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5 Things to Watch Next Week: Treasury Yields, Still Bullish Crypto Coins, Small Caps, Gold, and Jobs Friday

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1.            What’s Next for the Bond Market

The rise in yields has been arguably the most important trend of this week, as the aftermath of the “historic” Fed meeting brought about a significant rise in short-dated Treasury yields. Long-term bonds were less moved by the shift and that still shows the skepticism of the market regarding the long-term growth prospects.

What’s crucial about this that the Trump administration heavily relies on the 3% long-term growth number in the calculations regarding the new tax proposal. Let’s just say that it is an optimistic view; what’s more likely is that the expansion will be slower on average in the coming years, leaving the budget short by trillions. That said, rates could still be headed higher in the coming weeks, and that could help a durable bounce in the Dollar after the lengthy downtrend in the currency.

Two-Year Government Note Futures, Daily Chart Analysis

2.           Bullish Trend in Crypto World

Cryptocurrencies acted pretty well this week, showing resilience to bad news, while rallying on the good catalysts. Bitcoin, IOTA, and NEO have been leading the way higher, and the strength of BTC is especially impressive as the other two coins are rallying off much deeper lows, while the most valuable coin is just 15% off its all-time high. As the downturn that ended with a bang after the Chinese trade ban took the segment down by 40%, the total market capitalization of the coins is still shy of the $175 billion record, but the strength shown by the majors is encouraging. Only the leaders of the previous leg higher in altcoins are weaker, but that’s natural after the monster rallies in Dash, Monero, and Litecoin.

Bitcoin, Daily Chart Analysis

3.           Are Small Caps the New Leaders?

The above-mentioned trend in yields and the skewed positive effects of the tax proposal both favored a shift towards small cap issues towards the end of September, and sure enough the Russell 2000 run circles around the large-cap benchmarks. While the big companies were enjoying the benefits of the record low yields (through large-scale stock buybacks mostly), small caps suffered more from weaker domestic growth. How long will the current shift last? We have our doubts about the durability of the small-cap surge, and we are still sellers of equities at the current elevated valuations, despite the undoubtedly bullish short-term trend.

Russell 2000, Daily Chart

4.           Gold Bottoming?

With gold exactly matching the performance of the S&P 500 in the 3rd quarter, the recent correction in the shiny metal doesn’t seem too bad after all. The dip that came after the North Korea rally reset the overly bullish sentiment, and now the metal is at a major decision point between the crucial $1300 and $1275 levels. We still think that for diversified investors gold is essential in the current environment, and although an exact bottom is hard to catch, the current levels already seem attractive, with the daily MACD headed towards oversold territory. With volatility being near all-time lows and yields being in an uptrend, short-term headwinds are still obvious for precious metals, but the long-term valuation worries and the behavior of the major central banks more than justifies holding them

Gold, Daily Chart

5.           The Fed Meeting Minutes and Jobs Friday

With no Fed meeting in the month of October, and given the recent reveal by the central bank, we expect a less pronounced reaction to economic numbers, as the Fed’s policy looks less fluid for the time being. Janet Yellen’s speech on Tuesday was also an indication that the FOMC is determined to go on with its hiking schedule. Having said all that, a huge negative surprise in the Employment Report could change the landscape, and a meaningful drop in the ISM indices would also be a cause for concern. Apart from those releases, the week will be relatively quiet regarding economic numbers, with a focus on Australia and the RBA’s rate decision.

Key Economic Releases This Week

Day Country Release Expected Previous
Monday JAPAN Manufacturing PMI 18 17
Monday JAPAN Retail Sales 24 23
Monday UK Manufacturing PMI 56.3 56.9
Monday US ISM Manufacturing PMI 57.9 58.8
Tuesday AUSTRALIA Building Approvals 1.1% -1.7%
Tuesday AUSTRALIA RBA Rate Decision
Tuesday AUSTRALIA RBA Statement
Tuesday UK Construction PMI 51.2 51.1
Wednesday UK Services PMI 53.3 53.2
Wednesday US ADP Employment Change 151,000 237,000
Wednesday US ISM Non-Manufacturing PMI 55.5 55.3
Wednesday US Crude Oil Invesntories -1.8 mill
Wednesday EUROZONE Mario Darghi Speaks
Wednesday US Janet Yellen Speaks
Thursday AUSTRALIA Retail Sales 0.3% 0.0%
Thursday AUSTRALIA Trade Balance 0.87 bill 0.46 bill
Thursday EUROZONE ECB Meeting Accounts
Thursday CANADA Trade Balance -3.0 bill
Thursday US Unemployment Claims 270,000 272,000
Thursday US Trade Balance -43.0 bill -43.7 bill
Thursday US Factory Orders 0.9% -3.3%
Friday UK Halifax HPI 0.0% 1.1%
Friday CANADA Employment Change 22,200
Friday CANADA Unemployment Rate 6.2%
Friday US Employment Change 88,000 156,000
Friday US Unemployment Rate 4.4% 4.4%
Friday US Hourly Earnings 0.3% 0.1%
Friday CANADA Ivey PMI 57.2 56.3

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 443 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Crypto Update: Sideways Drift Continues but Sellers Still in Control

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While the bounce on Monday gave some hope to crypto bulls that last week’s plunge was just a correction in an ongoing broader counter-trend move, so far, we haven’t seen meaningful follow-through. That means that the bearish short- and long-term trends are still dominant in the segment and sellers are clearly in control of every major top coin.

Also, while volatility is relatively low, correlations are still elevated, and volume patterns are bearish as well, so our trend model remains on sell signals with regards to the overwhelming majority of coin on all time-frames. Traders and investors are still advised to stay away from entering new positions, as we have no evidence the bear market is over, and at least the test of the lows is likely in the coming months.

That said, a quick recovery above the primary resistance levels would be a positive sign here, but until we see signs of technical strength, the defensive approach is warranted as bearish risks remain very high here.

BTC/USD, 4-Hour Chart Analysis

Bitcoin’s relative stability is still the only positive sign among the top coins, but BTC also lacks bullish momentum and it failed to leave the close vicinity of the key $3600 support level. The $3850 resistance is out of reach, for now, and given the clearly bearish long-term setup, traders and investors shouldn’t enter positions here.

A move above that level would be a positive sign for bulls, with further zones between $4000 and $4050, and near $4450, but we still expect a move towards the support levels near $3250 and $3000 in the coming weeks, even if a broader bottoming process might already be underway.

ETH/USD, 4-Hour Chart Analysis

While Ethereum spiked higher again towards the $130 resistance level today, the move failed again and bulls failed to make technical progress, with the recent low still being in danger. A sustained push above $130 could still signal a failed break-down pattern, but the lack of bullish momentum points to a continuation of the decline.  Key support is found near $120 and between $95 and $100, while further resistance is ahead at $145, $160, and near $180.

Altcoins Unchanged and Bearish After Choppy Day

LTC/USD, 4-Hour Chart Analysis

The volatility compression continued in all of the major altcoins as well, but the broad selling pressure is still apparent in the segment. Litecoin failed to get close to the primary resistance zone near $34.50 despite the early-week rally attempt, and it continues to threaten with a move below the key $30-$30.50 support zone.

A breach of support would likely trigger a move towards the $26 level, with the oversold short-term momentum readings now being cleared in the market of LTC. Further strong resistance is ahead near $38 and $44 and with support found near $23, and traders and investors still shouldn’t enter positions here.

XRP/USDT, 4-Hour Chart Analysis

Ripple has been showing signs of relative weakness again today, after the brief period of stability and the technical picture continues to be negative on all time-frames, and our trend model is also on short- and long-term sell signals. The $0.32 price level is still in focus, and we still expect a move below $0.30, with strong support found near the $0.26 level, with resistance ahead near $0.3550 and $0.3750.

DASH/USD, 4-Hour Chart Analysis

Dash remained among the relatively weaker majors as well, and it still hovering around the $70 price level after bottoming out close to $67.50. A test of the bear market low near $56 seems very likely in the coming weeks, and only a move above the strong resistance zone between $76.50 and $80 would change the short-term outlook for the coin.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 443 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Crypto Update: Zilliqa a Good Buy on Dips

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Zilliqa (ZIL/BTC) has been on our radar ever since it revisited a price level of 0.0000039 on November 20, 2018. At that point, we were curious whether the market would respect its previous low or breach the support and print a new 2018 low. We got a little bit of both and that’s the stuff that makes crypto very exciting.

While Zilliqa printed a new 2018 low of 0.00000347 on November 25, bulls managed to lift the market back above 0.0000039 on November 27 with heavy volume. This fakeout gave this coin a new lease in life and the market is not taking the opportunity for granted. In this article, we reveal why Zilliqa presents a good buy on dip opportunity.

Solid Base at Parabolic Support

Zilliqa bottoming out and accumulating around 0.0000039 is no coincidence. This is the level where the market rejected lower prices in March 2018. Zilliqa’s ability to stay above 0.0000039 back then sparked a parabolic run that saw the market climb as high as 0.00002508 on May 10. Thus, it is not surprising for the market to return to its low level and start a new market cycle.

To build its base, Zilliqa spent 154 days range trading between 0.0000039 and 0.000006. That’s over five months dedicated to accumulation. We’ve seen many altcoins with significantly shorter accumulation periods launch massive bull runs.

Daily chart of ZIL/BTC

With a solid base in place, you can be fairly certain that market participants will buy the dips. Like you, they also likely know that the market spent a lot of time base-building. Therefore, they’ll take advantage of any opportunity to get in cheap before the market launches its bull run.

Breakout from Consolidation

After five months of base-building, the market appears ready to break out from a double bottom pattern. It made a strong push yesterday, January 15, 2019, to take out our range high of 0.000006. The move up was supported by above-average volume. So far today, the market has managed to stay above 0.000006.

ZIL/BTC Double bottom breakout

This price action tells us that Zilliqa is raring to launch a bull run. This type of bullish momentum is rare in crypto nowadays. With so many suffering from heavy losses in this bear market, a lot of people are eager to ride on markets that are showing bullish potential. As Zilliqa continues to show strength, participants will likely buy on dips in the hope of either growing their capital or recouping losses.  

Key Levels to Watch

If you’re looking to place a long position in Zilliqa, we believe that one of these two scenarios can play out.

The first scenario shows the market pumping in the next few days. The pump might send the market to as high as 0.00000685 where Zilliqa will likely face heavy resistance from bears. If bulls succumb, Zilliqa might retest 0.000006 before resuming its uptrend.

ZIL/BTC Scenario 1

The other scenario involves an immediate throwback as Zilliqa succumbs to profit taking. We can see it retesting support of 0.00000575. If Zilliqa respects the support, the market would print a bullish higher low setup. This will likely send the market to greater heights.

ZIL/BTC Scenario 2

Bottom Line

With an extensive base and a recent breakout from consolidation, Zilliqa is a good buy on dips. It appears that the market now belongs to a small group of alts that show bullish potential. This makes Zilliqa attractive to investors who are looking to grow their capital or recoup their losses.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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3.8 stars on average, based on 309 rated postsKiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and ETFs, as he does his own crypto research and is the subject matter expert at ETFdb.com. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.




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Analysis

AMD: Time to Find the Bottom

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By Dmitriy Gurkovsky, Chief Analyst at RoboMarkets

With the crypto hype nearly over, it’s time to see what’s happening with graphic board manufacturers. When demand boomed, their earnings burst, and so did the stock prices. Currently, however, the demand is down, and this is clearly seen in the earnings reports. While previously the earnings reached rather high numbers, they are bound to start shrinking now. What is important here is whether the management at such companies used the large capital inflows to take the companies’ performance to the next level.

Today, we’ll take a closer look at Advanced Micro Devices, known as AMD. We could also consider Nvidia (NASDAQ: NVDA), but its stock is seven times more expensive than AMD’s, which means it is much less available to the retail investors.

AMD earnings had risen by 2,200% when the crypto boom was at large, while Nvidia added 1,500% to its value. At the same time, when AMD shares were at the low, they cost around $1.50, which was quite alright for retail traders, while Nvidia shares were 15 times higher.

Advanced Micro Devices (NASDAQ: AMD) is a major GPU and chip set manufacturer. The company hasn’t had any production facilities of its own since 2009, and uses other companies’ facilities. Among AMD’s partners, one may mention Acer, Cisco, Dell, Ericsson, Fujitsu, HP, IBM, NEC, Nokia, Siemens, and Sony.

The major competition of AMD is Nvidia. In 2010, AMD was better than Nvidia, when its market share amounted to 51%. It was actually in 2010 when the first Bitcoin transaction was made. This was the jump start for the cryptos and, eventually, for mining devices.

By 2018, the crypto market cap reached its high at $840B, followed by the fall that has so far reached $119B. This caused a high demand for used GPUs, while the demand for new devices fell; this eventually led to the falling AMD sales. Investors booked their profits, and AMD shares fell, too. The earnings will continue going down, and the company will have to distract the investors from this.

The forecast for earnings in the coming quarter is not positive either, which means the stock has not reached its bottom yet.

AMD: What Happened Recently

In October, the Q3 report came in, with both the earnings and the ROI rising YoY. The operational profit went up to $150M, while the net profit rose by 70% to reach $102B. However, even with the earnings rising (mostly due to the CPU sales), the stock went down by 22% just because GPU sales shrank. When this happened, Deutsche Bank, Mizuho, and Morgan Stanley cut their forecasts regarding AMD share price.

In November, AMD partnered with Amazon to supply Epic CPUs for Amazon data centers. This pushed the price by 9% in the short term. Another price spike happened in December, when the 90-day ‘cease-fire’ was achieved in Sino-US trade wars; this was perceived as positive news for tech companies, and, in particular, pushed the AMD price by 7.50% upwards.

After that, the rise was over, and the shares were falling for 20 days in a row. The last hope was the Radeon IIV GPU release, which was presented at the CES expo on January 9, 2019. The stock started to recover but then went down abruptly.

This whipsaw may continue for long. What one may do is pay attention to the next quarter forecasts and do the tech analysis, while also watching the current and past events.

As such, some figures may show AMD’s strong points.

Thus, the equity ROI is 28.44%, with the overall industry number being at 11.84%; the profit margin is 5.05% versus 2.06%. On Dec 20, 2018, AMD was added into NASDAQ 100. Every year, the amount of data to process is increasing, while making the CPUs and GPUs smaller gets more and more difficult. This is likely to increase the demand, and, subsequently, increase AMD earnings, too.

On the dark side, AMD is not currently paying any dividends, while the P/E is 49.50 versus the 14.85 industry average, which means the company is well overpriced. The forecasts for the next quarter earnings are negative, which may put the AMD shares under pressure, too.

Thus, AMD shares may shrink in the short term, but in the longer term, they look quite attractive for investment. In order to understand where the price is going to ‘take off’, one should use tech analysis.

On W1, the price is above the 200-day SMA, which means there is an ascending trend. Fundamentally, however, the price may get lower, perhaps finding its support at the 200-day SMA.

The secondary support levels are at $10 and $15. $15, the nearest one, is very likely to get broken down, as it is quite far from the SMA. If the sellers get more active, the price may head further lower to reach and even break out $10. However, the odds are that the breakout will not continue for long, and a recovery will follow immediately. Thus, $10 may be considered a good level for taking long positions.

On D1, $22 is a currently strong level. In case it does not get broken out soon, it may become then a starting point for the price to start heading towards $10.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 23 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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