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Better Early Than Never: OPEC, Cryptos, & BoJ

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Japan, US stocks

The US Government failed to reach any sort of deal to approve a budget last Friday. If there’s no budget there’s no money to pay government employees or to keep things open.

Welcome to Day 1 of the US Government Shutdown.

(Technically, the shutdown started on Friday night but short of a last minute arrangement, today will be the first day that it actually matters.)

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • OPEC Yesterday
  • Cryptos Today
  • BoJ Tonight

Please note: All data, figures & graphs are valid as of January 22nd. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

Asian markets seem little affected by the government shutdown in the United States. I guess this isn’t much of a shock to most people. Even President Trump himself tweeted several times that this was a possibility that didn’t particularly concern him.

The biggest question is how long it will last. Shutdowns in previous Presidencies were mostly resolved quite quickly. However, with the Democratic leaders feeling like they’re “negotiating with jello” something tells me there’s a good chance this time might be different.

As I’m writing, we’re getting word that there will be a vote on the floor at 01:00 in Washington DC, but if that fails Trump’s trip to Davos may be in question. 🙁

Currency markets opening up for the week are showing the US Dollar with a small gap down (blue circle). Of course, a good deal here could see the Buck much higher as it already is at multi-year lows (dotted yellow line).


OPEC’s Framework

The OPEC cartel has done a great job in the past of controlling the price of crude oil by limiting the amount that OPEC partner countries produce. However, Saudi Arabia’s Energy Minister Khalid Al-Falih pointed out yesterday that OPEC nations have dwindled in market share over the past few years.

At the moment, OPEC only produces about a third of the world’s oil. Yet, most oil that is produced globally is actually consumed locally. So OPEC oil still accounts for about 60% of global trade.

Their main competition is US Shale producers. The US has invested big on fracking technology and they’re getting pretty good at it. With the collapse of oil prices in 2014 however, the fracking math just didn’t seem to add up and there are currently plenty of pumps in the United States that are not being used to their full capacity.

With Oil now holding above $60 since New Years, the shale guys might just have a prime incentive to start priming the pumps.

Khalid Al-Falih’s statement involved a fair bit of forward thinking but was rather vague, saying that by the end of 2018 OPEC and her partners would need to come up with some sort of a “framework” rather than continue to limit production. I mean, what does that even mean?

It would seem, the role is now reversed. Saudi Arabia and her partners now have a clear incentive to keep prices low in order to continue to corner this market.

Crypto’s In Red

Looks like the Crypto markets may have been more affected by Trump’s government shutdown than the stocks.

As we mentioned in previous updates, a dip is usually a good time to get in but it is possible that we go down even further from here as technical support is still a way away.

The good thing is that volumes are holding in Japan and South Korea. Though real FOMO won’t start to kick in unless we get an indication that the dip is over.

It’s been a wild year so far so it’s good to see things calming down a bit as far as the volatility. Let’s hope the gyrations remain subdued for the next few weeks to give the market some more time to even out.

Meet the Bank of Japan

The BoJ has just gone into a two day meeting at the end of which they will make a public statement that could prove symbolic for global monetary policy and have a sizable impact on financial markets.

As we know, most of the central banks in the world have been practicing an extremely loose monetary policy since 2009. Yet, out of everyone, the Japanse have been the most aggressive by far. According to some, their bond-buying program has gotten way out of hand and the BoJ now owns more than 75% of the ETFs in the country and a good portion of all the financial assets in the world.

They may have been trying to give us a hint last week when they reduced their monthly bond purchases ever so slightly. Some traders reacted quite quickly taking this as a sign that they might be about to pull out and tighten up.

If this is the case, we may witness the last of the titans of loose money fall tomorrow morning. For those of you who are hardcore FX traders, this could be an amazing opportunity but might require staying up all night depending on where you are in the world.

Watch the USDJPY closely, and if they are indeed about to shake things up, we could see the pair drop pretty quickly as investors pile into the newer stronger Yen.

Let’s have an awesome week!

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.

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 134 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Slick Move

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Hi Everyone,

The company known as Ripple Labs seems to have a decent shot at replacing Swift as the way that banks move money around globally. The way banks currently send money from one place to another is archaic and certainly needs to be changed.

One of the biggest hurdles for mass adoption of Ripple’s XRP system however, are the current battles playing out in the US court system.

Ripple currently has several lawsuits against it with the plaintiffs claiming that the XRP token is actually a security. If so, the company will likely need to pay dearly for not registering with the SEC before raising money from the public.

In a “slick move” the company has now consolidated all of these cases into one hoping for a positive decision from the federal court.

We continue to keep an eye on this case with great interest and in the meantime, traders are working hard to defend the 50 cent per coin price. Though many of the popular cryptos have given back their gains from the early November rally, XRP is standing its ground quite well so far.

In a surreal coincidence, if we apply the famous Fibonacci Retracement Tool to XRP’s price rise, we see that the 50% mark comes out to exactly $0.50 per coin. Let’s hope it holds.

It’s important to note that even if we’re very generous and say that Ripple does have a 50/50 chance to replace the banking system (a recent report written by Ripple execs only gave it a 25% chance), it’s still a huge risk to take in the event that it doesn’t work out. That’s why it always pays to diversify your portfolio.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Apple Falls
  • Oil Slick
  • Crypto Volumes Spike in South America

Please note: All data, figures & graphs are valid as of November 14th. All trading carries risk. Only risk capital you’re willing to lose.

Traditional Markets

Stock indices are down today as it seems investors prefer to take risk off the table. There was an attempt at a rally on Wall Street yesterday after positive comments from Larry Kudlow on China trade, but it did fade by the end of the day.

The tech sector is being watched particularly closely and Apple stock is a concern for investors wondering if iPhone sales may have peaked. Apple has now fallen 17.5% from it’s all-time high and is now trading below its 200 DMA (blue line).

As much as it pains me, what goes up must come down. Wonder what Sir Isaac Newton would say about this.

If people are scared of tech, they’re terrified of oil. Crude extended its losses yesterday but we are seeing a bit of a bounce this morning. As we discussed in Monday’s market update (titled: Line in the Sand), a move below $60 (yellow dotted line) could be devastating and indeed it was.

This morning we’ve seen a bounce off $55 (thin red line).

A move below $55 is certainly possible but the tendency of a market that’s moved this much so quickly is usually to take a break.

Nobody is taking the oil slide more seriously than Nicolas Maduro, the President of Venezuela. In fact, Venezuela is now making a push to end the era of the petrodollar entirely.

This comes at an interesting time when Iran’s Crypto-Rial is set to go live within the next few days and even the IMF seems to be advocating for state-backed digital currencies around the globe.

BCH Hard Fork Tomorrow

Near as I can tell, the drama happening in BCH isn’t a great concern. Let’s face it, if prices weren’t as flat as they’ve been in recent months, we probably wouldn’t even be talking about this.

Preliminary results of a poll that I put out on Twitter this morning is showing people’s sentiment about this pretty clearly.

So, nobody really seems to care. For those of you who are watching though, I’d recommend keeping your eyes on the following two websites.

Number one is Coindash’s cash.coin.dance. They’ve got a nice cointdown timer and show the hashwar pretty well.

The other is called forkmonitor.info that was set up by BitMex for this purpose. Though I don’t really understand what they’re trying to show in the Bitcoin Cash tab, I’m hoping they’ll have more info as the situation progresses.

Volume Spikes in South America

Prices seem to be declining slightly this morning but overall things are pretty stable. With the exception of Tether, which traded as low as $0.96 on some exchanges last night.

All eyes are on BTC to see if it holds onto its current support level of $6,000 but more important than these short-term price movements is a growing trend that we’ve been tracking of rising volumes, especially in several key areas.

One of those areas that I’ve noticed in South America. This site showing volumes by country isn’t a pure indicator since it only tracks trades made on the peer-to-peer site localbitcoins.com. However, if we look at the various countries on the list you’ll notice that all the Latin American countries listed are showing increasing volumes lately.

Now, I’d rather not repost all the charts here but I do urge you to visit coin.dance/volume/localbitcoins to see for yourself.

Volumes are on the rise in Mexico, Dominican Republic and Argentina and are near their all-time highest levels in Colombia, Chile, Peru, and Venezuela.

As the economic cycle continues and the United States continues to raise their interest rates, they put pressure on the emerging market economies, but as we can see, people are getting smarter, the global economy is getting freer, and we now have the tools to protect ourselves from poor monetary policy.

Let’s have a wonderful day ahead.

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

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

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

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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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4.6 stars on average, based on 134 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Market Update: U.S. Stocks Rattled by the Oil Bears

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U.S. stocks traded mostly lower on Tuesday, weighed down by slumping energy shares as crude prices extended their collapse to a record 12th session. Cryptocurrencies were mostly lower as markets shifted focus to the upcoming bitcoin cash hard fork scheduled in less than two days.

Stocks Settle Mostly Higher

The large-cap S&P 500 Index fell 0.2% to 2,722.18, reversing earlier gains. Five of 11 primary sectors finished lower, with energy shares plunging more than 2% as a collective.

Shares of information technology companies also rebounded from an early-week selloff, helping the Nasdaq Composite Index recover some lost ground. However, the tech-heavy gauge gave up most of its gains in afternoon trading, closing flat at 7,200.88

The Dow Jones Industrial Average fell 100.69 points, or 0.4%, to close at 25,286.49.

A rollover in the technology sector triggered a massive selloff on Wall Street Monday. This included a 600-point drop in the Dow and a nearly 3% plunge for the Nasdaq.

Oil Rout Intensifies

The oil-price collapse entered its 12th day on Tuesday, as U.S. futures prices plunged below $58 a barrel for the first time this year.

U.S. West Texas Intermediate (WTI) for December settlement touched a session low of $54.91 a barrel on the New York Mercantile Exchange, its lowest in over a year. The U.S. oil benchmark plummeted more than 8% on the day. Brent crude, the international futures benchmark, faced a similar setback, falling 7.2% to $65.19 a barrel on London’s ICE futures exchange.

The record loss demonstrates just how quickly market narratives can shift. A little over a month ago, analysts were talking about $100 a barrel oil as a distinct possibility sometime next year. Now, crude prices are struggling to avoid a protracted bear market.

Cryptoassets Slightly Lower

Most cryptocurrencies in the top-20 traded slightly lower on Tuesday, with losses ranging between half a percent and 3.5% over 24 hours. However, the combined market value of all coins in circulation was little changed at $211 billion, reflecting underlying stability in the bitcoin price.

Bitcoin, which accounts for 52.4% of the entire market capitalization, pared losses to settle just below $6,400, according to CoinMarketCap. As Hacked reported earlier, BTC traded at a large premium on Bitfinex following a renewed slump in Tether’s USDT stablecoin.

Bitcoin cash reversed a large slump to trade slightly higher ahead of a planned network-wide upgrade on Thursday. The schism, which is expected to produce two competing coins, appears to stem from a war between Craig Steven Wright and Roger Ver, the most prominent backer of bitcoin cash. Although Ver’s Bitcoin ABC has won support from major industry players, data on bitcoin cash mining pools suggest Bitcoin SV will control the lion’s share of the network’s mining power.

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 662 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Pre-Market Analysis And Chartbook: Trade Deal Hope Boost Risk Assets as Pound Surges

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Tuesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,737 0.27%
DAX 30 11,381 0.49%
WTI Crude Oil 59.10 0.41%
GOLD 1,203 0.20%
Bitcoin 6,291 -0.42%
EUR/USD 1.1265 0.42%

After yesterday’s equity selloff and Dollar rally today we are seeing a counter-trend move in most asset classes thanks to the reports regarding some progress in the US-China trade talks. The optimism has been sparked by the planned US visit by the main Chinese negotiator which points to a renewed interest on the Chinese side that withdrew from the talks.

Stocks are slightly higher before the US open, but the short-term uptrend that carried the major indices significantly above the October lows seems to be broken, with especially the Nasdaq being set for a re-test as soon as this week. Currencies and commodities are also very active today, and as volatility is increasing across asset classes, a busy US session is likely.

GBP/USD, 4-Hour Chart Analysis

The Pound continues to be the most volatile major currency, even as the Dollar has been in the center of attention since the Fed meeting, with the looming Brexit deadlines increasing the tension in the market of the GBP. Interestingly, the Euro has been underperforming the Pound lately, due to the Italy related worries, and today the Pound is significantly higher against all of its major peers.

The Pound was also boosted by the British Employment Report, as the healthy wage growth figure outweighed the weaker than expected Unemployment Rate, at least as far as the forex markets are concerned. The GBP/USD pair jumped higher off the key 1.2850 support/resistance level that has been “in play” several times in the last few months, but the broader downtrend remains unharmed by today’s move.

S&P 500 Futures, 4-Hour Chart Analysis

The technical troubles are mounting on Wall Street, with the key benchmarks all turning sharply lower off last week’s highs. The Dow, which has been the strongest index this month also broke its rising trendline and dipped below several short-term support levels, similarly to the slightly weaker S&P 500 and the lagging Nasdaq.

The S&P 500 is now testing the key support zone near 2750, and given the broader bearish setup, we expect the large-cap index to revisit the October low in the coming weeks, with even an accelerating selloff being in the cards. The weak market internals are also pointing to further troubles for stock bulls, and we still wouldn’t buy the dip here.

Emerging Market Weakness Casts a Shadow on Risk Assets

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

While the main risk on currencies is higher today, looking at the weakest links of the October risk-rout, emerging market and European stocks, the picture is not pretty. We looked at the DAX’s wounded chart yesterday, and the most important emerging market ETF also shows signs of distress, with a test of the bear market low being seemingly inevitable in the near future, especially given the broad weakness across the developed markets as well.

Copper Futures, 4-Hour Chart Analysis

Commodities are mixed today amid the Chinese optimism, with the increasing volatility in oil still being the most interesting trend in the segment. The WTI contract fell back below the $60 level after yesterday’s initial bounce, and although it only hit a marginal new low today, and we still expect a larger bounce in the coming days in oil, sellers are still in control of the market.

Gold dipped below $1200 for the first time in a month, as the precious metal failed to reverse last week’s breakdown, threatening with a test of the $1180 support level. Copper avoided a new swing low below the $2.65 level, for now, and the metal is still within its broad consolidation pattern, thanks to the renewed trade-deal optimism, with the broader downtrend clearly being intact.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

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 393 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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