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Daily Analysis: Catalonia Crisis Postponed

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Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2546 0.12%
DAX 12950 -0.21%
WTI Crude Oil 50.64 2.54%
GOLD 1293.00 0.58%
Bitcoin 4880 1.96%
EUR/USD 1.1806 0.57%

Financial markets are puzzled after the Catalonian president’s much-awaited speech, as Puigdemont called for a peaceful solution and a dialogue with the Spanish government, but also asked for a mandate to declare an independent Catalonia.  The Euro has been rallying throughout the day, and it climbed back above the 1.18 level against the Dollar, but safe-haven assets also advanced compared ot the Greenback in the nervous environment. Gold is now back near the $1300 level after dipping below $1275, even as global stock markets are still hovering just below their all-time highs.

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Gold, 4-Hour Chart Analysis

Besides the Euro, currencies were little changes, and equities were also trading with low volatility, despite the political tensions. The Great British Pound and other British assets continued their relief rally, as the positive surprise in Manufacturing Production helped the sentiment. The Japanese Nikkei outperformed the other major indices, as the Yen also climbed against most of its peers, but the moves remained muted. With the OPEC once again heating up the supply-cut argument, even asking the US shale producers to restrain output, crude oil jumped higher by almost 3%, but the long-term fundamental picture remains questionable

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Oil, 4-Hour Chart Analysis

Cryptocurrencies

The BTC-up-altcoin-down trend that accelerated yesterday cooled down during today’s session as Ethereum and NEO led a rebound in the segment. Despite the reversal, Bitcoin continued to show strength, topping $4900 after Puigdemont’s speech and pushing the market cap of the coins back above $155 billion for the first time since the recent crash. Ripple has been the other stand-out performer among the majors, but after the coin got short-term overbought, it entered a volatile correction, and dropped by almost 20% top to bottom before recovering a large chunk of the losses. Despite the altcoin-recovery, Bitcoin dominance is still above 52% thanks to the recent restructuring and the strong decline in the value of Bitcoin Cash.

ETH/USD, 4-Hour Chart Analysis

Technical Picture

The DAX is consolidating in a narrow range near the 13,000 level and the MACD indicator is showing a looming correction. That said, a brief break above the crucial level is possible but we expect a test of the 12,850 level before a sustained move higher. As the US indices are more stretched on every time-frame, the German benchmark should outperform them in the coming weeks, with support found near 12,650 and 12,500.

DAX, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
2:30 AUSTRALIA NAB Business Confidence 7 5
10:30 UK Manufacturing Production 0.4% 0.3% 0.5%
10:30 UK Goods Trade Balance -14.2 bill -11.2 bill -11.6 bill
14:30 CANADA Building Permits -5.5% -0.9% -3.5%

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
16:00 US JOLTS job Openings 6.06 mill 6.17 mill
20:00 US FOMC Meeting Minutes

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Analysis

Daily Analysis: Dollar Rally Continues amid Fed Chair Confusion

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Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2554 -0.09%
DAX 12995 -0.07%
WTI Crude Oil 51.53 -0.66%
GOLD 1287.00 -1.22%
Bitcoin 5652 -0.86%
EUR/USD 1.1751 -0.38%

Yesterday’s trends are mostly continued in financial markets, such as the low-volatility levitation in stocks and the slightly more active trading in currencies with the apparent Dollar strength. The Great British Pound continued to be under pressure amid the amplified Brexit-related worries, but most of the other majors also lost ground to the Greenback.

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The Dollar rally has been fueled by the rise in the odds of some of the hawkish Fed Chair candidates, while overall, the “race” for the positions looks more chaotic than ever. Interestingly, the long-end of the yield curve is refusing to follow the short-term moves, and without the effects of the Fed’s QE program, the yield curve would probably be inverted by now, signaling strong recession risks.

Dollar Index (DXY), 4-Hour Chart Analysis

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The major stock indices are virtually unchanged yet again and even the previously surging Nikkei entered a consolidation, adding to the unusual October lull. Commodities have been quite active thanks to the Dollar’s vigor, with crude oil and gold both turning lower. Oil gave back most of yesterday’s gains as the Iraqi-Kurdish conflict turned out to be less violent than previously feared, and the brief rally fizzled.

WTI Crude Oil, 4-Hour Chart Analysis

Cryptocurrencies

The major coins are having a mixed session at best, as yesterday’s rebound wasn’t durable, and most of the coins turned back lower again. That said, despite the recent choppy price action, the total market cap of the segment is close to its all-time high, even as only Bitcoin is trading near its own record price level.

The optimism regarding Ethereum major Byzantium upgrade wasn’t enough to lift the second most valuable coin today, and the price of the ETH token retreated below the key $330 level after touching $350 yesterday after the upgrade’s lock-in. Ripple and NEO have been among the most active majors today, but with opposing performances, as Ripple fell significantly after yesterday’s break-out attempt, while NEO defied gravity and jumped above the $30 level after a corrective period.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The S&P 500 is grinding higher despite the overbought short-term momentum readings, and the benchmark is trading very close to its all-time high. The 2550 level is still in focus, but until volatility remains near record lows, the minuscule moves are unlikely to change the technical setup. While a sudden drop in prices could quickly negate the recent break-out, the consolidation could very well lead to further upside, as bulls remain firmly in control, despite the lofty valuation levels.

S&P 500 Futures, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
02:30 AUSTRALIA RBA Meeting Minutes
10:30 UK CPI 3.00% 3.00% 2.90%
11:00 GERMANY ZEW Sentiment 17.6 20.3 17
12:00 EUROZONE Final CPI 1.50% 1.50% 1.50%
15:15 US Industrial Production 0.30% 0.40% 0.20%
15:15 US Capacity Utilization Rate 76.00% 76.20% 76.10%

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Analysis

Technical Analysis: NEO Jumps as Broad Markets Turns Lower

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As the new waves of regulatory changes keep on hitting the segment, the major cryptocurrencies are mostly lower today. After the major update of Ethereum, and the recent surge in the price of Bitcoin, choppy conditions developed, with no clear short-term trend in most of the coins.

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NEO is the best performing major today, as it surged back to the $30 level after a frustrating period that was dominated by a downward drift.  The coin is now just below the key resistance level, and it could be ready to test the $34 level, with a further target found at $40. The long-term picture still looks positive, with strong support levels at $27 and $25.

NEO/USDT, Daily Chart Analysis

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Ethereum is in a consolidation after the encouraging rally towards the end of last week, while Bitcoin is also correction after its stellar rise. The two largest coins pulled the rest of the majors lower, while Ripple remained very volatile after touching the $0.30 level yesterday, trading below the $0.26 again.

Litecoin, Dash, Monero, and IOTA are all a bit lower today, while Ethereum Classic found some relative strength, although it remains stuck in a declining short-term trend. All in all, the segment is still in a clear uptrend, so let’s see which coins are the most promising regarding the short-term picture.

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Analysis

Daily Analysis: Volatility Near Record Low 30 Years After Black Monday

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Monday Market Recap

Asset Current Value Daily Change
S&P 500 2555 0.12%
DAX 13003 0.09%
WTI Crude Oil 51.88 0.82%
GOLD 1296.00 -0.61%
Bitcoin 5680 2.95%
EUR/USD 1.1793 -0.25%

Stocks markets in the US are at a standstill near their all-time highs, with the major indices trading in extremely narrow ranges yet again. Volatility, as measured by the VIX, is close to its all-time high, in stark contrast to the average October readings, as this month is the most negative for equities regarding seasonality. In fact, this October is the least volatile ever so far, while this week is the 30th anniversary of the most volatile day ever on Wall Street.

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A Riskless Market?

On Black Monday in 1987, the Dow crashed by more than 23% during one session, as widespread bullishness coupled and novel portfolio techniques lead to a massive wave of selling. Although such one-day moves should be prevented by circuit breaking rules in today’s market, the notion that risk is non-existent in the current environment is as dangerous as it was three decades ago.

VIX, Weekly Chart

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Stocks have been very quiet across the globe today, with only the Nikkei continuing its break-out to two-decade highs yet again. In Europe, British assets were the most active, as the Brexit talks seem to be in quite a big trouble, and that pushed the Pound and the Euro lower compared to the Dollar. The Greenback’s rally put pressure on gold as well, and the Japanese Yen also declined, as safe-haven assets were sold in the calm environment.

Nikkei Index, 4-Hour Chart Analysis

Oil has been very active as the Iraqi army took control of Kirkuk defying the Kurdish resistance, the WTI contract rose as much as 2% before retreating below the $52 per barrel level, and as we speculated during the weekend, the spike is unlikely to cause a structural change in energy markets, and we expect the range trading environment to continue in the crucial commodity.

WTI Crude Oil, 4-Hour Chart Analysis

Cryptocurrencies

Today was a big day for the crypto segment thanks to the Byzantium update of the Ethereum network, and although the hard fork went smoothly, the session ended on a slightly negative note. Ethereum pulled back towards the $330 support/resistance level, while Bitcoin remained stuck near the $5700 level after recovering from Sunday’s dip.

Ripple has been the other major mover of the day as the coin first surged higher and hit the $0.30 resistance just to fall back swiftly below the $0.26 level towards the end of the day. Despite the decline, the currency is still in a clear uptrend, but more volatile moves are expected in its price. Among the smaller coins, Stellar Lumens more than doubled in price after the announcement of a deal with IBM, as blockchain adoption continues in full force, pointing out the sound fundamentals behind the boom in the segment

ETH/USD, 4-Hour Chart Analysis

Key Economic Releases on Monday

Time, CET Country Release Actual Expected Previous
3:30 CHINA CPI 1.6% 1.6% 1.8%
3:30 CHINA PPI 6.9% 6.3% 6.3%
14:30 US Empire Manufacturing Index 30.2 20.3 24.4

Key Economic Releases on Tuesday

Time, CET Country Release Expected Previous
2:30 AUSTRALIA RBA Meeting Minutes
10:30 UK CPI 3.0% 2.9%
11:00 GERMANY ZEW Sentiment 20.3 17.0
12:00 EUROZONE Final CPI 1.5% 1.5%
15:15 US Capacity Utilization Rate 0.4% 0.2%
15:15 US Industrial Production 76.2% 76.1%

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