2022/12/28 (136) Technical Analysis – XETR-PAH3 & 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 Price/Earnings Model And/Or The So Called Interest Rate Model

The PE Ratio Model tracks the ratio of the total price of the US stock market versus the total average earnings of the market over the prior 10 years (aka the Cyclicly Adjusted PE or CAPE). The current CAPE ratio is 27.7. This is 38% above the long-term historic trend CAPE of 20.1, or approximately 0.9 standard deviations above trend. We consider this Fairly Valued. The last changed from Strongly Overvalued to Overvalued was in November 2022.

Low interest rates should generally drive higher equity prices. This model examines the relative S&P500 position given the relative level of interest rates. The current S&P500 ($3,845) is currently 0.8 standard deviations above its historical trend. The 10-year US Treasury interest rate is 3.75, about 0.7 standard deviations below trend. Netted together, this composite model suggests the total market is Fairly Valued. Last changed from Undervalued to Fairly Valued was in June 2020.

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.

Dollar Edges Up on Rising Treasury Yields
While Dallas Fed Services Index Lowest Since July 2020

The dollar index edged above 104 on Wednesday, attempting to rise from recent lows, underpinned by surging Treasury yields on growing fears that China’s reopening would add inflationary pressures to the global economy. The benchmark 10-year US yield jumped to a six-week high of 3.85%, extending an uptrend that started in mid-December. The greenback also remains supported by a hawkish Federal Reserve outlook, with the central bank 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. Meanwhile, latest 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.

The Dallas Fed General Business Activity index for services in Texas fell to -19.8 in December of 2022, the lowest since July 2020, sinking well below the series average of 3.5, and compared to the -11 in the prior month. Perceptions of broader business conditions dropped further with the company outlook gauge falling sharply to -9.9 from -4.1 in the prior month. On the other hand, the uncertainty outlook eased to 22 from 23.4 in the previous period.Wall Street Extends Losses On Wednesday

Major US stock indices consolidated early losses from morning trade and closed sharply lower on Wednesday, extending yesterday’s retreat as investors worried about the impact of China’s reopening on global growth ahead of 2023. The Dow Jones lost 370 points and the S&P 500 dropped 1.2%, pressured by sharp losses for energy-producing giants amid concerns that the end of China’s zero-Covid policy could induce worldwide restrictions and lower energy demand. The Nasdaq underperformed and slipped 1.4% as inflation worries continued to lift Treasury yields and hurt rate-sensitive tech companies. Apple led the losses in the sector with a 3% decline. Meanwhile, Tesla shares rebounded nearly 2% to halt a 7-session rout, but the electric vehicle maker is still down roughly 70% year-to-date. For December, the Dow is currently down around 5%, S&P 500 7.3%, Nasdaq 100 11.3%, setting up for their worst annual performances since 2008.

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

Today`s closing price are 32875.22 points. The 50SMA is currently trading at 33060.37 points. The 200 SMA is currently at 32448.97 points. And/Or the 100SMA at the same time at 32202.98 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…