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  • Writer's picturen ev

This time it is different

Okay, "THIS TIME IT'S DIFFERENT".

There, I've gone and said it. You can pooh-pooh me all you want, just let me qualify what the time is and how things are actually different.

This is the US500 CFD on #tradingview , I was going to use the ES or SPX but this will do.


The market as it was a year ago.

A year ago the US spending versus the US taxation went into Surplus. On April 14th, 2022 the surplus was $2.2 billion. The US 500 was signaling a sell (using my EOD strat) and was traveling away from a recent high of 4640 and heading for a sweep of the February 2022 lows.

This came after the Federal Reserve (FOMC) meeting in March where they lifted the Federal Reserve Rate by 25bps, firing the starting gun of the rate hike cycle. The rate hike cycle had been widely telegraphed and the market was baying for rate hikes to curb the runaway inflation.


Roll on 12 months and we are in a new paradigm.


Yes, we may be about to go into surplus, but I have to wait until Monday to get that data for Friday 14th due to the lag in reporting. But even if we are, it is a cyclical phenomenon due to the taxation scheduling in the USA. The difference this year is that the market is receiving data that inflation has been dropping since the peak in June 2022, and the FOMC is hesitant to raise rates and is pulling back from their expectations of having to hike through the rest of 2023.


My EOD strategy provided a buy signal at the end of March and we ended last week positively. The US500 is gunning for the February 2023 highs. The market is now citing recession is upon us and this should help ease back the tightening cycle.


For me, these simple facts show that April 14th, 2023 is the opposite of last year and therefore my bullish stance is not changing.


Things that I will monitor going forward are:

• How long and deep is the tax drain

• How much of a surplus

• When do we get back to deficit spending

• Supply chain disruptions due to the Ukrainian war

• Will the US Congress lift the debt ceiling or shut down the government?


The last point is the main concern for me!


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