Interest Rate Dynamics: Jim Biano suggests that cutting short-term rates could paradoxically lead to higher long-term yields due to increased inflation risk premiums, indicating a potential steepening of the yield curve.
Investment Strategy: Patrick Serezna discusses a trade strategy focused on the 5-year and 30-year bond spread, recommending a 4:1 futures contract ratio to balance duration and manage risk effectively.
Market Outlook: The S&P 500 shows signs of potential topping, with a possible 5% correction anticipated, which could either be a healthy pullback or the start of a deeper market correction.
Currency Analysis: The US dollar is in a consolidation phase, with a potential for a counter-trend rally driven by technical factors, despite a broader bearish outlook.
Commodity Insights: Crude oil is experiencing distributive price action with potential downside risk, while gold has broken out to new highs, with targets set between 3,750 and 4,000 by year-end.
Sector Focus: Uranium is poised for a seasonal rally, with increased investor interest and potential for significant price movements, although market sentiment appears crowded.
Technical Trends: Copper and 10-year Treasury yields are showing mixed signals, with copper equities performing well despite weak underlying prices, and Treasury yields potentially heading lower in the short term.
Transcript
[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Serezna. >> Eric, it was great to have Jim Biano on the show. I loved his perspective on how things have materially changed in this postcoavid economy. And that's a perfect opportunity to segue to our new segment, the Big Picture Trading Trade of the Week. Patrick, tell our listeners how you'd put a trade on to express Jim's view that cutting short-term rates could actually risk increasing long-term yields. Now, Eric, Jim's got a lot of interesting takes, but the one that really stood out for me was his view on higher inflation regime and what it means for bonds. His argument is pretty straightforward. Rate cuts could actually be inflationary. They juice up demand, push up inflation risk premiums, and ironically that could lead to selling in the long end of the curve. To me, that screams steepener. I'd rather look at the 530s than the 210s. It lines up better with the idea of long duration bonds under pressure. Right now, that spread is around 121 basis points. As you can see on page two of the chart deck, we've moved a long way off the 2023 inversion. But when you zoom out, history is clear. In the last two big steepening cycles back in 2000 and 2008, the spreads widened north of 200 basis points. So, there's still room to run if rates meet sticky inflation. Now, sizing the trade is a tricky part. You can't just throw on equal contracts. The 30-year moves a lot more per basis point than the 5-year. You've got a balance by duration, so both sides react evenly. On futures, that works out roughly to a 4:1 ratio. I've attached a Bloomberg screenshot of that on page three of the chart deck for those that want to take a closer look. In regards to risk management, I'd keep it simple. Two things kill the trade. One, if inflation expectations roll back to the pre-COVID norms, or two, bullish technicals showing demand coming back in the long end. Either of those would be a clear signal to scale back. So, in that bigger picture, if Jim's right and the Fed is cutting into sticky inflation, then history says that the 530s still have plenty of room to steepen. Patrick, that was a great explanation for our professional audience. We don't have time to delve into all the details of a retail version of this trade. So, how about giving our retail listeners just a quick 10,000 ft overview. A lot of retail investors shy away from this trade because futures and duration matching sound complicated, but you don't actually need to mess with futures to play the theme. There are simple ETF-based ways to do it. For example, you can use Harley Bassman's Simplify short-term treasury futures ETF, and pair that with options on the TLT, which is the EyesShares 20 plus year treasury bond ETF that gives you exposure to Jim Biano's Bond View without having to dive into futures. Thanks, Patrick. And I'm sure a lot of our listeners would have liked a more complete explanation. So, how about doing one of your famous big picture trading webinars on this topic? And while you're at it, how about hooking up our macro voices listeners with a free ticket? On Monday, September 8th on our members webinar, I'm going to walk through exactly how retail investors can set up trades to take advantage of Jim Biano's bond market view with no futures required. If you're a macro voices listener and you want to see how it's done, you can jump on for free. Just register for a free trial at bigpicturertrading.com. And listeners, be sure to let us know what you think about this new big picture trading trade of the week format on X. We're experimenting with this format and trying to decide whether we're going to continue it beyond this countdown series. Now, let's move on to our usual postgame chart deck. Listeners, you're going to find the download link for the postgame chart deck in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage, macrovoices.com, and click on the red button over Jim's picture saying looking for the downloads. Patrick, it's starting to look like the S&P chart could finally be topping after hitting my target of 6,500. But are we topping or just pausing? Uh, frankly, I'm not sure. And I think newslow is going to determine the answer. What are the charts telling you? >> Well, Eric, I have to agree with you because this is a heavy market. uh while the big rally was through June and July, August has actually seen some sort of heavier distribution and topping formations developing. Now really the jobs numbers is going to decide what happens next. Uh but if the market does break down uh uh in the post jobs numbers period uh it certainly has now created enough distribution along the high to kick in a bigger and deeper market correction. Now, if we did have a market correction, it will typically start with a 5% uh garden variety correction, which is we'll probably get down towards 6,200 on the S SNP. The big tell will be if we get that type of a correction, how fast and with what velocity the bulls buy the dip. If a a quick 5% correction happens and then uh by October we're back to 52- week highs, then uh actually that muchneeded correction would only actually be favorable for the bulls because in the end it would have unwound the overbought state of the market create the correction and the backdrop from which a bull continuation pattern can actually happen. But at the same time, if we had a breakdown of a 5 plus% variety and the markets uh stay down there and failed to rally and is immediately m met with distribution whenever there is a short-term rally, let's say not be able to get back above 6,400 in that condition, then that could pivot a lot of systematic traders. uh whether the vault targeting funds that have been net buyers over the last three months uh or the uh CTAs that are generally net long now will start giving signals uh to sell and then all the short gamma on the dealers books could all uh together begin a much bigger and deeper correction that could then spur sentiment shift in the markets. Now that's very premature to jump to those conclusions. At this stage, we are long overdue for a 5% correction, especially we're now almost 150 days into a rally off the April low uh without a correction. And so a correction is a very natural thing to happen. But the bigger question is how will the bulls react when we get it? All right, Eric, let's move on to that US dollar. Well, Patrick, we've been in a horizontal consolidation pattern on the Dixie centered on 98 for four months or so now. Most of the action has been between 97 and 99 with occasional excursions out to 96 or 100, but we really need to see a sustained move above 100 or below 96, which obviously is a very wide range before we really know that we're we're into a new trend and uh we haven't seen it yet. So, my fundamental bias is unchanged. Still uh strongly bearish, but subject to let let's wait out this consolidation. I think it will eventually resolve to the downside. We'll see another leg down, but it'll be several steps before we eventually get to my target of 89. Well, Eric, I appreciate the bigger picture bearish view because there are all sorts of bigger picture macro reasons to be bearish, the dollar, but when I look at the technicals, uh what we see is a primary bearish downtrend that's been in place since the start of the year. But over the last two months, uh even arguably three months, we have seen the dollar find a fair value zone. uh that has uh created this sideways trade range that you've spoken about. The bigger question here is that will that trade range act as a support line to potentially spur a uh US dollar counter trend rally? That would purely be technical if it was to emerge. But when you really look at the underpinning cross currencies, you can see the euro has been incredibly heavy. The pound sterling has made a decisive breakdown below its 50-day moving average. The uh US dollar yen has decisively broken out of a wedge on the upside. And even the US dollar CAD is actually rolling up out of a flagging formation. There's a lot of these cross currencies that are actually setting up for what could be at least on a temporary basis a US dollar counter trend. Now again, that wouldn't be a big macro call, but rather a technical move, but it'll be very interesting to see if something like the jobs numbers or the Fed rate cuts actually spur a uh US dollar rally. We'll uh certainly find out in the weeks to come. All right, Eric, what are your thoughts here on crude oil? Well, Patrick, I think this market is finding solid support around $60 WTI. The question is whether or not we're ready to mount a meaningful rally higher. Uh backwardation is moderating. We we had more than a dollar on the front spread a few months ago. Now we're down to 39. Now part of that is seasonality. It's expected that you have a lot of backwardation right around the end of summer driving season and the shoulder season. It starts to come off. So it is a seasonality thing, but it's coming off pretty quickly. It's possible that we could be in a pattern that eventually takes us into a structural contango market. Um I I doubt it. I think we're more likely to see this market move higher and reestablish backwardation at least at the front half of the curve. But that's the thing to watch in my mind is if we get into a contango market, if the the uh if the spreads that are currently in backwardation, if those expire and we go past them and the spreads which become the front month spreads don't move into backwardation in the next few months, that's going to tell me that maybe there there is a structural change in the market that's bearish. But I think it's more likely to resolve the other way. This backwardation moderating though is definitely uh a concern in my mind saying maybe we are headed towards a uh a move significantly lower in prices before this is over. Well, Eric, I want to look at this purely on a technical basis, which is uh that uh we had a substantial sell-off in the early part of August and then we bounced and that bounce was essentially a 50% retracement to the $66 and a very temporary close back above the 50-day moving average. And almost immediately, that was met with a huge reversal and selling it right back down towards uh the bottom of its August lows. This is still distributive price action and uh the on the short term the vulnerability of crude oil potentially weakening is there but there are some bullish signs. First of all we have a key support line along the April and May lows which uh overall suggests that maybe at most we have a 10% downside volatility risk on crude. Uh but when we take a look at energy stocks, we can see very clear accumulation happening there. And the interesting part there is what are the energy stocks telling us? Like when usually if we have this kind of weak price action in oil, it usually leads to distribution in energy stocks and that's just not the case right here. Are we in a situation where oil just needs to bang out its short-term lows and as soon as we do that uh something into October we may see it giving bull signals on the upside. You can draw that trend line along those summer highs from the June, July and August highs and simply watch for when crude oil finally bases out, trades back above its moving averages and uh breaks that uh descending trend line. uh if we do maybe an oil counter trend in October is entirely possible. All right, Eric, let's take a look at that chart on gold. What's your thoughts here? Well, as predicted here on Macrovoices, the gold market was coiled up for an upside breakout to new all-time highs, and that's exactly what we got. I think the move is on to at least 3750, maybe 3,900 by Christmas. But don't chase it here. Uh we got what, six big green candles in a row. It looks like just as we're into the Wednesday overnight into Thursday session, we're starting to paint a red candle. Maybe we'll come back down at least to the 5-day moving average around 3560 or so. We'll see what happens. But this market is extreme overbought. We could easily easily come back down oh I don't know to say 3475 uh even lower than that without it really even being a correction. and it would just be part of the uptrend. So, we're extremely overbought here. We got to have at least some pullback, but I think we're seeing the beginning of a significant breakout that takes us probably to at least 3750, maybe even uh 4,000 by Christmas. Well, Eric, definitely a huge breakout to all-time new highs. Gold is clearly started a new bull trend. The big question here is is that how does it react during a consolidation? So, whenever we see a a one or a two-day pullback, something that gives back uh even up to 50% of the breakout rally, we want to see whether the bulls are buying dips. Now, what were all of its previous highs should act like support? Do we see that general accumulation in there? If we see uh gold continuing to demonstrate that positive bullish price action, uh then your upside targets are very real realistic. In fact, if you take the length of the market rally from its November December lows and use that as a a measured uh move for uh an upside target, we definitely have potential to see even 4,000 on the upside by year end. So, your targets of 3715 and 3,900 are very realistic. All right, let's move on to uranium. Patrick, the long awaited moment is finally upon us. This week is the pivot point where seasonality favors uranium of September to February approximately. The World Nuclear Association conference in London is ongoing right now. It has often in the past been the catalyst to sort of start the buying season. The fuel buyers come and get together at that conference, compare notes, go back to their offices and start putting their RFPs together in order to buy uranium. So, there's been lots and lots of action. the uh sput ATM. Sput did another raise at the money. But most importantly, sput is now starting to close approximately at the money. It's been in a steep discount, which means new retail investors is coming into the market buying sput. It doesn't really take any physical uranium off of the market because they're just buying up that discount in sput below its net asset value. it has to get up to and start to exceed its NAV in order for the fund to actually buy more physical uranium. I think we're right on the cusp of that starting to happen. That's a self-reinforcing virtuous circle once it gets going and I think maybe it's about to get going. So, everything looks absolutely phenomenally great to me with just one really big caveat and that is just too many people all think exactly the same thing at the same time. And anybody who's an experienced trader knows too many people on the same side of the boat means it gets really messy if there's a sudden gust of wind nobody saw coming. So this trade is not crowded overall, but almost among the people who are in it, everybody's got this idea that the WNA conference is going to be the catalyst for a big upside move. That means everybody's positioned for it. That means there's not a lot of cash on the sidelines. And that means that a broad market risk event, which hey, maybe it looks like we're starting to see the beginnings of the S&P rolling over. If that got worse, it could easily be the catalyst to get something going in the uranium market. So, it feels too easy to me. I my base case is still the moonshot from here. I I think this is an incredibly opportune market, but there's so many people who believe exactly the same thing. the market is probably going to throw us through some kind of loop before we eventually see much higher prices. >> Well, Eric, I want to just focus on talking about uranium stocks versus uranium itself, the U308 and the ETFs or closen funds that uh track it. What we clearly have had is an incredibly strong run in uranium equities over the last few months and uh it's has them continuing to trade at their uh all-time highs. But we when we take a look at uh the U308, it didn't move very much uh over that period. And uh what we saw is consolidation. And so when I look at that spot physical uranium trust here, what you can observe is that while we have definitively u broken out of its descending trend line, uh we have not seen uh uranium prices itself actually participate with all of the euphoria or excitement in the uranium equity space. But that has changed here in the last week. We have a very clear upshoot in the U308 and these closed end funds have all targeted back to their June highs asking the question is this the cycle from where the U308 uh underlying yellow cake commodity is actually going to catch up and so uh we're certainly watching whether this breakout happens and if it does that could result in even a 10 plus% move on the upside in the in the next few months. All right, let's touch on copper. >> Well, Patrick, we're finally starting to see at least a little bit of a bounce, but not much of one. It's kind of muted and looks like it's even starting to roll over again already. Well, below the 200 day moving average, all the the moving averages really. So, lots and lots of work to do to repair this chart. Well, certainly there's been some strength in the last little bit, but what's interesting is that the copper equities are continued to take flows and continue to do well. uh we are much closer to the key lows of copper over the last year. Uh and so I think that the asymmetry is in the favor of the bulls just simply because I don't see copper breaking down below $4 or anything like that uh in this cycle. And so it it's all in my opinion about uh where it's finishing off this basing and when we'll start seeing some bullish price action to the upside. And Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. Now, Eric, when we take a look at the US government 10-year Treasury bonds, I know uh we talked about Jim Biano's views uh that there could generally be a steepener and then that could be stress on the long end of the curve. But when you're actually looking at this chart, we have seen throughout the summer sequentially lower highs in yields going from 460 to highs at 450 to highs below 440. We're now down uh under the 420 level on yields and more importantly these are right along the lows of the yields uh for the summer. I mean we are in a situation where if there's any technical breakdown here we could be heading towards uh the April lows under 4%. the when I uh see this chart then I kind of step back and say well I do get Jim's idea that we could see the long end under stress but technically on the short term we could see a scenario where the yields go down and bonds rip giving actually a better entry into that bigger thesis maybe even several weeks from now let's see whether or not the 10-year yield breaks down here or not folks if you enjoy Patrick's chart decks you can get them every single day of the week with with a free trial of BigPictur Trading. The details are on the last pages of the slide deck or just go to bigpicturetrading.com. That concludes this edition of Macrovoices. Be sure to tune in each week to hear feature interviews with the brightest minds in finance and macroeconomics. MacroVoices is made possible by sponsorship from bigpicturetrading.com, the internet's premier source of online education for traders. Please visit bigpicturetrading.com for more information. Please register your free account at macrovoices.com. Once registered, you'll receive our free weekly research roundup email containing links to supporting documents from our featured guests and the very best free financial content our volunteer research team could find on the internet each week. You'll also gain access to our free listener discussion forums and research library. And the more registered users we have, the more we'll be able to recruit high-profile feature interview guests for future programs. So, please register your free account today at macrovoices.com if you haven't already. You can subscribe to Macrovoices on iTunes to have Macrovoices automatically delivered to your mobile device each week free of charge. You can email questions for the program to mailbag macrovoices.com and we'll answer your questions on the air from time to time in our mailbag segment. Macrovoices is presented forformational and entertainment purposes only. The information presented on Macrovoices should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions. The views and opinions expressed on macrovoices are those of the participants and do not necessarily reflect those of the show's hosts or sponsors. Macrovoices, its producers, sponsors, and hosts Eric Townsend and Patrick Serezna, shall not be liable for losses resulting from investment decisions based on information or viewpoints presented on Macrovoices. 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Talking Charts – MacroVoices #496
Summary
Transcript
[Music] This is Macrovoices, the free weekly financial podcast targeting professional finance, high- netw worth individuals, family offices, and other sophisticated investors. Macrovoices is all about the brightest minds in the world of finance and macroeconomics telling it like it is. Bullish or bearish, no holds barred. Now, here are your hosts, Eric Townsend and Patrick Serezna. >> Eric, it was great to have Jim Biano on the show. I loved his perspective on how things have materially changed in this postcoavid economy. And that's a perfect opportunity to segue to our new segment, the Big Picture Trading Trade of the Week. Patrick, tell our listeners how you'd put a trade on to express Jim's view that cutting short-term rates could actually risk increasing long-term yields. Now, Eric, Jim's got a lot of interesting takes, but the one that really stood out for me was his view on higher inflation regime and what it means for bonds. His argument is pretty straightforward. Rate cuts could actually be inflationary. They juice up demand, push up inflation risk premiums, and ironically that could lead to selling in the long end of the curve. To me, that screams steepener. I'd rather look at the 530s than the 210s. It lines up better with the idea of long duration bonds under pressure. Right now, that spread is around 121 basis points. As you can see on page two of the chart deck, we've moved a long way off the 2023 inversion. But when you zoom out, history is clear. In the last two big steepening cycles back in 2000 and 2008, the spreads widened north of 200 basis points. So, there's still room to run if rates meet sticky inflation. Now, sizing the trade is a tricky part. You can't just throw on equal contracts. The 30-year moves a lot more per basis point than the 5-year. You've got a balance by duration, so both sides react evenly. On futures, that works out roughly to a 4:1 ratio. I've attached a Bloomberg screenshot of that on page three of the chart deck for those that want to take a closer look. In regards to risk management, I'd keep it simple. Two things kill the trade. One, if inflation expectations roll back to the pre-COVID norms, or two, bullish technicals showing demand coming back in the long end. Either of those would be a clear signal to scale back. So, in that bigger picture, if Jim's right and the Fed is cutting into sticky inflation, then history says that the 530s still have plenty of room to steepen. Patrick, that was a great explanation for our professional audience. We don't have time to delve into all the details of a retail version of this trade. So, how about giving our retail listeners just a quick 10,000 ft overview. A lot of retail investors shy away from this trade because futures and duration matching sound complicated, but you don't actually need to mess with futures to play the theme. There are simple ETF-based ways to do it. For example, you can use Harley Bassman's Simplify short-term treasury futures ETF, and pair that with options on the TLT, which is the EyesShares 20 plus year treasury bond ETF that gives you exposure to Jim Biano's Bond View without having to dive into futures. Thanks, Patrick. And I'm sure a lot of our listeners would have liked a more complete explanation. So, how about doing one of your famous big picture trading webinars on this topic? And while you're at it, how about hooking up our macro voices listeners with a free ticket? On Monday, September 8th on our members webinar, I'm going to walk through exactly how retail investors can set up trades to take advantage of Jim Biano's bond market view with no futures required. If you're a macro voices listener and you want to see how it's done, you can jump on for free. Just register for a free trial at bigpicturertrading.com. And listeners, be sure to let us know what you think about this new big picture trading trade of the week format on X. We're experimenting with this format and trying to decide whether we're going to continue it beyond this countdown series. Now, let's move on to our usual postgame chart deck. Listeners, you're going to find the download link for the postgame chart deck in your research roundup email. If you don't have a research roundup email, that means you have not yet registered at macrovoices.com. Just go to our homepage, macrovoices.com, and click on the red button over Jim's picture saying looking for the downloads. Patrick, it's starting to look like the S&P chart could finally be topping after hitting my target of 6,500. But are we topping or just pausing? Uh, frankly, I'm not sure. And I think newslow is going to determine the answer. What are the charts telling you? >> Well, Eric, I have to agree with you because this is a heavy market. uh while the big rally was through June and July, August has actually seen some sort of heavier distribution and topping formations developing. Now really the jobs numbers is going to decide what happens next. Uh but if the market does break down uh uh in the post jobs numbers period uh it certainly has now created enough distribution along the high to kick in a bigger and deeper market correction. Now, if we did have a market correction, it will typically start with a 5% uh garden variety correction, which is we'll probably get down towards 6,200 on the S SNP. The big tell will be if we get that type of a correction, how fast and with what velocity the bulls buy the dip. If a a quick 5% correction happens and then uh by October we're back to 52- week highs, then uh actually that muchneeded correction would only actually be favorable for the bulls because in the end it would have unwound the overbought state of the market create the correction and the backdrop from which a bull continuation pattern can actually happen. But at the same time, if we had a breakdown of a 5 plus% variety and the markets uh stay down there and failed to rally and is immediately m met with distribution whenever there is a short-term rally, let's say not be able to get back above 6,400 in that condition, then that could pivot a lot of systematic traders. uh whether the vault targeting funds that have been net buyers over the last three months uh or the uh CTAs that are generally net long now will start giving signals uh to sell and then all the short gamma on the dealers books could all uh together begin a much bigger and deeper correction that could then spur sentiment shift in the markets. Now that's very premature to jump to those conclusions. At this stage, we are long overdue for a 5% correction, especially we're now almost 150 days into a rally off the April low uh without a correction. And so a correction is a very natural thing to happen. But the bigger question is how will the bulls react when we get it? All right, Eric, let's move on to that US dollar. Well, Patrick, we've been in a horizontal consolidation pattern on the Dixie centered on 98 for four months or so now. Most of the action has been between 97 and 99 with occasional excursions out to 96 or 100, but we really need to see a sustained move above 100 or below 96, which obviously is a very wide range before we really know that we're we're into a new trend and uh we haven't seen it yet. So, my fundamental bias is unchanged. Still uh strongly bearish, but subject to let let's wait out this consolidation. I think it will eventually resolve to the downside. We'll see another leg down, but it'll be several steps before we eventually get to my target of 89. Well, Eric, I appreciate the bigger picture bearish view because there are all sorts of bigger picture macro reasons to be bearish, the dollar, but when I look at the technicals, uh what we see is a primary bearish downtrend that's been in place since the start of the year. But over the last two months, uh even arguably three months, we have seen the dollar find a fair value zone. uh that has uh created this sideways trade range that you've spoken about. The bigger question here is that will that trade range act as a support line to potentially spur a uh US dollar counter trend rally? That would purely be technical if it was to emerge. But when you really look at the underpinning cross currencies, you can see the euro has been incredibly heavy. The pound sterling has made a decisive breakdown below its 50-day moving average. The uh US dollar yen has decisively broken out of a wedge on the upside. And even the US dollar CAD is actually rolling up out of a flagging formation. There's a lot of these cross currencies that are actually setting up for what could be at least on a temporary basis a US dollar counter trend. Now again, that wouldn't be a big macro call, but rather a technical move, but it'll be very interesting to see if something like the jobs numbers or the Fed rate cuts actually spur a uh US dollar rally. We'll uh certainly find out in the weeks to come. All right, Eric, what are your thoughts here on crude oil? Well, Patrick, I think this market is finding solid support around $60 WTI. The question is whether or not we're ready to mount a meaningful rally higher. Uh backwardation is moderating. We we had more than a dollar on the front spread a few months ago. Now we're down to 39. Now part of that is seasonality. It's expected that you have a lot of backwardation right around the end of summer driving season and the shoulder season. It starts to come off. So it is a seasonality thing, but it's coming off pretty quickly. It's possible that we could be in a pattern that eventually takes us into a structural contango market. Um I I doubt it. I think we're more likely to see this market move higher and reestablish backwardation at least at the front half of the curve. But that's the thing to watch in my mind is if we get into a contango market, if the the uh if the spreads that are currently in backwardation, if those expire and we go past them and the spreads which become the front month spreads don't move into backwardation in the next few months, that's going to tell me that maybe there there is a structural change in the market that's bearish. But I think it's more likely to resolve the other way. This backwardation moderating though is definitely uh a concern in my mind saying maybe we are headed towards a uh a move significantly lower in prices before this is over. Well, Eric, I want to look at this purely on a technical basis, which is uh that uh we had a substantial sell-off in the early part of August and then we bounced and that bounce was essentially a 50% retracement to the $66 and a very temporary close back above the 50-day moving average. And almost immediately, that was met with a huge reversal and selling it right back down towards uh the bottom of its August lows. This is still distributive price action and uh the on the short term the vulnerability of crude oil potentially weakening is there but there are some bullish signs. First of all we have a key support line along the April and May lows which uh overall suggests that maybe at most we have a 10% downside volatility risk on crude. Uh but when we take a look at energy stocks, we can see very clear accumulation happening there. And the interesting part there is what are the energy stocks telling us? Like when usually if we have this kind of weak price action in oil, it usually leads to distribution in energy stocks and that's just not the case right here. Are we in a situation where oil just needs to bang out its short-term lows and as soon as we do that uh something into October we may see it giving bull signals on the upside. You can draw that trend line along those summer highs from the June, July and August highs and simply watch for when crude oil finally bases out, trades back above its moving averages and uh breaks that uh descending trend line. uh if we do maybe an oil counter trend in October is entirely possible. All right, Eric, let's take a look at that chart on gold. What's your thoughts here? Well, as predicted here on Macrovoices, the gold market was coiled up for an upside breakout to new all-time highs, and that's exactly what we got. I think the move is on to at least 3750, maybe 3,900 by Christmas. But don't chase it here. Uh we got what, six big green candles in a row. It looks like just as we're into the Wednesday overnight into Thursday session, we're starting to paint a red candle. Maybe we'll come back down at least to the 5-day moving average around 3560 or so. We'll see what happens. But this market is extreme overbought. We could easily easily come back down oh I don't know to say 3475 uh even lower than that without it really even being a correction. and it would just be part of the uptrend. So, we're extremely overbought here. We got to have at least some pullback, but I think we're seeing the beginning of a significant breakout that takes us probably to at least 3750, maybe even uh 4,000 by Christmas. Well, Eric, definitely a huge breakout to all-time new highs. Gold is clearly started a new bull trend. The big question here is is that how does it react during a consolidation? So, whenever we see a a one or a two-day pullback, something that gives back uh even up to 50% of the breakout rally, we want to see whether the bulls are buying dips. Now, what were all of its previous highs should act like support? Do we see that general accumulation in there? If we see uh gold continuing to demonstrate that positive bullish price action, uh then your upside targets are very real realistic. In fact, if you take the length of the market rally from its November December lows and use that as a a measured uh move for uh an upside target, we definitely have potential to see even 4,000 on the upside by year end. So, your targets of 3715 and 3,900 are very realistic. All right, let's move on to uranium. Patrick, the long awaited moment is finally upon us. This week is the pivot point where seasonality favors uranium of September to February approximately. The World Nuclear Association conference in London is ongoing right now. It has often in the past been the catalyst to sort of start the buying season. The fuel buyers come and get together at that conference, compare notes, go back to their offices and start putting their RFPs together in order to buy uranium. So, there's been lots and lots of action. the uh sput ATM. Sput did another raise at the money. But most importantly, sput is now starting to close approximately at the money. It's been in a steep discount, which means new retail investors is coming into the market buying sput. It doesn't really take any physical uranium off of the market because they're just buying up that discount in sput below its net asset value. it has to get up to and start to exceed its NAV in order for the fund to actually buy more physical uranium. I think we're right on the cusp of that starting to happen. That's a self-reinforcing virtuous circle once it gets going and I think maybe it's about to get going. So, everything looks absolutely phenomenally great to me with just one really big caveat and that is just too many people all think exactly the same thing at the same time. And anybody who's an experienced trader knows too many people on the same side of the boat means it gets really messy if there's a sudden gust of wind nobody saw coming. So this trade is not crowded overall, but almost among the people who are in it, everybody's got this idea that the WNA conference is going to be the catalyst for a big upside move. That means everybody's positioned for it. That means there's not a lot of cash on the sidelines. And that means that a broad market risk event, which hey, maybe it looks like we're starting to see the beginnings of the S&P rolling over. If that got worse, it could easily be the catalyst to get something going in the uranium market. So, it feels too easy to me. I my base case is still the moonshot from here. I I think this is an incredibly opportune market, but there's so many people who believe exactly the same thing. the market is probably going to throw us through some kind of loop before we eventually see much higher prices. >> Well, Eric, I want to just focus on talking about uranium stocks versus uranium itself, the U308 and the ETFs or closen funds that uh track it. What we clearly have had is an incredibly strong run in uranium equities over the last few months and uh it's has them continuing to trade at their uh all-time highs. But we when we take a look at uh the U308, it didn't move very much uh over that period. And uh what we saw is consolidation. And so when I look at that spot physical uranium trust here, what you can observe is that while we have definitively u broken out of its descending trend line, uh we have not seen uh uranium prices itself actually participate with all of the euphoria or excitement in the uranium equity space. But that has changed here in the last week. We have a very clear upshoot in the U308 and these closed end funds have all targeted back to their June highs asking the question is this the cycle from where the U308 uh underlying yellow cake commodity is actually going to catch up and so uh we're certainly watching whether this breakout happens and if it does that could result in even a 10 plus% move on the upside in the in the next few months. All right, let's touch on copper. >> Well, Patrick, we're finally starting to see at least a little bit of a bounce, but not much of one. It's kind of muted and looks like it's even starting to roll over again already. Well, below the 200 day moving average, all the the moving averages really. So, lots and lots of work to do to repair this chart. Well, certainly there's been some strength in the last little bit, but what's interesting is that the copper equities are continued to take flows and continue to do well. uh we are much closer to the key lows of copper over the last year. Uh and so I think that the asymmetry is in the favor of the bulls just simply because I don't see copper breaking down below $4 or anything like that uh in this cycle. And so it it's all in my opinion about uh where it's finishing off this basing and when we'll start seeing some bullish price action to the upside. And Patrick, before we wrap up this week's show, let's hit that 10-year Treasury note chart. Now, Eric, when we take a look at the US government 10-year Treasury bonds, I know uh we talked about Jim Biano's views uh that there could generally be a steepener and then that could be stress on the long end of the curve. But when you're actually looking at this chart, we have seen throughout the summer sequentially lower highs in yields going from 460 to highs at 450 to highs below 440. We're now down uh under the 420 level on yields and more importantly these are right along the lows of the yields uh for the summer. I mean we are in a situation where if there's any technical breakdown here we could be heading towards uh the April lows under 4%. the when I uh see this chart then I kind of step back and say well I do get Jim's idea that we could see the long end under stress but technically on the short term we could see a scenario where the yields go down and bonds rip giving actually a better entry into that bigger thesis maybe even several weeks from now let's see whether or not the 10-year yield breaks down here or not folks if you enjoy Patrick's chart decks you can get them every single day of the week with with a free trial of BigPictur Trading. 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