🗞 Elliott Called, His Last Wave is In

WHILE YOU POUR THE JOE… ☕️
Store of Value

FOMC is today. 👀 

And, it looks like someone is looking to offload on their risk-on assets, you saw the same behavior in other areas like gold and the S&P 500.

But get this.

Toward the second half of the day yesterday, it looked like the market shited back to slightly risk on attitudes, so maybe someone knows a bit about Fed Powell’s agenda for later today.

In my opinion, the data looks pretty bearish at this point, so a potential shift to talking cuts or QE shouldn’t come as a surprise. ✅ 

Eyes on a lower dollar my friends, it’s key to get us through this recession.

By the way, if this risk on/off talk is new to you, we just wrote an entire Global Macro primer to get you started on this lingo.

Speaking of lower prices, let’s get on with today’s email 📧…

FALSE GODS
Your Weight in Gold

I got two words for you: China Bull. 🐂 

What does that have to do with gold? Well, the answer lies in this ratio above.

This ratio tracks the price of gold to the $MCHI ETF tracking Chinese stocks in general, and the reason it is important matters here for two reasons. ⬇️ 

First, China has been stockpiling gold reserves since COVID to prop up and leverage its economy, as we’ve been seeing the bazooka effect now in stocks like $PDD and our favorite in $BABA.

Second, everyone else that was becoming a bull on China, as a product of the US economy slowing into a recession, started to buy gold as a proxy as well.

Now, the ratio has topped and is probably going to start its trend lower, since Chinese stocks have outperformed gold prices for over a quarter now, both domestic and international investors will look for China’s stock market and not gold now.

Now this is not my custom, but after a productive conversation with an ex Goldman trader friend of mine, I decided it was worth to note the following:

• Gold futures have just entered the fifth wave of the Elliott Wave theory pattern.

• I like the psychological premises here, as well as the thesis that we now have in a gold selloff next to an oil recovery.

Here’s the link to that newsletter so you don’t get left behind in this thesis. 📈 

This is the premise of that entire thesis, as a major spread in the ratio between gold and oil would call for a mean reversion scenario coming up (which is natural and fundamental in commodities).

That being said, I am looking at the gold futures for a potential short entry around $3,045.

Will keep you posted in our Twitter account. 🫰 

TRADE OF THE WEEK
My Latest Preneur

This is what the trends looked like for last motnh’s retail sales data, and you can see that the winner was Non-store retailers clearly.

Now this would typically benefit names like:

• Amazon

• Shopify

• eBay

• Mercado Libre

But, out of all those, there is one setup that we really like and are considering buying ourselves. ⬇️ 

If you’ve been following us for a while, then you probably already know what’s driven us to Shopify here.

The forward P/E multiple of 51.9x above the rest of the peer group will be a significant factor to lean on in the coming months for Shopify stock, since there’s got to be a reason for this premium to be here. 👀 

One reason could be the EPS growth forecasts for 2026, set for 24.8% and above all others except Mercado Libre.

Mercado Libre is a stock I like as an investment, but traders aren’t really that optimistic on emerging markets right now. 🤷‍♂️ 

Plus:

This is the market / volume profile for Shopify stock, which shows us an imbalance or cutoff level around the $90 to $95 per share area. 🎯 

Noticing how the recent rejection came again, respecting 2024 and 2025 levels so far, I think that responsive buyers have just come in to reiterate the reasons why Shopify commands this forward P/E premium today.

Based on this one, I think a sensible target might be set at $120 to $130 per share for an exit.

Our Wall Street buds agree with us here: 🔥 

GO AND MAKE IT HAPPEN
Spot The Trend

A true classic, in the spirit of traditional commodity traders.

Any professional will tell you that you can’t trade commodities (or anything for that matter) in isolation, that doesn't do well and will never do well in the market.

Which is why we want you to focus on global macro so much.

Anyway, today’s book recommendation 📖 is filled with some of the wildest trading stories from commodity, futures, and equity traders, so learn from them.

To your success,

G. 🥃