PAM Offloads Equity Longs As The Lagged Effect Of Liquidity Outflows Set-In; 10Yr Yield Also Due To Resume Declines, Which Should Tip Equities Over
Robert P. Balan
Managing Owner and CIO at Predictive Analytic Models / FinaTech Solutions GmbH (CH)
By Robert P. Balan, Predictive Analytic Models
PAM JULY 9, 2021 REPORTS.
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ASIAN OPENING BRIEF:
10YR YIELD LIKELY TO BREACH 1.3300 BIFURCATION POINT -- EQUITIES RATCHET HIGHER CORRESPONDINGLY.
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1/X Our short-term outlook of the 10Yr yield ratcheting up . . .
2/X . . . to 1.33 is taking place. Watch the behavior of the Yield at 1.33--it determines the behavior of the equity index futures in the short term. We have bet long equities on assumption that the Yield will ratchet higher, through 1.33-- equities should follow through higher.
3/X If our thesis of sharp rally in yields has began, then equities should also rise alongside, if the covariance between the two assets has indeed turned positive. So far, response from equity futures has been subdued, even negative. But expect that to change later in the day.
EUROPE OPEN BRIEF:
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10YR YIELD BREACHES THE BIFURCATION LEVEL -- PREPARE FOR POSSIBLE PROFIT-TAKING IN EQUITY LONGS DURING NY TRADE.
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4/X Just to set the background, this is what we said in the yesterday's (Thursday) NY Close Brief: . . .
5/X It looks like the Yield has made the 1.3300 breakthrough -- we will see if it turns into a real breakout by the time NY market opens.
6/X Assuming that the Yield continues to rise, as we believe it would, then we have a fair chance of seeing the area of 14,830 /40 in NQ (possibly test of the 4353 high in ES) in late NY trade. We recommend taking all the bets off the table if/when those levels are reached. . .
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7/X . . . We will finetune market expectations in real-time, and we will send an alert when we believe it is time to get out out of yesterday's BTFD longs. As we headlined in the NY Close Brief yesterday, we can always reset those longs next week, if conditions so warrant.
8/X Not responding quickly as expected, Manish -- that is why it is sideways bound -- but NQ is just about to make a breakout for the 14,830 target. It looks like ES is finally taking the lead higher, as the Yield looks to keep its upward drift.
9/X RB, it seems the market is following your charts! Unbelievable. Great! Thanks & Regards, Thanks for another amazing week! I'm honestly amazed as I was always told by ‘gurus’ that no one could profitably trade indexes. Thanks again because you obviously work very hard at this.
10/X OK, we're pretty close to profit take point of this rally. We're offloading a lot. I know I said we can see markets higher until July 12_July 14, but there's data pointing to July 9 as top. We offload all outstanding long contracts today. Next week may be a different regime.
11/X OK PAM gals, guys, Accountant gave a summary of the loot for the day: $8,592,680. We're hoping to see $10 million loot today, but ES and YM didn't follow the NQ higher, as NQ rose towards our 14,830 exit trigger. By and large, for 2 days of market rally, not bad at all, eh?
NY CLOSE BRIEF:
10YR YIELD RALLY SHOWING EVIDENCE OF TAPERING, THEN TIPPING OVER MONDAY
12/X For the 10yr yield, I now believe we could see a temporary top at or at just below 1.3700 -- that's less than 4 bps from NY Yield's close. The Yield then falls back to 1.3200. . . .
13/13 . . . If this top happens, it will change the short-term narrative/analysis by Monday. If the covariance between yields and equities have indeed turned positive as we surmise, then we will look to start selling by late Asian session or early Europe by Monday.
Good luck!
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Here is the current status of the PAM flagship Swing Fund, which includes open and closed trades.
During the?first six months of 2021, PAM delivered phenomenal real-dollar Hedge Fund trading performance, the best at Seeking Alpha:
PAM's flagship?Swing Portfolio,?year-to-date?(June 30, 2021)?delivered?$115,395,668.48?net profit on?$11,172,813 margin capital.
Year-to-date performance: 995.25%.
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