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The Global Macro Trade Continues Into Q2

My first global investment destination of the current phase was China per a post earlier today. Positions were taken in Q4 2018 as the two massive trade warriors duked it out but the China Large Caps ETF held its long-term series of higher highs and higher lows, along with long-term lateral support.

fxi

China seemed like a contrarian no-brainer, but it was only the first of several positions, which now include ETFs and stocks from Russia, India, Japan, Canada and even the Netherlands (ASML, a prime player in the Semiconductor sector, which itself would be at the center of the global trade if/as it continues).

As an extension of China strength would come industrial commodities and other resources and what the hell, let’s throw in Bitcoin (we did, nailing GBTC before its recent big pop) and a few of the sounder Cannabis stocks while we’re at it. The trade is global and it is multi-asset. US exporters stand a good chance this year as well, provided the US dollar weakens in line with the wishes of the president and apparently now, the Fed.

A global macro trade would very likely need a continued dovish Fed and a softer USD per the ACWX/SPY charts we update each week in NFTRH. The correlation is not perfect, but a strong dollar backed by strong Fed policy went with weaker global markets (relative to the US SPX/SPY) and the opposite has been expected to go with stronger global markets, relative to SPX/SPY at least, if not nominally as well. Of note, the dollar has not as yet weakened and the World has not begun to out perform the US.

acwx spy

As a side note, my best support target for SPX (2100-2200) obviously looks a lot less likely along side our developing global bull scenario. It appears that for me to be right on that target I’d have to be wrong about a global bull phase. I do still hold SPY short pending its top-test. It would have been painful if it were not along side many US and global long positions.

Meanwhile, in NFTRH we charted the Global index as it took out resistance, turned it to support and held the moving averages. So far, so very good.

djw

But there has been more work to do and in-month so far, it is doing it. The next step is to take out the dashed trend line. The daily chart above will direct the lumbering likes of this monthly chart. The daily is bullish at this time.

This post is just a little snippet of the type of the in-depth analysis we do weekly in NFTRH for US and global stock markets, commodities and precious metals. There is much more work ongoing to confirm a global macro bull trade (e.g. we’re keeping close track of copper’s key $3/lb. level, hoping to confirm the bullish view of the OCB, AKA the original copper bull ;-), AKA Mark Turner), but since Q4 2018 we have been working the global “bounce-a-thon” that is now making noises beyond just a bounce. As with the big global rally early last decade, this trade started as a glimmer in gold’s eye as well (the precious metals held firm and rose during Q4’s troubles).

We older timers remember that bull market well. Inflation and a weaker US dollar played roles and would likely need to do so again here. Now, will Uncle Buck play ball? It’s elevated but has fading momentum.

Obviously we do not have a full range of indicators blinking green at this time, but if US and global stock markets continue to rally the chances are good that global will out perform the US from this point on. If they weaken, chances are that the US markets will weaken more. But it’s not linear. Remember, there are some US sectors that prefer a weaker currency and improving global growth.

Stay tuned. 2019 is shaping up nicely, through Q1. Now we need more confirming indicators to kick in.

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