Still there on the S&P500.
With this chop so far looks like it could take a little longer than anticipated to reach that 5700.
But either way…
Still long and bullish.
Also beware of a potential fakeout below the lows marked with the yellow line.
You can see from the chart above there have been already a couple of instances where price took out the lows of the range right below resuming higher thereafter.
Quick technical update.
Stop loss on the trade is already at breakeven.
But other than that, nothing changed.
Still looking for that 5700 by late July.
More details on the original post:
Other than that…
NFP on Friday.
Starting to trail stop loss up in profit on the S&P500.
Obviously still targeting that full 5700 but the CPI from the US on Thursday will be a mover.
Will share more details over the coming days.
Remember…
US CPI tomorrow.
If the CPI is above consensus that will be more than enough to trigger a decent pullback on the S&P500.
While if instead it’s below consensus then that 5700 will be reached much earlier than anticipated.
Here’s what most models are pointing to:
And here’s the various scenarios based on the core reading:
I’ve highlighted the two most likely scenarios.
Either way…
Longs on the S&P500 for us are already protected with the stops trailed up well in profit.
Alright.
Trailed out in profit on the S&P500 longs on this pullback.
Still expecting 5700 to be reached to be honest, but…
We might get a bit of a corrective structure now to build up fuel for the next leg higher.
Will update.
Ok, long GBPUSD on a dip.
UK inflation this morning proves still a bit too high for the BoE.
Particularlu services inflation which is at 5.7% while the BoE’s target is at 5.1%.
While instead the story is the opposite in the US with plenty of disinflation going.
So the overall context is well set for GBP outperformance and USD underperformance.
Target 1.3130.
Side note…
It’s nothing particularly actionable right now, but well worth a mention.
Basically, Trump overnight did an interview with Bloomberg…
And from that we can say for the first time in a while JPY carry trades are in danger, why?
Because Trump loudly talked about how the Dollar is too expensive against the Yen.
In other words…
Short JPYs are now being threatened from multiple sides.
The FED will start cutting rates in September, and that will shrink the carry advantage that the Dollar has against the Yen.
Then the BoJ is actively intervening every time the JPY gets too weak too quick.
And now there’s Trump saying the Yen is too cheap and he will want to turn that around when he’s president.
Well…
This may or may not be the absolute turning point for the JPY.
Probably it’s not, yet.
But certainly JPY shorts are not the attractive carry trade that they were before this interview.
Just a bit of context.
Nothing actionable for me.
But this is just to give you a bit of context into the JPY strength over the past 12 hours or so.
Stopped on the GBPUSD longs for now.
Squeezed by the risk off hitting across equities.
Which led to a turn in sentiment across FX pairs too.
Keeping an eye out for a reentry as 1.31 is still likely to be reached sooner or later.
But no rush with it, letting this pullback play out fully first.
Also, what triggered this?
Rumors have it that Biden is about to drop out of the presidential race.
So Trump will (most likely) have to face someone else in November.
And that’s rebalancing the polls and the election scenarios.
How?
Think about it this way…
Trump extending his lead after the June 27 presidential debate was one of the multiple reasons for the bullishness in US equities over the past couple of weeks.
And so with the latest developments that’s unwinding now.
Just a bit of context.
A number of reasons - Pres Trump’s remarks re Taiwan likely the spark.
One headline I read summed it up:
Textbook on How to Spook Investors
Hey Peter,
Thank you for your thought and that’s true.
But that was from Trump’s interview on Wednesday.
This:
That started the move but it was isolated to equities alone an fairly small.
After that on Thursday this was the trigger that escalated things:
From there if you notice we have had lower stocks along lower GOLD.
That’s a sign that it’s not classic risk off type from geopolitical concerns, growth concerns, and such.
But it’s the market “pricing out” a Trump victory, meaning…
So…
Reason being that Biden has no chance to win against Trump, at least for what markets think obviously.
So a new opponent (most likely younger, more competent, and more charismatic than Biden) changes the whole scenario now for the election, not too easy anymore for Trump.
So the market is adjusting.
One thing that the market hates most - uncertainty.
Taiwan is the biggest chip market and tech relies on chips - anything that could cause an imbalance in that market will affect risk - even comments from a prospective US President…
Tech is leading - remember the bubble 24 yrs back?
I do because I was right there 
Absolutely Peter.
That was the first leg in equities, but then the second leg was on the US elections developments.
Here:
The giveaway of that if you notice is GOLD…
As you can notice the Taiwan news is bullish GOLD obviously, as it loves geopolitical tensions.
But then it turned around heavy on the Biden’s news.
Let’s put it this way…
Taiwan news: bullish GOLD and bearish equities.
Biden’s rumors: bearish both equities and GOLD.
Anyway all this is important contextually just to be able to find the bottom in both of these pullbacks.
And that will be either slightly after Biden officially drops out and we know officially who the new candidate will be.
Or if Biden officially says he’s not going to drop out.
Reason being that Trump facing Biden is (from the market point of view) an easy win for him. While if he has to face someone else that’s more of an unknown.
And Trump is bullish equities and bullish GOLD.
So less likelihood of him winning triggers a pullback in what has been two weeks or so of him remarkably extending his lead in the polls since the June 27 presidential debate.
So that’s the variable right now.
With that said…
Thank you Peter for jumping in the discussion, these are the comments that spur productive conversations and make the thread more and more useful for traders as they can get more insights, more context, more details, more of everything.
So thank you 
Hello Sir, What’s your thought on GBP/JPY and USD/JPY ?
weakness on JPY but BOJ try to save the currency by injecting money in the market.
it’s a good idea to keep shorting the currency (JPY) or it’s actually risky with growing uncertainty to keep trading it
Mixed sentiments there to be honest.
There are forces pulling both ways.
There’s bearish stuff like this:
There’s as you said the BoJ intervening to stop JPY weakness…
But at the same time there’s the fact that JPY shorts pay really good carry so it keeps attracting carry traders regardless.
So in my opinion…
There’s NO clear sentiment to get a high conviction trade on it.
Mixed.
Guys.
You know I don’t like to self promote in here.
But we just landed an interview on The Hudson Weekly where I went REALLY into the details of fundamental analysis…
I know you will find this a good read so…
Here it is:
I’ve been asked some really good questions that allowed me to go into some aspects of fundamentals that are extremely useful and practical for your trading.
Also it’s a quick 10 minute read so pretty straightforward one.
Feel free to ask questions here if you have any.
I will be happy to get into more details where needed.
One thing to note today guys…
And it’s this:
Bill Dudley has been a long time hawk and he’s now vouching for a rate cut at the upcoming FOMC meeting. Why?
Well, Goldman Sachs recently put it this way…
If you have to cut, wouldn’t it be better to cut in now rather than too close to the election?
I know, I know!
The FED is NOT political, but still.
Objectively speaking, yes!
It would be better to cut now instead of too close to the election.
Does it mean they will?
Mh, that’s a different story.
But if they don’t cut next week, at least we should expect quite a dovish Powell pointing at a September cut.
Enough for a trade?
No, not for me, at least not at the moment.
But this reminds me one thing…
That the overall context is VERY bullish GOLD.
Why?
Because if the FED cuts, bullish!
If the FED cuts because of a US recession, even more bullish!
I haven’t talked about GOLD much here, but I went into a lot more details in this article.
It’s quite a long term view.
So I won’t be bringing that up much often.
Just remember…
GOLD to 2700 this year is the base case, maybe higher.
Short GBPUSD.
Short term trade that we should look to square before the FOMC.
Target 1.2750.
Will update.
Hit breakeven.
Will update if we get another entry.
