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Daily Analysis: Stocks Slide as Yen Marches Higher

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Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2352 -0.05%
DAX 12260 0.05%
WTI Crude Oil 50.55 0.60%
GOLD 1258.50 0.41%
Bitcoin 1139 1.15%
EUR/USD 1.0653 -0.16%

 

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Stock markets are trading slightly lower today, led by the Japanese market, as the Bank of Japan might be the latest central bank that’s contemplating the end of its Quantitative Easing program (also known as money printing). The Japanese Yen gained ground against the major currencies overnight, and that weighed heavily on the Nikkei, as export-focused companies are negatively affected by the strong currency. US futures extended their losses from yesterday and European stocks are also lower, despite remaining relatively strong.

Gold is among the winners of the day so far, as the Shiny Metal is testing its recent highs near the $1260 level in the face of the relatively strong US Dollar. The slightly negative global sentiment is helping precious metals, the Yen and the Swiss Franc as well. WTI Crude Oil is still above the $50 per barrel level, holding on to its gains from last week. The Australian Dollar and the New Zealand Dollar are the losers of the day, as the Reserve Bank of Australia left its interest rate unchanged at 1.5% and released a cautious statement regarding the economy. The British Pound is also under pressure again as the construction PMI caused another negative surprise this morning.

Cryptocurrencies are very active once again, with trading volumes being elevated across the board. Amazingly enough, Ripple almost re-tested the 0.025 level yesterday after trading as high as 0.075 earlier on. Today the most active altcoin has been trading around the 0.035 level.  itcoin breached the $1150 level, as it continues to creep higher following the deep correction. Dash found support near the $60 level and it might be building a base after the heavy selling last week. Monero is still holding up above $20 while Ethereum fell another 10%, and it’s now near the $40 level, while Litecoin is consolidation near the $8 level.

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Ripple/Bitcoin, 4-Hour Chart

Technical Picture

XLF (US Financial Sector ETF), 4-Hour Chart Analysis

Technicals deteriorated somewhat since yesterday, as the weaker indices failed to follow the lead of the DAX and the Nasdaq, and the S&P 500 slid below the crucial support/resistance zone near the 2355 level. The 2332 level is the next important support level for the most-watched benchmark if the current declining wave reaches below yesterday’s low at 2340 (see our investment recommendation). The financial sector had a negative day yesterday, and as we pointed out in last week’s review, banks have been leading the market in the last two and a half weeks. The $22.87-$23 support zone could be in the focus in the coming days.

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
6:30 AUSTRALIA RBA Rate Decision 1.50% 1.50% 1.50%
10:30 UK Construction PMI 52.2 52.5 52.5
14:30 CANADA Trade Balance -1 billion 0.7 billion 0.8 billion
 14:30 US Trade Balance -43.6 billion -46.7 billion -48.5 billion
16:00 US Factory Orders (monthly) 1.00% 0.90% 1.2%

 

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
10:30 UK Services PMI 53.5 53.3
14:15 US ADP Employment Change 225,000 298,000
16:00 US ISM Non-Manufacturing PMI 57 57.6
16:30 US Crude Oil Inventories 0.9 million
20:00 US FOMC Meeting Minutes
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Analysis

Daily Analysis: Dollar Falls, Gold Jumps after Yellen’s Final Move

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2668 -0.02%
DAX 13125 -0.45%
WTI Crude Oil 56.65 -0.68%
GOLD 1258.00 1.35%
Bitcoin 16,100 -6.32%
EUR/USD 1.1842 0.73%

The Federal Reserve hiked interest rates as expected today, and although the central bank’s monetary statement was slightly more hawkish than expected, the market’s reaction didn’t reflect the much-anticipated move. The worse than expected Core CPI reading that underlined the low-inflation narrative weighed on the recently strong Greenback, while stocks were unchanged after decision and bonds gained ground as yields retreated.

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EUR/USD, 4-Hour Chart Analysis

The major indices are hovering near their all-time highs with the DOW leading the way higher, hitting a new record for the second day in a row. While volatility Is expected to remain low as we approach the end of the year, market internals and valuation levels are still concerning from a long-term perspective, and stocks outside the US are also negatively diverging. The action in crude oil could be slightly more interesting as the commodity is starting to act in a slightly bearish manner after a grinding multi-month rally.

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WTI Crude Oil, 4-Hour Chart Analysis

The Brexit process is still in the center of attention in Europe, although volatility took a nosedive on the old continent as well, and it’s unlikely that the Christmas period will be much different, given the predictable drop in volumes and trading activity. The date of the next election in the financially and politically troubled Italy has been set to March 4th next year, and the early date caused some turmoil in the countries assets, which dragged the Euro Stoxx 50 lower today, together with the DAX and the other major indices.

Cryptocurrencies

As the total market cap of the crypto-market crossed the incredible $500 billion mark, Ripple, NEO, and Ethereum made headlines with lofty gains in the face of the severely overbought readings elsewhere in the segment. While XRP and NEO are still not overbought from an investment perspective, Ethereum reached our final target for its break-out and triggered a long-term sell signal.

ETH/USD, 4-Hour Chart Analysis

The previously surging IOTA continued its correction, Litecoin consolidated in a relatively narrow range, while Dash, ETC, and Monero scored marginal new highs before turning lower together with BTC. The most valuable coin that has lost some of its momentum “mojo” in recent days fell back below last week’s highs, and that could mark a failed break-out and a start of the deeper correction that seems more and more likely.

BTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
11:30 UK Average Earnings 2.5% 2.5% 2.3%
11:30 UK Claimant Count Change 5,900 3,300 6,500
11:30 UK Unemployment Rate 4.3% 4.2% 4.35
15:30 US Core CPI 0.1% 0.2% 0.2%
15:30 US Crude Oil Inventories -5.1 mill -3.6 mill -5.6 mill
21:00 US Fed Rate Decision 1.5% 1.5% 1.25%
21:00 US FOMC Statement

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Analysis

Technical Analysis: Volatility on the Rise Again, as Ripple and Ethereum Hit Targets

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Ripple has been the star of today’s session in the cryptocurrency segment, as the only major coin on a long-term buy signal in our trend model continued yesterday’s break-out, and surged to a new all-time high. The currency cleared the $0.425 level that marked the top in May, and after the more than 6-month long consolidation phase, it promptly neared the $0.50 level.

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While the short-term momentum indicators are now stretched, the coin is still in an encouraging long-term setup, although the best period to buy already passed. The coin could be dragged lower in the case of the expected broad correction in the segment, but we expect XRP to outperform in the coming period, with support levels found at the prior high and below that in the range between $0.30-$0.32.

XRP/USDT, 4-Hour Chart Analysis

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Ethereum has been the other top coin on the rise, as the second largest digital currency surged past the final range projection target of the break-out two weeks ago at $685 in the aftermath of the launch of the BTC futures on Monday. The ETH token is now also on a sell signal on all time-frames, and we advise investors and investors to wait for the next major correction to establish new positions. Support levels are now found at $575, $500, $480, and $400.

ETH/USD, 4-Hour Chart Analysis

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Analysis

Technical Analysis: Bitcoin Grinds Higher as Records Tumble in Altcoins

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The historical surge in the segment, which is the second such move this year, continued today, with another round of break-outs in some of the major altcoins and tepid gains for BTC investors. Ethereum, Ripple, Dash, and first and foremost Litecoin was leading the charge, with the recent star LTC topping $300, just after a day of hitting the $200 mark.

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Litecoin defied all odds after reaching extremely overbought readings, and the coin rode the speculative wave, turning exponential, not unlike IOTA and Bitcoin previously. With the coin being stretched in an unprecedented way on all time-frames, investors could even consider selling their core positions at the current levels, as a deep correction is almost granted in the coming period. The first meaningful support level is found at $125, and a re-test of the $100 level is probable during the next major correction.

LTC/USD, 4-Hour Chart Analysis

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Ripple finally ended a long period of relative weakness today, and the only major on a long-term by signal jumped over primary resistance at $0.26 and crossed the $0.30-$0.32 too in the euphoric sentiment. As the coin is not long-term overbought following the 6-month long consolidation, the buy signal in XRP remains intact, with the only major resistance level being found at the all-time high near $0.425.

XRPUSDT/USD, 4-Hour Chart Analysis

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