MBCC Trading Highlights 4th November'22 - today it's the Chinese "reopening" rumours again, ignore the noise, focus on NFP and CPI...

1) S&P 500 – the market is super jittery as sensitive to any “positive” headlines, today it is about Chinese reopening:

As you can see above, the market has been stuck in a sort of range of 3700-3900. To break the key 3600 level, which is also the big 200 weekly moving average level going back to the 2009 uptrend in markets, that break will be a big one and needs a “new” marginally negative catalyst to make it happen. The market can squeeze all the way to 4100 on the chart above and still be in a downward trending tape. We really have not broken to the upside unless we get a clear break > 4150.

Now there are several factors that could break the market lower, i.e. collapse in housing, another bank facing liquidity problems or a breakdown in repo markets, to name a few. For now the market knows the Fed is in tightening mode, but also assuming that the data will get better soon and/or hoping that China will reopen soon. These were the rumours that came out today causing a big rally in Chinese/Hang Seng. When everyone is short and faced with FOMO, of course a big squeeze can be expected, especially coming from such an oversold level.

For now, all eyes on the NFP and then the CPI next week. What does this mean for the markets? For now, it is all one big macro trade and Copper/Oil/Silver are all up today as reopening rumours take them higher. But we drill into each one’s physical market fundamentals and triggers to pinpoint what is in store for q4.

Sign up to find out what Chinese refineries are doing? How do product market balances look in q4? What are the generalists doing in the Tech/Energy trade, what does it all mean?