With only three weeks left in the year and the critical December 10th FOMC meeting fast approaching, we are at a pivotal market juncture. This week’s deep dive focuses on navigating these conditions by mastering the two essential pillars of successful trading: your Internal Process and precise External Market Analysis.
In this episode, we reveal the current reading of our proprietary “Risk Map.” This analytical framework uses key risk barometers including Credit Spreads (the “last functioning smoke alarm”), Real Yields, and the XLP/XLY ratio to forecast liquidity flows weeks in advance.
We detail how the “cocktail mix” of falling Real Yields and a softening Dollar is creating an insanely positive environment for risk assets right now.
We also break down the high-level technical application of our 6-Week Fed Cycle. This methodology defines high-probability breakout zones (with a less than 10% failure rate) and allows for robust risk management, offering a strategic advantage for those looking to place stops.
Finally, we identify constructive setups based on the current “Risk On” environment:
Bitcoin (BTC): Is this the start of a multi-month bottom? We outline the key level to watch.
Gold: We explain why the historically powerful “January Effect” seasonality makes Gold a compelling bullish setup.
USD/CAD: We confirm our continued bearish bias and the optimal zones for shorting opportunities.
The “Risk Map” is clear: liquidity conditions are loosening. Tune in to ensure your processes are in place so you are ready to “swing the bat when the pitch comes”.
(Disclaimer: This is market musings from the charts and is not financial advice).
