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Market Overview

Currency Manipulators

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Hi Everyone,

Hope you’re having a fantastic day. Writing to you from sunny London today. 🙂

All markets are currently on the edge as we’ll see below. Stocks seem to be near their highs but showing signs of weakness. Cryptos are stable with a good chance of a breakout.

What many people aren’t watching, but probably should, is the bonds markets. Yields on some bonds have shot up to their highest levels since 2011.

With any luck, things are about to get exciting.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Currency Wars
  • Bond Watch
  • Crypto Volumes

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

Traditional Markets

As we discussed in Monday’s update (titled: The New World), China has recently moved to inject more money into their financial system by adjusting their bank cash reserve requirements. Today

Donald Trump made the issue of “Chinese currency manipulation” a cornerstone of his presidential campaign. However, until today it hasn’t really played into trade discussions.

Later this month the US Treasury is set to release its report on currency issues and we’ll be watching that very closely. If the US does officially label China a “currency manipulator”, it could have very serious ramifications.

Bond Watch

As we mentioned above, the bond markets are showing some concerning signs.

Here we can see the yield on the US 10-year note, which has been rising steadily all year. Please notice the spike since the start of October…

As interest rates go up, the tendency is for bond rates to follow. Because the yield trades conversely against the price of the bonds, this spike means that people are selling.

Over the last week or so, stock traders have been prone to selling when they see their bond brothers doing so.

Crypto Volumes

As mentioned above, and in yesterday’s update, the development of bitcoin is coming to a head. One of the side effects of this is that volumes have recently been quite flat.

In this chart from coinmarketcap.com we can see the volumes of the entire crypto industry (black bars) over the last year, along with the total market cap of all the cryptos listed on the site.

While volumes have gone down it has put some crypto exchanges to the test. Most notably, Coinfloor, the UK’s oldest exchange, has announced that they’ll be consolidating their operations.

What’s important to note here is that volumes aren’t actually going down, they’re simply flattening out. The numbers reported are running steady above $10 billion per day. Though it’s much less than $67 billion that was seen at the start of the year, it’s still notably higher than the sub $1 billion that we were used to seeing throughout the first half of 2017.

No matter what anyone might be telling you, the industry is growing at a very rapid pace.

Have an excellent day!!

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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Market Overview

The Easy Way In

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Hi Everyone

It’s quite natural to think that the news influences markets but in many cases, it simply isn’t true. People move markets.

In traditional markets, we see often how an announcement regarding employment or inflation, or an interest rate decision from a central bank can have a huge impact on prices.

This is mainly due to the vast number of investors who are anticipating these type of events and are ready to deploy a large amount of capital at the drop of a hat.

In crypto, we simply don’t have that just yet. You’d think that news of half a dozen major financial institutions will be opening new options for cryptotrading and cryptoasset solutions would have an effect on prices but they’ve so far remained stable.

So it’s not surprising that LibertyX and Genmega are about to convert 100,000 ATM machines across the USA into user-friendly bitcoin vending machines has had no impact on the price of bitcoin.

What this does do though is builds the infrastructure that will be necessary for mass adoption, so that when people do decide to buy, they’ll have an easy way in.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Asia Rally Over
  • Flight to Safety
  • Crypto Correlation

Please note: All data, figures & graphs are valid as of October 23rd. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Looks like Monday’s massive rally in Asia has been short-lived. By the time the bell rang on Wall Street, the mood had already turned sour and stocks across the board ended up down.

The only exception, oddly enough, was the Faang stocks, which managed to hold up the Nasdaq. As we discussed in yesterday’s update investors are looking to invest, but cautiously. Well, it looks like they found their refuge in the top tier brands.

The exception we can notice above is Netflix which dropped with the rest of the market. Also, it’s worth noting that even the Nasdaq futures are down this morning and the entire market threatens to break lower.

Here we can see the S&P500, which is sitting firmly below its 200 day moving average (blue line).

Perhaps the light at the end of the tunnel here is the upcoming earnings reports that will be closely watched by investment managers.

Flight to Safety

As the stocks turn red, we can see some clear signs that the other markets are looking for some safety. Turkish President Erdogan isn’t helping much either with strong accusations against the Saudi government over the Khashoggi incident.

Some are buying bonds as a way to lower the risk. As well the Japanese Yen is up sharply due to its status as a safe haven currency. This graph shows the greenback bowing to the Yen (this morning in the purple circle).

Of course, the most vulnerable at the moment are the emerging markets currencies, which are performing particularly poorly today.

Another clear sign of safe haven trading is the fact that gold has broken out to the upside making significant stretch into fresh highs and now trading at the highest levels since July.

Crypto Follow?

Though we’ve pointed out recently that crypto assets bear only a very small correlation with the stock market, they still are considered to be a high risk asset.

We have seen several times before where fear in the stocks has managed to spill over into the crypto markets and that might just be what’s happening at the moment.

The declines in crypto are very light today. This could be because, as we mentioned above, the tech sector seems to be mostly shielded from the current sell-off. In any case, there’s no denying that bitcoin and the Nasdaq are moving in tandem today.

Wishing you an excellent 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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4.6 stars on average, based on 133 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Pre-Market Analysis and Chartbook: Stocks Plunge as Chinese Rally Fades

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Tuesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,713 -1.59%
DAX 30 11,282 -2.06%
WTI Crude Oil 67.72 -2.11%
GOLD 1,241 1.38%
Bitcoin 6,393 -0.20%
EUR/USD 1.1469 0.05%

The major global stock indices are all significantly lower today just after the US open, with several European benchmarks hitting new multi-month and multi-year lows after the recent bounce. Chinese stocks turned south after the strongest two-day rally in years, and although the local markets remain above their recent bear market lows, the shift weighed heavily on sentiment across the globe, with the Nikkei also getting below last week’s minimum level.

DAX 30 Index CFD, 4-Hour Chart Analysis

In Europe, the DAX is the weakest major index again, and German stocks confirmed the long-term breakdown that we have been following in recent weeks. Today, chemical giant Bayer is pushing the benchmark lower, but the weakness in auto-makers also continues to drag equities lower together with the struggling financial sector.

Spreads between Italian and core Eurozone government bonds are still wide, as the budget debate continues to pressure Italian assets, and despite the relative stability of the Euro, European equities are in deep trouble.

EUR/USD, 4-Hour Chart Analysis

The Euro is hanging on a thread above its monthly lows against the US Dollar, while the broader Dollar index hit a marginal new 2-month high today. All eyes are on the European Central Bank and Italy this week, and with the US midterms approaching, things can get wild in currencies in the coming days, especially given the rising volatility in equities, and the general risk-off shift.

While the EUR/USD pair is trading below the 1.15 level, the Dollar failed to show momentum against the common currency with buyers consistently stepping in near 1.1440. That said, the broader downtrend is clearly intact, and a test of the support zone near 1.13 still seems like the most likely scenario in the coming weeks.

S&P 500 Hits New Correction Lows as VIX Eyes 25 Level

S&P 500 Futures, 4-Hour Chart Analysis

US index futures had an ugly overnight session before the pre-market earnings dump, with the Asian selloff dragging the major indices lower. While the Nasdaq is holding up above its recent lows, the Dow and the S&P 500 plunged well below their multi-month lows, and the small-cap Russell 2000 also opened deep in the red, below its correction low as well.

Short-term technicals continue to scream sell in the US, with the weak bounce clearing the bulk of the oversold momentum readings with regards to the key benchmarks, and with market internals still being very negative. For now, we would still not buy the dip here, especially as we see no major positive divergences in global markets either.

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

Looking at the Volatility Index (VIX), the regime change that we were speculation on at the start of the correction seems to be confirmed, with the VIX getting back very easily above the line-in-the-sand 20 level. The index neared the 25 level pre-market, and although the panicky 30 level is still well above the current zone, a concerted move below the lows could spark a renewed surge in the VIX as early as today.

This leaves a protracted correction as the best-case scenario for US stocks, but as usual with bearish trends, violent counter-trend rallies are expected along the way, punishing late shorts and resetting the negative sentiment.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 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

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

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 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

Copper 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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4.6 stars on average, based on 380 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

Global Stocks Plunge Again as Erdogan Pins Khashoggi Death on Saudi Arabia

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Equity markets from Asia to North America took a beating on Tuesday after Turkish President Recep Tayyip Erdogan accused Saudi authorities of planning a “premeditated murder” of journalist Jamal Khashoggi. The journalist, who was considered a dissident by Riyadh, was last seen entering a Saudi consulate in Istanbul, Turkey three weeks ago.

Stocks Resume Selloff

Global markets were down sharply on Tuesday, with Asian stocks giving back some of yesterday’s gains. China’s benchmark Shanghai Composite Index fell 2.3% while the broader CSI 300 Index closed down 2.7%. In Japan, the Nikkei 225 index fell 2.7%.

Europe’s major bourses were down between 0.8% and 2.3%. The pan-European Stoxx 600 was down 1.4% at last check.

U.S. stock futures sold off during pre-market hours, with the Dow Jones mini falling 437 points as of 9:17 a.m ET. S&P 500 futures declined 44.25 points and the Nasdaq 100 plunged 135.50 points.

The CBOE VIX, also known as the “fear index,” was up more than 21% as of 9:14 a.m. ET.

Erdogan Blames Saudis for “Savage” Khashoggi Murder

The Turkish president on Tuesday said he has proof that Saudi Arabia carried out a premeditated murder of Jamal Khashoggi at one of its royal consulates in Istanbul. According to Erdogan, a team of 15 Saudi officials arrived in stages in Istanbul to carry out the attack. The Saudis reportedly conducted reconnaissance outside the city where Khashoggi’s remains are believed to have been buried.

“It is clear that this savage murder did not happen at the drop of a dime but was a planned affair,” Erdogan said in a firm challenge to the official Saudi account, which claims that Khashoggi was killed accidentally in a brawl.

“Why was the 15-man Saudi team in Istanbul on the day of the murder?” he asked, as quoted by The New York Times. “On whose orders? We are seeking answers. Why was the consulate not opened to investigators immediately? When the murder was so clear, why were there so many different statements given by Saudis? Why has the body of someone, the killing of whom has been officially admitted, not been found? Who is the local collaborator who disposed of Khashoggi’s body? Saudi must answer all these questions.”

The Saudis have faced international backlash for their alleged role in Khashoggi’s disappearance, with several leading U.S. executives backing out of a high-profile investment conference in Riyadh. U.S. President Donald Trump has also stated he is “not satisfied” with Saudi Arabia’s official response, a sign that the matter will remain on the front burner.

Like past presidents, Trump must tread carefully in how he approaches Saudi Arabia given the country’s over-sized influence on the U.S. economy. From oil to arms sales, the Saudis have a direct impact on the U.S. labor market as well as its energy needs.

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 649 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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