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

<p><a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> backed off of stiff resistance at the 23,000 zone and a secondary test and failure at this level would set up a harder pullback cycle. Japan has been a market we have been long since late March and on dip in May.</p><p>USD/JPY is expected break lower below the 106.80 pivot support to test 1.05 which will act as the bigger risk inflection. Below 105 we are eyeing 100-102.</p><p>23,000-500 marks a tough congestion area as pointed out in the daily chart cycle (previous lows and range zone).</p><p>We outline three trades. Buy a dip for a test on 23k, short 23k for a deeper summer pullback and then buying that low for a Q3 rise to test macro triple tops outlined in the weekly cycle.</p>

Nikkei 225 (NKY INDEX) backed off of stiff resistance at the 23,000 zone and a secondary test and failure at this level would set up a harder pullback cycle. Japan has been a market we have been long since late March and on dip in May.USD/JPY is expected break lower below the 106.80 pivot support to test 1.05 which will act as the bigger risk inflection. Below 105 we are eyeing 100-102.23,000-500 marks a tough congestion area as pointed out in the daily chart cycle (previous lows and range zone).We outline three trades. Buy a dip for a test on 23k, short 23k for a deeper summer pullback and then buying that low for a Q3 rise to test macro triple tops outlined in the weekly cycle.

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<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>  2,950 buy zone and level to put on risk in Asia and Europe worked well but charts have shown clear fractures after the SPX break below trendline pivot. This reaction higher will exhaust by late this week or early next week ahead off the bigger turn cycle due from June 22 into July but could impact weaker markets as soon at June 18 (HK, Singapore, Malaysia, Europe).</div><div></div><div>Cycle - June 22/27 primary cycle turn timeline. If we are rallying into this cycle we expect a top (base case and so far on track). SPX 3,120 a key level to monitor into the 18th.</div><div></div><div>Call to put on risk in Asia in our long group yesterday (Nikkei, ASX, Taiwan, Korea, Europe) to trade a one week push back into sell zones to set up a bigger cycle peak in late June.</div>


S&amp;P 500 (SPX INDEX)  2,950 buy zone and level to put on risk in Asia and Europe worked well but charts have shown clear fractures after the SPX break below trendline pivot. This reaction higher will exhaust by late this week or early next week ahead off the bigger turn cycle due from June 22 into July but could impact weaker markets as soon at June 18 (HK, Singapore, Malaysia, Europe).Cycle - June 22/27 primary cycle turn timeline. If we are rallying into this cycle we expect a top (base case and so far on track). SPX 3,120 a key level to monitor into the 18th.Call to put on risk in Asia in our long group yesterday (Nikkei, ASX, Taiwan, Korea, Europe) to trade a one week push back into sell zones to set up a bigger cycle peak in late June.

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The Nikkei225 2020 dividend futures have traded higher as the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" rel="noopener" data-smartkarma-citation="entities:22909:1">Nikkei 225 (NKY INDEX)</a> index has continued to rally. At current traded levels, the 2020 dividend futures imply a 10% drop from the expiry level of the Nikkei225 2019 dividend futures contract.</p><p>In the current economic environment and using bottom up estimates, we feel that this is overly positive and trades in line with the bull case scenario that we outlined in our earlier Insight.</p><p>The risk/reward at this point favours selling the Nikkei225 dividend futures and we feel that there will be an opportunity to cover the short in the next couple of months.</p>

The Nikkei225 2020 dividend futures have traded higher as the Nikkei 225 (NKY INDEX) index has continued to rally. At current traded levels, the 2020 dividend futures imply a 10% drop from the expiry level of the Nikkei225 2019 dividend futures contract.In the current economic environment and using bottom up estimates, we feel that this is overly positive and trades in line with the bull case scenario that we outlined in our earlier Insight.The risk/reward at this point favours selling the Nikkei225 dividend futures and we feel that there will be an opportunity to cover the short in the next couple of months.

Nikkei225 Dividend Futures: Trading Near Our Bull Case

<p><a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" rel="noopener" data-smartkarma-citation="entities:22909:1">Nikkei 225 (NKY INDEX)</a> is forming a rising wedge that is maturing into the 20,800-900 top zone as the perform cycle begins to close.</p><p>Rising wedge patterns form when upside momentum and volume deteriorate and the majority of investors are holding long positioning and new buyers are lacking.  Overlapping rises also show distribution. An inflection apex is in the cards.</p><p>Japan has been a market that we have traded dips higher from 19,000.</p><p>Rising wedge maturing and shows a better than 70% probability of breaking lower to test the 19,000 pivot support (to break). We favor trading a dip and rally into the top of the wedge with a growing conviction to short the topside of this rising range (near 20,900 with time translation).</p>

Nikkei 225 (NKY INDEX) is forming a rising wedge that is maturing into the 20,800-900 top zone as the perform cycle begins to close.Rising wedge patterns form when upside momentum and volume deteriorate and the majority of investors are holding long positioning and new buyers are lacking.  Overlapping rises also show distribution. An inflection apex is in the cards.Japan has been a market that we have traded dips higher from 19,000.Rising wedge maturing and shows a better than 70% probability of breaking lower to test the 19,000 pivot support (to break). We favor trading a dip and rally into the top of the wedge with a growing conviction to short the topside of this rising range (near 20,900 with time translation).

Nikkei Rising Wedge Maturing into Sell Zone

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/748/original/2020-05-16_08-18-15.png?1589584720" class="editor-image img-responsive" data-smartkarma-image-id="133748"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>"WORSENING"</strong> - The Cabinet Office updated their Business Condition Leading Indicator for March this week, confirming the trend already apparent from our Results &amp; Revision Score data series. The correlation between the series is 0.80, with the only significant deviation occurring in 2016, Coincident conditions are assessed as "worsening" wording that is unchanged since August 2019. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/788/original/2020-05-16_12-10-50.png?1589598664" class="editor-image img-responsive" data-smartkarma-image-id="133788"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>DECOMPOSED</strong> - Our Score is decomposed into a Results Score, an Annual Forecast/Revision Score and an Interim Forecast Revision Score.  The last two are ten-year lows; the first should join them next week. A notable limiting factor is the shortage of forecasts being made. Without this reticence, both forecast Scores would be considerably lower.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/795/original/2020-05-16_12-47-02.png?1589600841" class="editor-image img-responsive" data-smartkarma-image-id="133795"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>RETICENCE</strong> - 77% by number and 81% by value of companies with year-ends in  March, June, September, or December have already reported. Of these 2,464 companies representing ¥438 trillion of market cap, just 1,119 have issued annual forecasts for the current year, and 583 have made interim forecasts. Of all listed companies, one-third by market value are currently unable to see ahead twelve months and only 16% by value and 23% by number are prepared to look forward four-and-a-half months. This unusual degree of reticence leaves the sell-side without their regular anchoring comfort blanket.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/802/original/2020-05-16_13-27-57.png?1589605282" class="editor-image img-responsive" data-smartkarma-image-id="133802"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>NOT CHEAP</strong> -  Even allowing for the lack of a full complement of forecasts, the market's forward multiple is at a five-year high with Net Income expected to reach levels first seen in 2015, 37% below the December 2018 peak. The ten-year peak trailing multiple was 29 on aggregate Net Income of  ¥14.6 trillion, which was ten times the 2009 trough.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/801/original/2020-05-16_14-00-16.png?1589605245" class="editor-image img-responsive" data-smartkarma-image-id="133801"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>FIDDLING ABOUT</strong> - The Bank of Japan has reduced the amount of its daily ETF program for a second time; however, intervened for the last three days of last week seemingly intent on keeping 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> above 20,000. The cumulative total of BoJ purchases represents over 5% of the Total Market Value.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/884/original/2020-05-17_12-54-22.png?1589687679" class="editor-image img-responsive" data-smartkarma-image-id="133884"></figure><div class="content-caption">Source • Japan Analytics</div><p>In the <strong>DETAIL</strong> below, we review some market data trends, look at the Results &amp; Revision Score trends by Sector (a 15-year timeline is shown above), apply some KPMG 'recovery analysis' to Japan and look at Friday's results and revisions.</p><div><ul>
<li>The balance between positive/neutral/negative of the <strong>490</strong> results announcements was <strong>206:45:239</strong>. The average change in Results Score was <strong>-0.2</strong>.</li>
<li>For the <strong>205</strong> revisions/initial forecasts, the split was <strong>49:10:146</strong>, and the average Revision Score was <strong>-7.5</strong>. Of the <strong>364</strong> companies declaring full-year results, <strong>47%</strong> made forecasts for the current year.</li>
<li>Fifty-one will announce today, the largest of which by market capitalisation will be <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a>, <a href="https://www.smartkarma.com/entities/terumo-corp" target="_blank" data-smartkarma-citation="entities:6708:1" rel="noopener">Terumo Corp (4543 JP)</a>, and <a href="https://www.smartkarma.com/entities/komatsu-ltd" target="_blank" data-smartkarma-citation="entities:8416:1" rel="noopener">Komatsu (6301 JP).</a>
</li>
</ul></div>

Source • Japan Analytics"WORSENING" - The Cabinet Office updated their Business Condition Leading Indicator for March this week, confirming the trend already apparent from our Results &amp; Revision Score data series. The correlation between the series is 0.80, with the only significant deviation occurring in 2016, Coincident conditions are assessed as "worsening" wording that is unchanged since August 2019. Source • Japan AnalyticsDECOMPOSED - Our Score is decomposed into a Results Score, an Annual Forecast/Revision Score and an Interim Forecast Revision Score.  The last two are ten-year lows; the first should join them next week. A notable limiting factor is the shortage of forecasts being made. Without this reticence, both forecast Scores would be considerably lower.Source • Japan AnalyticsRETICENCE - 77% by number and 81% by value of companies with year-ends in  March, June, September, or December have already reported. Of these 2,464 companies representing ¥438 trillion of market cap, just 1,119 have issued annual forecasts for the current year, and 583 have made interim forecasts. Of all listed companies, one-third by market value are currently unable to see ahead twelve months and only 16% by value and 23% by number are prepared to look forward four-and-a-half months. This unusual degree of reticence leaves the sell-side without their regular anchoring comfort blanket.Source • Japan AnalyticsNOT CHEAP -  Even allowing for the lack of a full complement of forecasts, the market's forward multiple is at a five-year high with Net Income expected to reach levels first seen in 2015, 37% below the December 2018 peak. The ten-year peak trailing multiple was 29 on aggregate Net Income of  ¥14.6 trillion, which was ten times the 2009 trough.Source • Japan AnalyticsFIDDLING ABOUT - The Bank of Japan has reduced the amount of its daily ETF program for a second time; however, intervened for the last three days of last week seemingly intent on keeping the Nikkei 225 (NKY INDEX) above 20,000. The cumulative total of BoJ purchases represents over 5% of the Total Market Value.Source • Japan AnalyticsIn the DETAIL below, we review some market data trends, look at the Results &amp; Revision Score trends by Sector (a 15-year timeline is shown above), apply some KPMG 'recovery analysis' to Japan and look at Friday's results and revisions.
The balance between positive/neutral/negative of the 490 results announcements was 206:45:239. The average change in Results Score was -0.2.
For the 205 revisions/initial forecasts, the split was 49:10:146, and the average Revision Score was -7.5. Of the 364 companies declaring full-year results, 47% made forecasts for the current year.
Fifty-one will announce today, the largest of which by market capitalisation will be Softbank Group (9984 JP), Terumo Corp (4543 JP), and Komatsu (6301 JP).



🇯🇵 JAPAN MARKET UPDATE 18th May - "Worsening"

Japan

The Nikkei-225 Stock Average is a price-weighted average of 225 top-rated Japanese companies listed in the First Section of the Tokyo Stock Exchange. The Nikkei Stock Average was first published on May 16, 1949, where the average price was ¥176.21 with a divisor of 225. 

Nikkei 225 (NKY INDEX)

Nikkei 23k Sell Zone

Nikkei 225 (NKY INDEX) backed off of stiff resistance at the 23,000 zone and a secondary test and failure at this level would set up a harder...

Thomas Schroeder

Asia's Rally into Sell Zones

S&P 500 (SPX INDEX) 2,950 buy zone and level to put on risk in Asia and Europe worked well but charts have shown clear fractures after the...

Thomas Schroeder

Nikkei225 Dividend Futures: Trading Near Our Bull Case

The Nikkei225 2020 dividend futures have traded higher as the Nikkei 225 (NKY INDEX) index has continued to rally. At current traded levels, the...

Brian Freitas

Nikkei Rising Wedge Maturing into Sell Zone

Nikkei 225 (NKY INDEX) is forming a rising wedge that is maturing into the 20,800-900 top zone as the perform cycle begins to close.Rising wedge...

Thomas Schroeder

🇯🇵 JAPAN MARKET UPDATE 18th May - "Worsening"

"WORSENING" - The Cabinet Office updated their Business Condition Leading Indicator for March this week, confirming the trend already apparent from...

Campbell Gunn