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Market Overview

A Dash of Cinnamon

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Hi Everyone,

Studies show that as little as 1/2 teaspoon of cinnamon a day can improve your blood sugar content by 24% and cholesterol levels by 18%. It can also make all the difference when baking a pie.

Many people don’t know this but cinnamon is actually considered to be an extremely volatile spice. Meaning, that it is incredibly complex at the chemical level and can have different interactions when mixed with different ingredients.

Those of you familiar with my writing probably know where I’m going with this already.

Just as a dash of cinnamon can invigorate an otherwise boring recipe, a small percentage of cryptocurrencies can have a powerful effect on any investment portfolio.

This, by the way, is what Wall Street hedge funds are so excited about at the moment.

Beware: just as a small amount of spice can drastically improve things, too much can have a devastating impact on Grandma’s favorite stew. Also, try eating a spoonful of cinnamon by itself and see what happens.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • In the Swing of Things
  • Brexit Blow Out
  • Steady Bitcoin Hands

Please note: All data, figures & graphs are valid as of July 10th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

As we predicted in last week’s webcast, the market’s reaction to the tariff trade wars seems to be well behind us now.

Many indices have seen some significant gains since the beginning of the week.

So, it’s just about the right time for a shakeup….

As we explained in a previous update (entitled: The Delicate Balance of Power) on February 1st 2017, it seems that Donald Trump’s presidency may indeed have an impact far beyond his 4 or 8 years in office.

Once confirmed, judges on the US Supreme Court serve for life. Until now, the bench was evenly split with 4 liberals, 4 conservatives, and 1 swing vote.

That swing vote was Anthony Kennedy, who Brett Kavanaugh, a staunch conservative, will be replacing.

The article above indicates that now that the Supreme Court has a majority of conservative members, it might pave the way to change American policy on things like abortion and firearms.

However, one thing that stands out about Kavanaugh’s reputation is that he has a tendency to uphold previous court decisions, even when they conflict with his personal views.

As an optimist, I have to say that this might be the best pick we could have hoped for.

Brexit Blow Out

It seems that the Pound was able to withstand the resignation of Brexit Secretary David Davis. Even at this late stage in the EU negotiations, as we indicated in yesterday’s update, the markets seemed to be reacting more to the World Cup.

However, the resignation of Foreign Secretary Boris Johnson was more than the market could resist. In the three hours following the announcement, the GBPUSD fell 150 pips (purple circle) proving that the markets are not immune to Brexit after all.

In the grand scheme of things, it’s not such a large movement and some of it has since recovered. Nonetheless, the reaction is pretty clear.

We’ll need to watch the updates from Prime Minister May’s team as well as Gareth Southgate’s pretty closely going forward.

Crypto Update

The crypto market hasn’t been doing so great over the last 24 hours as most of the top digital assets are seeing mild declines.

EOS & NEO have been hit the worse with double digit losses. Bitcoin on the other hand, has been acting more stable than the rest and only joined the trend in the last few hours.

Over the last few days, it seems the price of Bitcoin has mostly correlated with that of Gold. Here we can see gold in blue and bitcoin in purple.

This leaves me wondering if there might be any sort of connection between the recent decline in crypto assets and the sizable pullback on precious metals. Open to hearing any opinions on this.

Have an awesome day ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,

Mati Greenspan

Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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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Analysis

Pre-Market: China Tries to Support Markets as Global Stocks Slide

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Yesterday’s risk-off shift continued today in early trading with nervous and choppy trading in Asia and Europe, as global financial markets are still haunted by trade war fears and emerging market weakness. The major US indices rolled over after another period of apparent relative strength, with the Nasdaq being the most robust market once again, while most of the key European benchmarks continue to lag behind.

S&P 500 Futures, 4-Hour Chart Analysis

Chinese assets are still in focus before the weekend, as the Yuan’s recent steep devaluation sparked fears of a credit meltdown in the country. With the largest credit bubble in human history casting its shadow on China, some analysts think that with Trump’s trade war, the bug finally found its windshield and the bubble already started to burst.

USD/Yuan, 4-Hour Chart Analysis

All eyes are on the USD/Yuan pair as Chinese authorities are reportedly intervening in the market of the currency, and most likely local equities as well, trying to prevent a serious run on the most important assets.

With the Chinese stock market already in a bear market, and the Yuan trading at fresh 12-month lows against the Dollar, it might be a bit late to stop the slide, but the intervention could cause spectacular short squeezes.

Italy also made headlines today during the European session, as Italian government bonds got slammed lower, as the future of the new finance minister is uncertain, with another round of political turmoil possibly ahead for Europe’s most vulnerable country.

Unicredit (UCG), 4-Hour Chart Analysis

Looking at the charts of Italian banks, it’s clear that the spring turmoil had a lasting effect on the financial system, as Unicredit is on the verge of hitting a new low, and the other large players also remain under pressure, in part explaining the general weakness in European equities.

Europe Still Far Behind amid Mixed Economic Numbers

USD/CAD, 4-Hour Chart Analysis

The economic calendar is almost empty today with regards to the key markets, as the Canadian Retail Sales and CPI reports are the most important releases. The Canadian Dollar rebounded when the USD entered a correction June, but now the currency edging lower again, as the weakness in commodities and the Greenback’s rally are taking their toll. New highs are likely in the USD/CAD pair in the coming weeks, although strong resistance is just ahead at 1.33.

Commodities are little changed today after yesterday’s volatile session, as the bounce in China helped to stabilize the segment. Notably copper is back above the key $2.70 level, while WTI crude oil is trading at $68 per barrel again, and gold is hovering around $1225.

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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4.6 stars on average, based on 296 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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Market Overview

Market Update: U.S. Stocks Rattled by Trade-War Rhetoric; Cryptocurrencies Stabilize After Brief Dip

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U.S. stocks turned lower Thursday, with the S&P 500 Index easing off five-month highs as trade tensions and mixed corporate results weighed on investors’ sentiment.

Wall Street Sees Red

The benchmark averages were down across the board, with the large-cap S&P 500 Index edging down 0.4% to 2,804.49. Financials shares were the biggest laggards, falling more 1.4% as a cluster. Materials stocks were also down sharply. In total, eight of 11 primary sectors tracked by the S&P 500 finished in negative territory.

Dow industrials finished down 134.79 points, or 0.5%, to 25,064.50. The Travelers Cos Inc. (TRV) and American Express Co (AMX) were the worst performers, falling 3.7% and 2.7%, respectively.

The technology-driven Nasdaq Composite Index fell 0.4% to close at 7,825.40.

The CBOE VIX, also known as the fear index, rebounded from six-month lows, though the underlying picture continued to show complacency in U.S. stocks. The VIX rose more than 6% on Thursday to close at 12.90. Readings below 20 are generally associated with periods of calm on Wall Street.

On the earnings front, shares of eBay Inc. (EBAY) fell after the company offered disappointing guidance in its quarterly report released late Wednesday. Dow blue-chip American Express Co (AXP) posted per-share earnings that were higher than expected, but revenues fell short.

Trade Tensions Weigh

The market downshifted one day after U.S. President Donald Trump reiterated his vow to tax European automakers. Trump threatened “tremendous distribution” against Washington’s allies unless “something fair” could be negotiated.

Earlier this month, levies on $34 billion in Chinese goods came into force as part of an original plan to tax up to $50 billion in imports. The U.S. president has also threatened to implement levies on an additional $200 billion in Chinese imports – a move that Beijing would not be able to match dollar-for-dollar.

Resistance to the president’s tariff policy is growing within Congress, with a bipartisan group of 149 House members urging Trump to abandon his protectionist stance.

Crypto Market Recovers After Dip

The cryptocurrency market remained on track for its second weekly advance in three as bitcoin recovered from an intraday slide and altcoins came off session lows.

After reaching a high of $299.8 billion Wednesday, the cryptocurrency market saw its total capitalization fall to $287.9 billion. Still, trade volumes were $17 billion, which is considered robust in comparison to the last three months.

Bitcoin, the largest crypto asset by market cap and trading volume, was little changed compared with 24 hours ago. BTC values are currently hovering north of $7,450.

Stellar XLM defied the market downtrend to report minor gains on Thursday. In doing so, Lumens overtook Litecoin for sixth spot in the crytpo market cap rankings. At the time of writing, Lumens were trading around $0.31.

EOS was among the worst performers in the top-ten, falling 4.5% to $8.31. IOTA was also down more than 4% to $1.05.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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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4.6 stars on average, based on 502 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Pre-Market: Stocks Retreat, Yuan Tumbles as Dollar Pain Trade Still On

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The major US indices opened with losses today, as the creeping rally of the recent days lost further lost momentum, and as international headwinds remained strong. While the losses are not drastic, and the leading benchmarks, the Nasdaq and the Russell 2000 are still just a tad below their all-time highs, the small risk off shift could quickly turn into a larger scale correction, as a significant part of the market is still severely lagging behind.

S&P 500 Futures, 4-Hour Chart Analysis

Trading volumes are higher than in recent days, but that said, business-as-usual is the best phrase to describe price action across global financial markets, as the trends that have been dominating the previous months show no signs of weakening. The Dollar, which went from the most hated asset in early 2018 to the most bullish major currency, hit a new 12-month high as measured by the Dollar index today, as we expected.

USD/Yuan, 4-Hour Chart Analysis

The reserve currency’s strength is hurting its peers differently though, and the recently weak Chinese Yuan took another major hit today in early trading. Elsewhere in the forex segment, the GBP is back below $1.30 against the Greenback, while the Euro is close to testing its June lows near 1.15. The USD/CNH pair hit 6.80 for the first time in a year, and its weakness spread to the commodity segment yet again, with especially copper feeling the pain.

Copper Futures, 4-Hour Chart Analysis

The industrial metal plunged below key long-term support today Precious metals are also getting pounded, with gold hitting $1210, while oil is a positive outlier as the oversold bounce continued in WTI crude.

Europe Still Far Behind amid Mixed Economic Numbers

EUR/USD, 4-Hour Chart Analysis

Back to stocks, besides the full-blown bear market in China and the still struggling emerging markets, Europe is also relatively weak. While the British stocks are outperforming thanks to the pronounced weakness of the Pound, the rest of the continent is struggling to catch up with the US market.

DAX Index, 4-Hour Chart Analysis

The DAX turned lower after its recent rally today, and as the weakness in the Euro and the global risk-on shift were unable to lift the German benchmark, a risk-of turn could push back it even towards the April lows below the 12,000 mark.

Today’s economic numbers reinforced the divergence between the US and rest of the world, as British Retail Sales missed by a mile, pushing European assets lower, while the US Philly Fed index came in well above expected, and weekly jobless claims hit an almost 60-year low in the US.

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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4.6 stars on average, based on 296 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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