Macro Extremes (week ending July 30, 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)

USD/KRW (signifying a weaker Korean Won)

Overbought (RSI > 70)

Tin (for the 14th week)

Gasoil

Heating Oil

Gasoline

Hot Rolled Coil Steel

Natural Gas

Coffee

Orange Juice

the CRB Index

Switzerland’s SMI equity index (for the 7th week)

Australia’s ASX 200

Amsterdam’s AEX index

France’s CAC-40 index

and the Stockholm, Copenhagen and Helsinki equity indices.

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

Nil

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)

the U.S. Government 10 year bond yields,

the U.K.,  Chinese, Korean and Swedish 10’s,

AUD/JPY (signifying a strong Yen versus a weaker AUD),

the Hang Seng Index, 

the Hang Seng China Enterprises Index

and the Shanghai Composite.

Oversold (RSI < 30)

Nil

The Oversold Quinella – Both Oversold and Traded at < 2.5 standard deviations above the weekly mean)

Nil

Notes & Ideas:

The decliners included Iron Ore (15%), Coffee (5%) following last weeks 17% rise), Natural Gas (3.6%), Orange Juice (3.2%), the Hang Seng Index (6%) and the Shanghai Composite (4.3%).

Advancers were dominated by commodities where Brent and WTI Crude, Cocoa, Tin, Gasoil & Gasoline all rose 2% for the week. Aluminium climbed 3.7%, Hot Rolled Coiled Steel soared 6% and Heating Oil & Wheat advanced 3%.

The U.S. 10 year bond yield fell albeit muted when compared to the past month’s action. The yield fell from 1.28% to 1.23%. 

The 10’s remain bound in a larger range but we watch it broader capital markets could become explosive is the 10’s break decisively either below 1.25% or above 1.65%.

No cryptocurrencies registered any Extreme readings.

And lastly, Bitcoin is trading 193% above its 200 Week Moving Average, which is notably higher than last week’s 145% reading and certainly lower when compared to its 466% peak in mid-April 2021.

August 1, 2021

by Rob Zdravevski

rob@karriasset.com.au