2022/12/27 (135) Technical Analysis – XETR-MUV2 & CBOT

This Week Is Set To Be One Of The Least Exciting Weeks Of The Year,
That`s Why We`re Dealing Woth Our Basic Excepations For 2023 In The Dow!

When It Comes To The Dow Future, Even CBOT_MINI-YM1!, Let`s Point It Out,
And Get Always Shortly Illuminate About The Fundamental Framework Conditions
– Today With Using The US Yield Curve Model And/Or The So Called Buffet Indicator Model

When short term (3-month) Treasury yields are higher than long term (10-year) yields, it is usually a bearish signal that is almost always followed by economic recession. The 10-year Treasury rate is 3.75% and the 3-month is 4.34%, for a spread of -0.59%. Since 1950 the historic average spread has been 1.51%. The current spread is 1.8 standard deviations above the historic trend. We consider this Strongly Overvalued. The last changed in the us yield curve model was from Fairly Valued to Overvalued in November 2022.

The Buffett Indicator is the ratio of the total value of the US stock market versus the most current measure of total GDP. The total US stock market is worth $41.0T, the current GDP estimate is $26.0T, for a Buffett Indicator measure of 158%. This is 0.8 standard deviations above the historic trend of 128%. The most financial market participants consider this as Fairly Valued. The last changed in the Buffet Indicator from Fairly Valued to Overvalued in December 2022.

33242 Points Up To 35228 Points To Defend In January 2023
– This Is The Minor Short-Term Technical Picture In The Dow Future, Even CBOT_MINI-YM1!

35228 points was the last high in the Dow futures on Tuesday 12/13/2022. On this trading day the latest US inflation data for the previous month were released. The annual inflation rate in the US slowed for a fifth straight month to 7.1% in November of 2022, the lowest since December last year, and below forecasts of 7.3%. To my surprise, the market, i.e. the majority of traders and/or investors, took the pleasing numbers as an opportunity to sell the Dow Futures since then. Which I admittedly didn’t expect. A lower than expected inflation yes. But as has already been emphasized several times in the last issues, not just a sale. On the other hand, I didn’t expect prices to overshoot. But at least new highs. And that has to be tackled again in January 2023. Because the market, namely the majority of market participants, sold the Dow Future on the following Thursday, 12/15/2022, again by almost 1000 points in a single trading day, after both theSNB and ECB and or also SNB , as expected, hawkish, in public, at their regular meetings. After they each raised their interest rate. And since I hadn’t expected this sell-off, as I’ve repeated several times, I formulated a somewhat more cautious long 4XSetUp again. In order not to run into the open knife again. An that`s why through January 2023 this long 4XSetUp in the CBOT_MINI-YM1! with an entry price at 33053 points, a stop price at 32686 points, and/or target price at least at 35413 points for the first time. Don`t ignore the stop proce! The stop price must be observed. Because I don`t want to and can`t rule out a fall to new old lows of around 30,000 points in the run-up to the upcoming central bank meetings, in the first week of February 2023. So we might well see a volatile price action to the downside as well. But to stay honest I don’t have the courage for a short 4XSetUp. That’s why I will only observe the Dow Jones Future in January below 32686 points, from today’s perspective.

US Home Price Growth At 2-Year Low, As Dollar Eases On Risk-On Mood While US Bonds Head For Worst Year On Record

The S&P CoreLogic Case-Shiller 20-city home price index in the US rose by 8.6 percent from a year earlier in October 2022, the least since October 2020 and compared with market forecasts of an 8.2 percent increase. It was the sixth consecutive deceleration in home price growth as demand for housing has been hit by rising borrowing costs, low housing inventory, and stubbornly high inflation. The biggest gains were reported in Miami (21 percent), Tampa (20.5 percent), and Charlotte (15 percent). Meanwhile, prices grew the least in San Francisco (0.6 percent) and Seattle (4.5 percent). Compared to September, prices dropped by 0.8%, a fourth consecutive decline. “As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices,” Craig J. Lazzara, managing director at S&P DJI, said. “Given the continuing prospects for a challenging macroeconomic environment, prices may well continue to weaken.”

The dollar index eased toward 104 on Tuesday, hovering close to its lowest levels in six months, weighed down by improving market sentiment after China said it will end quarantine requirements for inbound travelers in early January. The greenback also extended losses from last week when data showed that US core PCE prices, the central bank’s preferred inflation gauge, fell to a four-month low of 4.7% YoY in November, in line with market forecasts. That overshadowed data from earlier last week showing the US economy expanded more than initially estimated in the third quarter. Meanwhile, a hawkish Federal Reserve outlookkept investors on edge, as policymakers are expected to tighten policy further despite the economic risks. Earlier in December, the Fed raised interest rates by a more moderate 50 basis points but indicated that the terminal rate could reach 5.1% next year, higher than markets anticipated.

The US 10-Year Treasury bond, the global fixed income benchmark, declined roughly 16% this year and is on course for the worst year on record, as fears of inflation becoming entrenched forced the Federal Reserve to raise interest rates rapidly. Worries that the Federal Reserve will hold interest rates higher for longer have also been a critical driver of those losses, with policymakers expecting the terminal level at around 5.10% in 2023 and anticipating no cuts in rates next year. The yield on the 10-year US Treasury note rose to as high as 4.3% in October, a level not seen since June 2008, before bottoming at around 3.8% in December, as the narrative started to change from inflation and tightening to slowing growth and the likelihood of a policy pivot.

Use The 50SMA, The 100SMA And/Or The 200SMA In The Dow Jones Industrial Average, Also Today Once Again
– To Det Daily Technical Analysis Confirmation As To Whether Our Short-Term Bullish Expectations Are Also Confirmed In The Medium Term

Closing price from today’s Tuesday are 33184.92 points. The 50SMA is currently trading at 33001.20 points. The 200 SMA is currently at 32448.68 points. And/Or the 100SMA at the same time at 32198.76 points. As long as the DJI (Dow Jones Industrial Average Index) is trading above all 3 SMAs in a full candlestick on each trading day closed data, I would still like to technically argue with a short-term technical recovery, which will hopefully turn into a confirmed medium-term technical recovery. And then just as long as the DJI is only traded above all 3 SMA`s (Simple Moving Averages)! Because that’s what our new old long 4XSetUp in the corresponding Dow Future is aiming for, even CBOT_MINI-YM1! And that regardless of the current monetary policy and/or economic data, which I, as usual, in the Central bank 4XSetUps, and/or also Economics 4XSetUps, will also continue to address and/or comment also in the future, in every D2D Edition – like today…