Macro Extremes (week ending April 9, 2021)

The following assets (on a weekly timeframe) registered an Overbought reading or traded more than 2.5 standard deviations above its rolling mean.

Extremes “above” the Mean (at least 2.5 standard deviations)

ASX 200 (new entry)

USD/SEK (indicating a weak Swedish Kroner, thus your IKEA stuff should be cheaper)

Overbought (RSI > 70)

Canadian 10 year bond yields (for 8th consecutive week)

Korean 10 year bond yields

U.S. Government 5 & 10 year bond yields (for 8th consecutive week)

Aluminium (for 7th consecutive week)

Copper (for 17th consecutive week)

Lean Hogs (for the 8th consecutive week and its highest price since September 2014)

Corn (for the 17th consecutive week & trading 51% above its 200 Week Moving Average)

Soybeans

S&P 500 Index (new entry)

Dow Jones Industrial Average

S&P Mid Cap 400 (5th consecutive week)

U.S. KBW Banking Index (6th consecutive week)

Nasdaq Transportation Index  (6th consecutive week)

Dow Jones Transport Index

Sweden’s OMX 30 Index (5th consecutive week….Swedish equities have been rising against a leaking Kroner)

Germany’s DAX Index 

Bitcoin & Ethereum

and the Copper/Gold Ratio 

The Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)

Live Cattle



Assets (securities) within my immediate universe which touched the other side of the extreme, being Oversold (where the RSI is < 30) or were at least 2.5 standard deviations below its mean are;

Extremes “below” the Mean (at least 2.5 standard deviations)

Nil

Oversold (RSI < 30)

Cocoa



Notes & Ideas:

Overbought weekly streaks in U.S. Transports, U.S. Banking, U.S. MidCaps, Canadian and American Government bond yields along with Corn, Aluminium, Copper & Lean Hogs continue…….

Be cognisant that streaks do come to an end.

Speaking of which, recent extremes have since pulled back, such as the Swedish 10’s have eased back from 0.48 to 0.37, the USD/DKK is commencing some mean reversion fro 6.35 to 6.25 as has the EUR/USD, while on the flip side, EUR/GBP bounced from its Oversold reading.

I’ve also heard a mention that with Corn prices being so high, it’s becoming too expensive to feed to equally the highly priced Pigs.

Watch the recent call I’ve made going “long” bonds, specifically the U.S. Government 5 bond yields (now in their 8th consecutive week of Overbought extremes).

As a buyer of the bond, the inverse reaction is for the yields to fall.

Incidentally, the 5 year bond yield this week has eased from high of 0.99 to 0.86

In fact, government bond yields across the world have seen notable declines (from their highs earlier in the week), thus suggesting bond buyers were more dominant and aggressive.

Probability has increased for a pullback in the U.S. Mid-Cap 400, U.S.  Banks & Transports indices.

A notable new entry into the Overbought territory is the S&P 500 Index….

and the ASX 200 Index.

France’s CAC and Spain’s IBEX are close to being Overbought…I’ll watch that during the week. 

And, Bitcoin has risen higher, to trade at 443% above its 200 Weekly Moving Average.



April 11, 2021

by Rob Zdravevski

rob@karriasset.com.au