While fundamentals remain, for now, as useful as useful as having the only phone in the world; we demur to BofAML's technical analysis team for their short-term trading focus across various asset classes. In light of the only thing that matters, the Fed balance sheet (as Hugh Hendry so eloquently explained [7]), BAML warns "beware the bear trap" in stocks...
In FX markets,
CHF at risk of a bearish reversal. $/¥ choppy, but bullish
Across many pairs the CHF has reached significant resistance and is now at risk of a bearish reversal. €/CHF is particularly worthy of note as it has completed a Bullish Reversal candle from retracement and pivot support. With momentum rolling bullish from its lowest levels since Apr'12, €/CHF could squeeze back towards 1.2346. $/CHF is in a similar situation and could squeeze back towards 0.9240, potentially 0.9472.
[8]
Turning to $/¥; since the 101.62 lows, price action has turned very choppy and overlapping, a condition likely to persist for the next week or so.
[9]
However, STAY BULLISH. THE UPTREND REMAINS FOR 104.60/105.00.
[10]
101.62 should mark the low end of price action AND $/¥ CAN'T TRADE BELOW 101.14/100.62.
Bonds remain a sell...
US 5yr yields stall at support, but stay bearish.
We remain bearish Treasuries. 10yr ylds are on track for 2.950%/2.992%/3.007% (swing targets and multi-month range high), while we remain short TYH4 (Dec-05 LTA : Sell TYH4. Treasuries are in Trouble). The completed TYH4 Head & Shoulders Top targets 122-06+. Meanwhile, 5yr yields have held the initial test of 1.556%/1.551% support (50% retrace of the Sep/Oct yield decline and mid-Sep pivot), but this should be only a temporary stopping point before the bear trend resumes for 1.670%/1.659%.
[11]
Back below 1.488% (equivalent to 2.839% in 10s and 124-17+ in TYH4) warns of stalling, while below 1.445%/1.443% (2.790% in 10yr yields and 124-30 in TYH4) negates the bearish potential. We recommend adjusting TYH4 stops to 125-02 from 125-08.
But "beware the bear trap" in stocks...
Conditions align for an ESZ3 Bear Trap
Finally we reiterate our BEAR TRAP VIEW on ESZ3. While 1773.25 support remains pivotal, BEWARE A BEAR TRAP!!. Intra-day momentum is at levels that have coincided with important lows AND seasonals into year end and the week of triple Witching are VERY BULLISH.
[12]
Indeed, the S&P500 has finished higher in 22 of the past 28 years the week of December Triple Witching (Next week). Above 1784.50 confirms a base and turn higher.
And Buy WTI...
Time to buy WTI
The CLM4 impulsive advance from 92.21(Nov-267 low) says the near-term and, POTENTIALLY, medium-term trend has turned bullish for WTI. Targets are seen to the Aug highs at 100.65, but likely beyond towards 105. Indeed, there is potential for a resumption of the long term bull trend towards 122/123 (basis continuation charts). We are wrong on this view below the Nov-27 low at 92.21 (CLM4).
[13]
BUY CLM4 at 95.00, add at 94.00, risking 92.20, targeting 100.65 & beyond.
