Hi YXI friends,

This is the final macro note for this week, as we comb through the earnings on Thursday and Friday for four of the Mag-7s.

If you haven’t already, please do read our morning Systematic Signals note today. We provided some visual charts for TSLA and PLTR for free on their machine-learning backtests and live signals.

Studying how the machine works in an uptrend and drawdowns helps us emotionally prepare (by not being emotional) for following the signals each day during the market swings.

Please check out our glossary for explaining the acronyms, financial terminology, and economic data.

Let’s dive in!

Table of Contents

• 1. YXI Dashboard

• 2. SPY, QQQ

• 3. FOMC Projections & Rates Futures

• 4. Summary Of Today’s 4-3-2-1 Ratings

• 5. USO

• 6. 30-Year Treasury Yield & TLT

• 7. Bitcoin (BTC) & Coinbase (COIN)

• 8. Gold (GLD, GDX)

• 9. Magnificent 7 Stocks

  • Apple

  • Amazon

  • Alphabet

  • Meta

  • Microsoft

  • Nvidia

  • Tesla

• 10. Other

  • SOXX

  • PLTR

• 11. Trade Updates & Monitoring

• 12. Notable ETF Flows From Previous Day

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. YXI Dashboard

TLT shot up 1.7% on the back of strong investor appetite towards the 7-year note auction on Tuesday. The rally occurred just before Treasury announces their refunding plan on Wednesday morning.

There is speculation for a potential rise in the buy-backs of the long-duration bonds to keep the long-end yields low. You can check out the last set of Treasury buy-back schedule here.

USO moved higher again by over 3%.

In response, most of equities retreated on Tuesday, except for GOOGL.

Click here for the past YXI article explaining many of the components of the dashboard.

2. SPY, QQQ

SPY (https://www.tradingview.com/x/EEJTrvlY/)

Although closing flat, SPY made a new high intraday on Tuesday. It is in an overbought territory.

However, we don’t see a negative divergence here, which could suggest the next pullback will only be corrective in nature, i.e. a dip-buying opportunity rather than the start of a bear trend.

SPY P/E, Vol, Correlations

SPY’s P/E is also at its one year high, which is of importance. At the beginning of the year, there were big debates around the market valuations and whether the forward 10-year returns will be negatively impacted.

I think of valuation as an elastic band. It could stretch very far for a while depending on the market liquidity, but eventually it always snaps back. There is usually some “narrative” or “catalyst” for the snap. However, the reality is simply that the market runs out of willing buyers at very high valuation levels. The opposite is also true.

SPY’s volatility is also at its 1-year low, which may suggest market complacence at this point as high valuation is being unchallenged for now.

QQQ (https://www.tradingview.com/x/oElhMygB/)

QQQ touched the exact 200% extension of wave (i) at $572 before turning down on Tuesday.

QQQ P/E, Vol, Correlations

QQQ is also trading at dangerously high valuations. One can also think of valuations as the length of period buyers are willing to wait before being paid back their investment through earnings. The longer the wait, the higher the risk appetite needs to be.

3. FOMC Projections & Rates Futures

FOMC Projections

We use the Fed Funds futures market to understand the market expectations of future FOMC interest rate decisions.

There were minimal changes to the front end curve ahead of the Fed. There should be no rate cut today.

Any surprise announcements will be to do with ending QT completely.

3-month SOFR Futures Yields

4. Summary Of Today’s 4-3-2-1 Ratings

SPY, QQQ, BTC, AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA, PLTR, TLT

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