🗞 Liberation Rally (?)

WHILE YOU POUR THE JOE… ☕️
Liquid Gold

When we pitched a long in oil and oil stocks, this was one of the catalysts that we were waiting for. 📈 

Of course, we had already been positioned due to the Chinese PMI breaking out, as well as global oil inventory coming to cyclical lows, making any whiff of new demand a spike potential for crude prices.

Here’s the newsletter that got you on the right side for a Brent Crude trade, among others, using this global macro approach. ✅ 

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

STRATEGIZE AGAIN
Expectations Set

When looking a the S&P 500 futures chart, there are some key levels I’d like to share with you moving forward into this week.

Before you wonder “Doesn’t this guy claim that he never uses a chart?” I don’t, but how else can I point these out to you? 👀 

By using order flow, a market profile, and statistical volatility, our team is able to pinpoint key levels to trade or to become active in the market.

These are some of the tools we explicitly train our mentees on within The Sovereign Trader Program: 5 No-Sweat Tools Taken From Goldman Sachs.

Actually, that’s the last step, and it’s 5% of the work. The other 95% is focused on generating trade ideas (the right way).

$5650 is the first hurdle we need to clear, as you can see in the profiles above, there were two days that saw little to no trading around this area. 👀 

This is why I’d be watching the order flow at this level, to seek confirmation that we are actually going higher. Higher where though?

Next stop could be $5668 as a liquidity vacuum to either pivot back to $5650, or to get us an express lane to $5680 as you can see that is another level where little trading got done. ✅ 

If we manage to break through that level, it should be clear skies to a relatively fast rally to $5710 as a first “resistance” area, where order flow will become vital again.

If that’s cleared, I would be happy to start stepping off the gas around $5730-$5750.

With this in mind, here are some of the reasons I’d expect a relatively bullish day:

• While the S&P 500 sold off, bonds didn’t really go on a rampant risk-off rally, especially in $TLT failing to clear the $90.25 key risk-off handle.

• Equity risk premiums haven’t really moved in a complete risk-off direction yet either.

• $IVE / $IVW spreads (value vs growth) spiked, but again not to levels respective to the size of this selloff.

These are some of the global macro indicators we look at on a daily basis to determine some of our short-term biases, and the whole list can be yours in this newsletter post. ✅ 

Stick around on our Twitter account, we’ll likely be covering the entire price action and biases as they come in through the day. 🫰 

TRADE OF THE WEEK
Accummulation Signs

This is a reminder of a pitch we had sent over a couple of months ago, which I understand is outside the time horizon of most retail traders out there (sigh…)

Transocean stock, as can be seen in the annualized profiles above, has been sitting on massive volume readings around the $3.0-$3.25 area, which is a pattern that has always worked for us under the right circumstances.

Now here’s a snippet from a recent analysis we did inside The Sovereign Trader Program ⬇️ 

We already know this from the PMI indexes we’ve gotten lately:

• New Orders for oil have been increasing for a quarter now.

• No production has followed, creating bottlenecks.

• The US is now resorting to importing oil to fix this situation.

With this, capacity utilization has been showing 90%+ readings for an entire quarter as well, meaning that crude oil prices might be about to spike (especially as China demand is coming back). 📈 

This is where Transocean comes into play, especially when the US starts to consider the need to ramp up production again.

It looks like Patterson UTI is the top pick so far in the sector, but we’ve already been in it and pitched it before it went on a near 50% rally higher. 🔥 

So, we’re picking the second best in this list, which is Transocean based on a few factors:

• Forward P/E premium

• 2026 EPS growth is above average

• 2026 PEG ratio severely compressed, giving us a massive upside potential

Based on this profile, we are comfortable shooting for Transocean to get to $4.50 to $5.00 a share in the coming months, especially as PMI data comes out this week to reiterate the need to boost oil production soon. 🎯 

As always, it seems our Wall Street friends are in agreement:

GO AND MAKE IT HAPPEN
Lest We Repeat It

Market and volume profiles are the closest we get to reflecting a true live market auction, which is the way every professional has traded since the beginning of time.

Generating ideas is still an activity dominated by global macro and having a proper system, yet there is nothing better out there when it comes to execution.

Which is why today’s book recommendation 📖 is the one that sits on the shelves of many professionals out there, even on trading desks at the biggest institutions.

To your success,

G. 🥃