Random Pre July 4th Observations
BTC - make or break
Bitcoin is trading right on the big trend line and the lower part of the range. Note the 200 day moving average slightly lower. These are make or break levels...
Source: Refinitiv
King Tesla
It was only one week ago we outlined the TSLA long logic in our thematic email "Could Tesla be bottoming out....?" We did not think it would trade 30% higher in a week, but here we are. The stock has taken out the bigger negative trend line, but chasing it here is becoming a late trade, at least in the short term. RSI is at extremely overbought levels. We say thank you as there will be better entry points...
Source: Refinitiv
Tesla energy
Tesla bull, Adam Jonas (MS), writes: "As Gen AI acceleration spurs a multigenerational increase in energy demand, electricity generation, and data center investment, we believe investors will begin to pay more attention to Tesla Energy which we value at $36 per Tesla share ($130bn) as the business uniquely positioned to benefit from investment in the US electric grid accelerated by the AI boom."
Copper
We have seen some notable moves in copper over the past months. First, we had the AI long logic from GS and MS (here) nailing the melt up. Not far from highs, we pointed out that copper had gone ahead of itself (here). Note that copper is putting in one of the bigger up candles in a while, having bounced on the 100 day basically. JPM timed the last move higher very well so far (more here).
Source: Refinitiv
XLU - don't own it, trade it
XLU as an AI proxy went parabolic earlier this year. On June 3 we pointed out: "...$73 is the resistance area to watch". Fast forward to today and the hot XLU has given back the most extreme part of the melt up we saw in April/May. We are trading below the 50 day, but still above the 100 day. Note the trend line from February lows comes in around these levels. XLU has gone from very overbought to rather oversold. Time for a short term bounce at least?
Source: Refinitiv
Eurostoxx and euro volatility
There is more to trading European equities than how EURUSD volatilities are trading, but overlay the two and they have moved in tandem over the past months. Note the current gap between SX5E and EUR volatilities (inverted).
Source: Refinitiv
SPX and VIX
New SPX ATH vs VIX.
Source: Tier1Alpha
VIX and elections
Not there yet, but soon VIX is a bargain...
Source: MS
Seasonal turning point in volatility
"We are basically right on the cusp of the seasonal turning point (the average level of the VIX tends to rise from now through Oct/Nov"
Source: Top Down Charts
THE volatility gap
Bond vs equity volatility continues getting even wider. The short term gap has not been this wide in a "long" time.
Source: Refinitiv
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