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Market Overview

Doomsday Anniversary

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Hi Everyone,

Tomorrow marks the 10th anniversary of the financial crisis.

The International Monetary Fund has sent out a quick poll on Twitter today. Though there are still a few hours until the poll ends, it seems like the answer they’re getting isn’t exactly what they were looking for…

Former Fed Chair Janet Yellen has famously said that “there will not be another financial crisis in our lifetime” yet it seems that other analysts are pencilling one in for 2020. Further still, former governor of the Bank of England says that “we’re sleepwalking into the next crisis.”

Over the last decade, the governments and central banks of the world have done a great job of providing an abundance of new liquidity into the markets. However, some certainly feel like this has been overdone. At this point, if another downturn were to take place, the tools with which to deal with them have most likely been used up.

As an investor, the best strategy is usually one of cautious optimism. For the time being things are going great and there are many opportunities but the one thing I believe many have learned is to always be prepared for whatever may come.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Another Doomsday Warning
  • AMD Goes Parabolic
  • More Crypto Adoption

Please note: All data, figures & graphs are valid as of September 14th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

In addition to all the predictions surrounding the ominous date mentioned above, one central banker is pointing to a very specific catalyst that he thinks could cause a 2008 like financial crisis.

Of course, this should be seen as a worst case scenario and not an apocalyptic prediction. Carney’s last major warning came before the Brexit referendum when he said that the Pound Sterling could fall sharply should the referendum pass.

Those warnings did, in fact, come to pass. The purple circle on this graph shows the night of the referendum and the Pound’s steep decline that day. The effect of which, in Carney’s view, will only be amplified should the UK leave without a deal.

Switching gears but looking at the same theme. Storm watchers continue to focus on hurricane Florence, which has now left more than 150,000 people without power. Any effects on the financial markets are yet to be determined.

AMD Stock or Bitcoin Graph?

Several participants in yesterday’s webcast surprised me by asking to look into AMD stock.

Indeed, I had seen a bunch of headlines about the company but as I’m mostly focused on macro and globally traded assets, I largely ignored them. Looking at the graph for the first time during our livestream was quite a shock.

As you can see, the stock’s value has surged 277% since April 1st. The chart almost resembles bitcoin’s hockey stick pattern from last year.

For all I can tell, the profits of this company haven’t tripled in the last 5 months, so my feeling is that buyers are simply following some sort of Wall Street fad.

Many investors are on the lookout for the next big thing. Tired of pouring all their funds into FANGs, they need something fresh to diversify with and many analysts are giving bullish calls on this one.

I’m not saying that it’s overbought at this point or that it won’t go further. All I’m saying is that with this type of volatility, the stock should be treated as a high-risk asset.

Crypto Adoption on Wall Street

Last week, Citigroup made waves by announcing that they have created a new way to invest in cryptocurrencies. Now, Morgan Stanley is following suit

Though it might be taking longer than some were expecting, adoption of cryptotrading on Wall Street is going ahead as planned.

Famed WS Cryptoanalyst Mike Novogratz has now officially called the bottom of the market!!

As always, please feel free to contact me directly with any questions, comments, or further insight.

Wishing you an outstanding weekend!

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: S&P 500, Dow Hit Record High Amid Global Rally

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The major global indices are marching higher in a concerted fashion today, as the risk-on shift that started after Trump’s trade announcement continues in earnest. Asian stocks were up, but not enthusiastic, while European equities are strong, with the major benchmarks being around 1% higher today. The US market is still the island of bulls, and with the surging past the January highs, all of the major indices left behind the deep correction that started with the VIX-induced crash in February.

S&P 500 Futures, 4-Hour Chart Analysis

The S&P 500 is also trading at its record high after the open, and although the Nasdaq is still shy of its respective all-time high, and small caps haven’t joined the party either, the technical advantage of Wall Street is striking.

The Dollar’s dip is clearly helping risk assets globally, even as emerging markets are not particularly strong, since the rising US Treasury yields are making some investors cautious amid the risk rally.

10-year US Treasury Yield, 4-Hour Chart Analysis

The bond selloff, or yield surge, is arguably the most important trend of the current market, and as the Fed’s meeting will take place next week and there are no crucial events before it, the trend could even accelerate before the likely rate hike.

Whatever happens, yields are already at multi-year highs across the curve, and the tighter credit conditions will likely further squeeze the most vulnerable countries in the next risk-off period.

Euro Hits 2-Month High as Dollar Still Under Pressure

EUR/USD, 4-Hour Chart Analysis

Economic releases were clearly on the bullish side today, with British Retail Sales and the Philly Fed index both beating the consensus estimate. The British measure was a huge positive surprise and that helped the Pound and the Euro in hitting two-month highs against the USD, which has been drifting lower against most of its major peers during the current risk-on shift. The EUR/USD pair topped the 1.1750 level before pulling back slightly, while the GBP/USD pair is trading above 1.32 currently.

Copper, 4-Hour Chart Analysis

Commodities haven’t followed stocks higher today, with copper and the WTI Crude contract both losing some ground. Copper still failed to show meaningful strength, and it was hurt today by the relative weakness of the Chinese stock market as well.

On the other hand, precious metals ticked higher, with gold edging closer to its one-month high near $1220, thanks to the weakness in the Dollar. Gold might be ready for a stronger rally, as its stability amid the rising Treasury yields is impressive following months of weakness.

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 348 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

Is Cannabis the New Crypto?

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Hi Everyone,

Cannabis stocks have been getting incredibly high lately and through the haze, it’s not difficult to see why. With the recent push towards legalization of cannabis in the United States and breakthroughs in medicinal marijuana,  many are seeing huge potential in this emerging industry.

Now some on Wall Street are asking the question….

For crypto enthusiasts, the answer seems to be no. A poll that I put out on Twitter a few hours ago is showing that many of my followers have a clear opinion on this one.

The great thing is, we don’t really have to make a decision on this one. Luckily, the rules of portfolio management are in favour of diversification. So we can take advantage of many different trends at the same time. In fact, the more we diversify the better.

Of course, similar to crypto-assets, when we see this type of volatility and short-term gains, it’s probably best to treat these stocks as a high-risk investment and therefore they should probably only be a small part of a well-diversified portfolio.

That said if you are interested to diversify into companies that deal in medicinal marijuana, the eToro @CannabisCare CopyPortfolio is still open for new investors today. The full details on that can be seen here.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Fighting Fire with Ice
  • New Crypto Hack
  • Ripple in the Market

Please note: All data, figures & graphs are valid as of September 20th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The Chinese government has seemingly chosen to fight fire with ice.

Yeah, the above headline made me do a double take too.

Yes, China has responded to Trump’s latest round of tariffs with some tariffs of their own, but in conjunction, they are reducing tariffs across the board on some products for all of their trading partners including America.

Stocks in Asia and Europe are enjoying the new sentiment as it indicates a greater level of globalization than we’ve been seeing lately.

Zaif Crypto Hack

Zaif is not safe. The Japanese crypto exchange was just hacked for approximately $60 million worth of BTC, BCH, and something called MonaCoin.

In comparison, the attackers of CoinCheck got away with about $500 million in crypto, and the Mt. Gox hack ended up with losses of around $450 million.

I’m tempted to say that these two price fluctuations were caused by the hack but it does seem that the timing is a bit off.

News of the hack began circulating about 12 hours ago (as of the time of this writing) and the volatility of this chart was over about 6 or 7 hours before that.

Even still, we can see that the end result of the above was higher prices. So the conclusion is that the hack hasn’t affected the market but what is clear is that Japanese companies should probably be investing more in cybersecurity.

Ripple in the Market

Crypto markets have been remarkably stable over the last few months. Sure, there is some FUD in the market surrounding Ethereum prices and their testing of the $200 mark, but even ETH is up 19% over the last 7 days.

The real winner in the graph below is XRP though. Check the blue line with a sudden breakaway from the rest of the crypto market on Tuesday afternoon.

The reason for the spike isn’t entirely apparent but the staff at Ripple Labs seem rather excited about it. As with the above story about Zaif, the market seems to be reacting prior to the news.

The specific story that Garlinghouse was retweeting was published on Ripple.com on Wednesday.

Either way, it is a positive update for the integration of XRP into the US financial system, so the 20% spike actually seems a bit light.

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

Markets Looking for Direction as Dow Eyes All-Time High

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Global stocks have been trading without clear direction so far today, even after Asia kicked off the day in a bullish fashion, with the Shanghai Composite rallying for the second session in a row following Trump’s tariff announcement. The Nikkei retreated a bit after its recent surge, but Europe followed China’s lead and the majority of US stocks are also sporting gains, even as the Nasdaq is in the red, with the likes of Amazon (AMZN), Microsoft (MSFT) and Apple (AAPL) lagging behind.

Dow 30 Index Futures, 4-Hour Chart Analysis

The Dow, which has been relatively strong in the past weeks is outperforming again, thanks now mainly to the jump in mega-cap banks, and the index is edging ever closer to its all-time high from January which is less than 1% away currently. Should the industrial average set a record high, the correction that started with the February mini-crash would be erased by all the US indices, further widening the divergence compared to the rest of the world.

DAX 30 Index CFD, 4-Hour Chart Analysis

Looking closer at Europe, the DAX is trading at its highest level since the first days of the month, similarly to the EuroStoxx50, but the longer-term downtrends are not in danger yet. British assets were in the center of attention today, since the CPI came in higher than expected in the UK, giving a brief boost to the Pound in the generally choppy environment in the Forex segment.

In the US, the housing market provided the most excitement, with building permits significantly missing the consensus estimate of 1.31 million, coming in at 1.23 million, while housing starts beat expectations with 1.28 million units vs. the 1.24 units expected. The sector remains under pressure from rising rates, and activity is clearly below the cycle-peak earlier this year.

US Yields Continue Surge after the BOJ Meeting

2-year US Treasury Yield, 4-Hour Chart Analysis

The upward pressure on yields is apparent today again, with Treasuries plunging and rates rising across the curve. Today, the 30-, 5-, and 2-year yields all hit multi-year highs, and the 10-year yield is also close to the highs it hit in May, as rate hike odds continue to climb before next week’s Fed meeting.

USD/JPY, 4-Hour Chart Analysis

The Bank of Japan didn’t surprise the market today, sticking to its policy despite some recent tightening rumors, and the Yen is virtually unchanged after the decision, with a slight bullish bias.

Gold Futures, 4-Hour Chart Analysis

Commodities are higher today, even as copper gave back most of its early gains, with gold drifting higher towards the $1210 level and WTI crude oil getting back above the key $70 per barrel level. The precious metal is boosted by the slightly weaker Dollar, while oil gained ground after the larger than expected crude inventory draw 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 348 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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