Flooding The Zone…
“The hardest thing to judge is what level of risk is safe.” – George Soros
Summary: NQ just printed new all-time weekly highs—hardly a bearish setup. Market breadth and internals look solid enough, bolstering the bulls. Meanwhile, the macro backdrop is about to ease further, with a sizable wave of TGA cash on deck and Fed SLOs showing looser lending standards plus rising demand. Dollar bulls might be walking into a trap, and if it springs, the knock-on effects for markets and the economy could be major. Also, there’s a tin play ready to run thanks to a sidelined competitor.
Alright, let’s get to it.
1. NQ closed at a new all-time weekly high last week. This is despite DeepSeek, Tariffs, hot CPI, hawkish Fed turn, etc… Don’t overcomplicate the game; the path of least resistance is up.
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2. Ignore the tariff chatter for a second—something bigger is brewing on the USD liquidity front. The Treasury’s about to drain its TGA stash over the next few weeks, pumping roughly $800 billion into private markets by the start of April, while net bond issuance stays flat. That’s a fat tailwind for crypto and high-beta names, at least in the short term.
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3. The Fed’s Senior Loan Officer Surveys are out and show a backdrop of easing lending standards met by rising demand.
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4. The USD continues to be the most intriguing developing macro story right now. The recent bearish break in CAD and AUD is starting to look like a bear trap—we’ll need to wait a few more weeks for confirmation. If so, and we get upside follow-through in these names going into mid-March, then it becomes very likely that the top in the USD is in for this cycle. A lot can happen over the next few weeks, so we’ll have to wait and watch.
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5. Positioning and sentiment are tanked in the Loonie while its yield spread oscillator is banging around on the floor. So it wouldn’t take much good news, or just less bad news, to start to turn this trend around.
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6. AUDUSD is an even better example of the potential major bear trap developing. The chart below is monthly. This is all within a significant compression regime, so whichever way this resolves will likely lead to a major trend.
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7. Similar to CAD, AUD positioning is rekt’d (apparently, that’s internet slang for total destruction).
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8. I’m tracking March corn here as it’s starting to compress within a broader Bull Quiet regime. It’s a similar setup to the long March Coffee (KCH2025) trade we took last month, which has gone on a tear since. We’ll put in buy orders if the chart continues to develop favorably.
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9. More signs that Chinese stimulus is starting to positively build on itself. Chinese train travel climbed to a new record over the NY holiday (chart from BBG).
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10. We’re big tin bulls (read our writeup here). Recently, Alphamin Resources (AFM:TSX) was kneecapped due to fears that its prime assets were going to get caught up in an escalating DRC civil war. Its only other publicly traded peer, Metals X (MLX:ASX), has caught an equivalent and opposite bid. Its monthly chart is breaking out from a 12m range. We’re buyers.
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Disclaimer: All statements are solely opinions and are for educational purposes only.