Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Cross Asset Strategy

Earlier this month a note titled <a href="https://www.smartkarma.com/insights/the-pain-and-the-gain-in-equities-and-fx" target="_blank" data-smartkarma-citation="insights:47142" rel="noopener">The Pain and the Gain in Equities and FX</a> was shared on SmartKarma trying to highlight the short term risks in these markets. In that note it was concluded that one should “look out for opportunities to re-engage in equity markets anywhere between 5%-10% below current levels. Similarly expect signals to short the USD again over the weeks ahead.”
As we now appear to be in the middle of this correction down in many equity indices, the following note attempts to highlight key support zones for major indices around the world in preparation for re-engaging in markets for a longer lasting and more underlying bull trend.

Earlier this month a note titled The Pain and the Gain in Equities and FX was shared on SmartKarma trying to highlight the short term risks in these markets. In that note it was concluded that one should “look out for opportunities to re-engage in equity markets anywhere between 5%-10% below current levels. Similarly expect signals to short the USD again over the weeks ahead.”
As we now appear to be in the middle of this correction down in many equity indices, the following note attempts to highlight key support zones for major indices around the world in preparation for re-engaging in markets for a longer lasting and more underlying bull trend. 

Where to Prepare for the 'Gain' in Equities

Founder & CEO Bond Angle, LLC, Bond Angle, LLC

Vicki Bryan

Founder & CEO Bond Angle, LLC

Bond Angle, LLC

Insightful commentary and analysis on bond markets and market movers, including financial, economic, and industry catalysts and management shenanigans. 

High yield market investment research

Credit

<a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US</a> stock dropped in after-hours trading when it missed market expectations for the fourth quarter with just $270 million in net income (up 157%) on slightly better revenue of $10.7 billion, up 46% versus $7.4 billion last year.
For those playing at home, that’s not just a paltry margin at 2.5%, it’s a much smaller profit versus the $331 million reported in the third quarter on $8.7 billion in revenue—$2 billion less.
And as I expected, all of reported net income came from energy credit sales which masked a loss of at least $131 million, as has happened with each and every profit Tesla has reported since Q319 (as I discussed again on Monday in <a href="https://bondangle.substack.com/p/tesla-the-skys-the-limituntil" target="_blank" rel="noopener">Tesla: The Sky's The Limit...Until</a>). I expect to see additional boosts to revenue and profits Tesla typically adds like accounting maneuvers such as conveniently timed reserves adjustments and other unusual and nonoperating contributions when the 10-K is filed.
It seems even more consequential this quarter, with its market cap at more than $800 billion following another $5 billion sale of stock and the addition of its stock to 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>, that Tesla’s core operations still can’t generate unvarnished profit even on $10.7 billion in revenue.

Tesla Motors (TSLA US stock dropped in after-hours trading when it missed market expectations for the fourth quarter with just $270 million in net income (up 157%) on slightly better revenue of $10.7 billion, up 46% versus $7.4 billion last year.
For those playing at home, that’s not just a paltry margin at 2.5%, it’s a much smaller profit versus the $331 million reported in the third quarter on $8.7 billion in revenue—$2 billion less.
And as I expected, all of reported net income came from energy credit sales which masked a loss of at least $131 million, as has happened with each and every profit Tesla has reported since Q319 (as I discussed again on Monday in Tesla: The Sky's The Limit...Until). I expect to see additional boosts to revenue and profits Tesla typically adds like accounting maneuvers such as conveniently timed reserves adjustments and other unusual and nonoperating contributions when the 10-K is filed.
It seems even more consequential this quarter, with its market cap at more than $800 billion following another $5 billion sale of stock and the addition of its stock to the S&amp;P 500 (SPX INDEX), that Tesla’s core operations still can’t generate unvarnished profit even on $10.7 billion in revenue.

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

Dow Jones Industrial Average / Technical Analysis

Fresh sell resistance is the tactical focus after seeing the reversal from short levels and DJI cracking key support that was touted to trigger an SPX fall and now piercing the critical SPX wedge support that will open up the downside.<div>Short equity (sell risk and put on protection), long USD and lower yield call panning out. Equity shakeout on the back of divergence and a USD short squeeze in the making.</div>

Fresh sell resistance is the tactical focus after seeing the reversal from short levels and DJI cracking key support that was touted to trigger an SPX fall and now piercing the critical SPX wedge support that will open up the downside.Short equity (sell risk and put on protection), long USD and lower yield call panning out. Equity shakeout on the back of divergence and a USD short squeeze in the making.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Our bullish outlook, intact since early November, has been based on the fact that virtually all signals from the market have been consistent with risk-on behavior that we would expect to see in bull markets. Now, the picture is less clear; we are still bullish, just slightly less so than we have been over the past 2-3 months. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary, Health Care, Manufacturing, and Technology.

Our bullish outlook, intact since early November, has been based on the fact that virtually all signals from the market have been consistent with risk-on behavior that we would expect to see in bull markets. Now, the picture is less clear; we are still bullish, just slightly less so than we have been over the past 2-3 months. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary, Health Care, Manufacturing, and Technology.

U.S. Equity Strategy: Downgrading Manufacturing & Transports

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

President Biden has followed up fiscal stimulus measures passed into law in December with the announcement of an even larger programme just prior to his inauguration. Full passage of the new measures via regular legislative orders will require 60 votes in Senate, an unlikely outcome, but the alternative budget reconciliation process would require a simple majority in the Senate, although revisions to spending and revenue projections by various committees could become time-consuming.
Any fiscal stimulus invoked by the Biden Administration will be welcomed by the Fed who have appealed for extra help to support aggregate demand for the past few months. The Fed will not seek to prevent rising bond yields in 2021 unless short-term interest rate expectations become unhinged.
Financial markets and the Fed expect economic conditions to significantly improve as vaccine rollouts gain traction and, consequently, reduce the need to impose further lockdowns. Expectations of improving economic conditions underpin forecasts for a strong recovery in corporate profits to new all-time highs, thereby reducing the disconnect between the real economy and financial markets.
<div>Banks' holdings of Treasuries and Agency securities have risen since May, while commercial &amp; industrial loans have fallen over the same period, historically consistent with the arrival of recessionary conditions. Holdings of government securities at banks since the Great Recession have been consistently higher than commercial &amp; industrial loans, thereby leaving them exposed to sizeable capital losses if bond yields continue to climb.  </div>

President Biden has followed up fiscal stimulus measures passed into law in December with the announcement of an even larger programme just prior to his inauguration. Full passage of the new measures via regular legislative orders will require 60 votes in Senate, an unlikely outcome, but the alternative budget reconciliation process would require a simple majority in the Senate, although revisions to spending and revenue projections by various committees could become time-consuming.
Any fiscal stimulus invoked by the Biden Administration will be welcomed by the Fed who have appealed for extra help to support aggregate demand for the past few months. The Fed will not seek to prevent rising bond yields in 2021 unless short-term interest rate expectations become unhinged.
Financial markets and the Fed expect economic conditions to significantly improve as vaccine rollouts gain traction and, consequently, reduce the need to impose further lockdowns. Expectations of improving economic conditions underpin forecasts for a strong recovery in corporate profits to new all-time highs, thereby reducing the disconnect between the real economy and financial markets.
Banks' holdings of Treasuries and Agency securities have risen since May, while commercial &amp; industrial loans have fallen over the same period, historically consistent with the arrival of recessionary conditions. Holdings of government securities at banks since the Great Recession have been consistently higher than commercial &amp; industrial loans, thereby leaving them exposed to sizeable capital losses if bond yields continue to climb.  

Biden's Fiscal Bazooka Raises Risks of Significant Bond Portfolio Losses for Commercial Banks

United States

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

S&P 500 INDEX (SPX INDEX)

Where to Prepare for the 'Gain' in Equities

As we correct down in many equity indices, this note attempts to identify levels where markets are likely to be supported

Shyam Devani

Tesla: Oh No You Didn’t

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Vicki Bryan

US Fresh Sell Levels for the Punch Lower

Short equity (sell risk and put on protection), long USD and lower yield call panning out. Equity shakeout on the back of divergence and a USD...

Thomas Schroeder

U.S. Equity Strategy: Downgrading Manufacturing & Transports

In today’s report we highlight attractive Groups and stocks within Consumer Discretionary, Health Care, Manufacturing, and Technology

Vermilion Research

Biden's Fiscal Bazooka Raises Risks of Significant Bond Portfolio Losses for Commercial Banks

President Biden's $1.9 trillion stimulus augments the $950 billion package passed in December. Rising bond yields could expose banks to significant...

DeSaque Macro Research