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Sven Henrich

Mar 3, 2023 • 6 tweets • 2 min read • Read on X

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NorthCast Market Update: Epic Battle

Not just a battle for control but an epic battle for control.
Something really interesting happened at yesterday's lows. Pay close attention as it may decide the outcome of the battle.
$SPX

For those who prefer to watch this on YouTube I've uploaded it to there as well:

$SPX weekly updated. Context above.

Back test of trend break. Markets so far ignoring. If it rejects the back test markets likely ok, if not may see more volatility.
Context in top of thread.
#Watching

2 year rejects the back test of the trend line. Equities at highs of the day in reaction. I remain impressed how precise all this is playing.
See context on top of thread.

Looking at the weekly chart this has been a clean and successful backtest with all key MA's recaptured for the weekly close. More to discuss on this in the days ahead. Have a good weekend.

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More from @NorthmanTrader

Sven Henrich

@NorthmanTrader

Sep 18

September 18, 2024: 50bp rate cut
September 18, 2007: 50bp rate cut

Reminder: In 2007 markets raced to new all time highs following the initial rate cut.
Soft landing talk permeated the landscape.
The recession began in Dec '07 but was not recognized until way into 2008 with the Fed still claiming no recession in Feb of '08.

For the claims it's different this time you are correct.
In 2007 debt to GDP was 64%, the deficit was 1% of GDP & market cap to GDP was 107%.
Now debt/GDP is 122%, the deficit 8% & market cap/GDP 200%.
It really is different this time. It's worse, much much worse.

Read 4 tweets

Sven Henrich

@NorthmanTrader

Jun 12, 2023

And thus concludes the great monetary tightening cycle to combat inflation by slowing growth & wringing out the previous excess.

Note: Q1 data.

After all we reduced the balance sheet by a stunning 7% back all the way to levels of September 22, 2021.
So much tightening. So much liquidity removal.

And look at MBS, we reduced these all the way back to November 2021 levels.

Read 6 tweets

Sven Henrich

@NorthmanTrader

Mar 31, 2023

What did you think was gonna happen?

They threw hundreds of billions of dollars of liquidity into a liquidity starved financial system in a matter of just 2 weeks and markets went up.
The end.

It's really that simple.

But it's not QE? Who cares? It's LIQUIDITY.
You can argue about whether it's QE or not or you can trade off of it & make money.
Sorry to be so opportunistic about it, but we are here to make money & not argue with the market.
I've tried that in the past myself. Learn & adapt.

https://twitter.com/NorthmanTrader/status/1636469742008520704?s=20

That chart on bank reserves suddenly spiking up screamed markets were gonna go higher 2 weeks ago due to the correlation, which was my point and they've added more liquidity since. If they drain it it's another story, but so far they haven't.

https://twitter.com/NorthmanTrader/status/1636469742008520704?s=20

Read 5 tweets

Sven Henrich

@NorthmanTrader

Mar 29, 2023

This is incredible.
According to the Fed total assets held by the top 0.1% amounted to $17.4 trillion at the end of Q4 2022 after peaking at $18.5 trillion.
The top 0.1% gained over $5 trillion in asset value since Covid.

And get this, the top 0.1% comprises a mere 131,485 households.

The real message: The middle class at large has gotten screwed over the past few decades as wealth gains have predominantly benefitted the top 1%.

Read 9 tweets

Sven Henrich

@NorthmanTrader

Mar 27, 2023

Understanding how the real world works is a key trading edge.

when you know you know ¯\_(ツ)_/¯

Just look at the dates. And look at the tape each time.

Read 5 tweets

Sven Henrich

@NorthmanTrader

Mar 26, 2023

NorthCast Market Update: Alternate Universe
Banking stocks getting carpet bombed, tech flying to new highs for 2023. Who's lying?
Some perspectives during this battle for confidence.