Live with SurgeTrader 4/24/23

Introduction

The speaker introduces the topic of trading and prop trading, and mentions that there is a lot of excitement coming out of Las Vegas for traders.

• The speaker will be giving updates on social media throughout the day, as well as in Discord.

Morning Update

The speakers discuss the current state of the markets and upcoming data reports.

• Stocks had previously been down but are starting to perk back up into positive territory.

• This week, most of the significant data reports are back loaded, with the first quarter GDP report from the U.S on Thursday followed by the pce deflator on Friday.

Volatility in April

The speakers discuss volatility in April and how it affects trading trends.

• In April, volatility has compressed significantly.

• One way to measure volatility is through the VIX, which reflects how well equity markets are doing.

• Since currencies and risk appetite have a close link with VIX, it can be used to identify consolidative markets.

• Currently, VIX is at its lowest level since January 2022.

Understanding VIX Indicator

The speaker explains how to use VIX indicator for trading purposes.

• A daily chart is best seen as a line chart when using VIX indicator.

• Looking at longer time frames can give a sense of where VIX has been historically.

• Currently, VIX is pretty much at 17 which is right around its lowest level since January 2022.

• Anywhere north of like 23 or so in mid to high 20s is considered high.

The Impact of the Federal Reserve on the VIX

In this section, the speaker discusses how the market has escalated and how volatility trends are dead. They also talk about how investors are waiting to see what the Federal Reserve will do next week and how that will impact the VIX chart.

The VIX Chart

• The VIX has been hovering around 1650-17 for a while now.

• Volatility trends are dead at this point.

• Investors are waiting to see what the Federal Reserve will do next week, which is driving everything in the market.

• The big question is whether or not they're done with rate hikes or if there will be more.

Implications of Neutral Sentiment from the Fed

In this section, the speaker talks about what could happen if neutral sentiment comes from the Fed. They discuss different scenarios and their implications for traders.

Neutral Sentiment from Fed

• If neutral means they're raising 25 basis points and they're done, it's bad news because it means no more rate hikes.

• It's good news because it's positive for equities.

• It's bad news because messages will start to wonder if there are problems in the U.S economy that we don't know about.

• If they suggest that they're not sure what comes next, uncertainty could drive up volatility.

Leaks from US Policy Makers

In this section, the speaker talks about comments made by US policy makers last week that could be interpreted as leaks.

Comments from US Policy Makers

• There haven't been any leaks recently, but comments made by US policy makers last week could be interpreted as leaks.

English Preview of US GDP and PCE Deflator

In this section, the speaker discusses the upcoming release of U.S GDP and PCE deflator numbers and how they will impact market expectations.

Importance of Upcoming Numbers

• Policy makers suggest that we may be close to being done.

• Advanced release of U.S GDP on Thursday and PCE deflator on Friday will help set expectations for the next FOMC meeting.

• These numbers could move the markets on Thursday and Friday.

Market Movement

• The first number that we get a sense of where growth was is usually market moving.

• If there are no big enough catalysts in the markets, then we are in a consolidative area.

• The bond market tends to show clear movement first, followed by equity, currency, and commodity markets.

Symbols to Watch

• US tenure yields tend to be a good indicator of market direction.

• Gold prices can also be an important indicator.

• Lower highs and lower lows can indicate bearishness in the market.

English Why Are US Yields Falling?

In this section, the speaker explains why US yields are falling.

Weak Data

• A string of weaker data last week caused yields to fall.

• Philly Fed was worse than anticipated.

• The sell-off in bond yields reflects both weak data and market expectations that the next rate hike for the FED will be their last.

Correlation between 10-year yield and the dollar

In this section, the speaker talks about how there is an inverse relationship between US yields and the dollar. When US yields fall, it's negative for the US dollar which is positive for the Euro.

Trading Euro Dollar

• The speaker started trading at 6:10-6:15 New York time when U.S yields were already down one and a half percent.

• The Euro was in the buy zone, which means that the longer-term trend is positive.

• German iPhone Eurozone ifo was strong, so investors latched onto that in the euro.

• This indicator analysis is available for all BK Traders who are members of their service as well as surge traders.

Adding 10-year yields to Euro Dollar chart

In this section, the speaker adds 10-year yields to their Euro Dollar chart to make it easier to trade.

Chart Analysis

• The speaker moves their chart to pin it on the left scale.

• They add in 10-year bond yield and make it regular price so viewers can see correct prices.

• The orange line represents 10-year bond yield while candlesticks represent your dollar.

• There's an inverse relationship where when U.S yields fall, that's negative for the US dollar which is positive for the Euro.

Easy Trade with Falling Yields

In this section, the speaker explains how falling U.S. yields made trading easy.

Trading with Falling Yields

• When U.S. yields fell, it drove down USD value against other currencies like EUR.

• At around 6 am NY time, EUR/USD broke above key resistance round number of 110.

• Since EUR/USD was in the buy zone, the speaker went long on EUR.

• The Euro was one of the best-performing currencies that morning.

Using Indicators to Trade

In this section, the speaker explains how they used indicators to trade.

Trading with Indicators

• The speaker uses zip, which is their BK Traders indicator.

• They went long on EUR because it was in the buy zone and trading above the indicator line.

• Being in the buy zone means that the currency pair's background color is green, indicating a positive longer-term trend.

Delayed Trade in Dollar Yen

In this section, the speaker talks about how U.S. yields can either help you get into good trades or keep you out of bad ones.

Trading Dollar Yen

• Dalian was in the buy zone, so it told Kathy to stand aside and not sell dollar yen.

• At around 10 am NY time, USD/JPY recognized this decline in U.S yields and actually fell.

• Watching yields can either help you get into good trades or keep you out of bad ones.

Discretionary Trading vs. Go Trading

In this section, Kathy discusses the difference between discretionary trading and go trading. She explains how having a strong view on the market can affect your trades and why it's important to pay attention to confluences.

Discretionary Trading

• Discretionary trading involves making decisions based on market analysis and personal judgment.

• It's important to pay attention to confluences in the market before making a trade.

• Having a strong view on the market can affect your trades, as seen with U.S data and the bearish dollar.

• If you're unsure about a trade, it's better not to take it.

Gold Analysis

In this section, Kathy analyzes gold prices and provides insights into what traders should watch for in the near future.

Gold Prices

• Gold closed below the 20 simple moving average for the first time since March.

• Traders should watch gold prices closely as they could drop lower in the near term.

• The recent consolidation around 2000 may be coming to an end.

• External factors such as yields and general risk appetite may also impact gold prices.

Bitcoin Analysis

In this section, Kathy discusses Bitcoin prices and why she doesn't personally trade Bitcoin.

Bitcoin Prices

• Kathy pulls up charts of Bitcoin for those who are interested in trading it.

• She does not personally trade Bitcoin but provides insights into its current state.

• Traders should keep an eye on news related to Bitcoin for potential opportunities.

Should You Invest in Bitcoin Now?

In this section, the speaker discusses whether it is a good time to invest in Bitcoin and provides insights on recent reports about the future of Bitcoin.

Recent Reports on Future of Bitcoin

• Standard Charter projects a $100,000 value for Bitcoin.

• Bloomberg predicts that Bitcoin could reach $50,000 next year.

• There are many articles discussing the future of Bitcoin.

Chart on Periods of Time with Bitcoin Halving

• Bloomberg created an interesting chart showing periods when there was a "Bitcoin halving," which is when a large number of Bitcoins were removed from circulation.

• The first halving led to a 500% increase in value, while the second and third led to 260% and 178% increases respectively.

• The next halving is expected to happen in April 2024, and the market is already pricing in its impact.

Potential Increase in Value for Bitcoin

• Based on the previous halvings and current market trends, the speaker believes that we could see Bitcoin reach $40,000 or even $50,000 soon.

• This would be due to the upcoming halving as well as crypto assets gravitating towards big round numbers like $50,000.

• A recent Bloomberg article also makes a strong argument for another significant increase in value for Bitcoin going into next year's halving.

Investing vs Trading Crypto

• As an investor rather than a trader in crypto, the speaker finds this information valuable.

• It is unclear if these levels are still decent for investing or if there will be further pullbacks.

Investing in Uncertain Times

In this section, the speaker discusses investing in uncertain times and the potential risks associated with it.

Potential Risks of Investing

• The speaker believes that bad news from the FED is unlikely to cause a significant drop in Bitcoin prices.

• Weak US retail sales or negative GDP growth could lead to a more significant risk conversion and recession in the US and other parts of the world.

Investing in Europe

• The Eurozone economy is expected to be stronger, making Europe an attractive place to invest.

• Sectors benefiting from tourism and hospitality will continue to grow as China reopens and Americans start traveling again.

Overall, the speaker suggests being cautious when investing during uncertain times and considering potential risks before making investment decisions. They also recommend keeping an eye on economic data such as retail sales and GDP growth. Additionally, they believe that Europe may be a good place to invest due to its improving economy and strong sectors such as tourism and hospitality.

U.S GDP Report and Eurozone First Quarter GDP

In this section, the speaker discusses the upcoming U.S GDP report and Eurozone first quarter GDP.

U.S GDP Report

• The advanced release of the first quarter U.S GDP report is expected to show a slowdown in growth from 2.6% to 2%.

• The PCE deflator, which is the Fed's number one indicator, is also expected to be lower.

• The speaker believes that these factors make her bearish on the dollar.

Eurozone First Quarter GDP

• Unlike the US, Eurozone GDP growth is expected to be stronger in the first quarter.

• The speaker is bullish on Euros due to this expectation.

• The Eurozone first quarter GDP report is considered the third most important number for that week.

Bank of Japan Rate Decision and Australian Inflation Report

In this section, the speaker discusses two upcoming events: Bank of Japan rate decision and Australian inflation report.

Bank of Japan Rate Decision

• This will be the first rate decision under new BOJ governor.

• While they are not expected to change yield curve control, they will release their latest economic projections.

• The market will interpret what his guidance going forward will be based on these projections.

• The speaker believes it will be dovish and that's why yen is moving differently from euro dollar and pound dollar.

Australian Inflation Report

• CPI has been easing across the globe including Australia.

• Speaker expects this trend to reflect itself in Australia's inflation report making her bearish on Aussies against all major currencies.