In today’s briefing:
- EM Thematic Short
- Treasury Yields Reversing Higher; U.S. Dollar and High Yield Spreads to Follow?
- Taiwan Semiconductor Manufacturing Co Ltd (TSM US): TSS < 10 - Target Tactical 8-10% Decline
EM Thematic Short
- EEM topped ahead of the DXY 101 bottom (lead) showing strong synergy with our bull DXY and bullish yield charts from last week.
- Bull divergence implies a 2-3 month USD and yield up cycle is in store. EEM rising channel breakdown due.
- HK was the first to crack trendline support. Korea is a weak link. India is one of the clearer shorts. Australia, Taiwan and then Japan are set to roll over.
Treasury Yields Reversing Higher; U.S. Dollar and High Yield Spreads to Follow?
- We continue to expect the 4165-4200 level to cap upside on the S&P 500, but cannot rule out a trip to 4300-4325 (August 2022 highs)
- Either way, we continue to preach caution and believe that upside is limited on the market indexes.
- Treasury yields are starting to reverse above multi-month downtrends, and we are monitoring for similar reversals on the U.S. dollar (DXY) and high yield spreads.
Taiwan Semiconductor Manufacturing Co Ltd (TSM US): TSS < 10 - Target Tactical 8-10% Decline
- On 7 November 2022 we published a bullish TSS / tactical recommendation in TSM US. It was trading at 62.49. TSM US rallied 13.4% in 3 days.
- On 15 February 2023 TSM US peaked at a new Q4/Q1 uptrend high of 98.99 amid similar extreme ST momentum failure and quickly reversed.
- Our TSS methodology triggered a TSS < 10 at the high and justifies a further 8-10% decline in the coming 1-2 weeks.
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