities: Another Quick Pullback Before Higher?

Price actions warns of a potentially quick pullback as the S&P 500 runs out of steam and the Dow posts a short term reversal

Shyam Devani

US Wages Are Resurgent, Even if Markets Haven't Noticed; Keep Your Eye on Inflation

Core CPI rose 10% annualized in 2Q2021; rentals will reflect surging house prices in 2H 2021. Wage inflation in June was 3.6%YoY on a high base....

Prasenjit K. Basu