Connect with us

Market Overview

Dow’s Relentless Surge Shows Signs of Slowing as Markets Ponder Overvaluation Risks

Published

on

The Dow Jones Industrial Average posted its seventh straight record close on Thursday. However, growth came by the narrowest of margins as Wall Street tempered its appetite for stocks.

// -- Discuss and ask questions in our community on Workplace.

The Dow’s Remarkable Story

Earnings results from several blue-chips have pulled the Dow Jones into record territory. Gains continued on Thursday, with the index inching up less than one-tenth of a point to 22,026.10. That represents a year-to-date return of 11.5%.

But amid the euphoria are signals that the Dow may be approaching its top. Of course, very few of us recognize that the top has occurred until it’s too late. That was certainly the case during the last two financial crises.

Are We Nearing the Top?

Barron’s recently identified three eerie characteristics that have defined some of the biggest market tops in history.  They include overvaluation, a struggling financial sector and significant divergences.

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

Overvaluation represents much more than how investors feel about a particular stock. Value indicators such as price/earnings, price-to-book and price-to-dividend ratios have done a pretty good job of signalling when the market is overvalued. While these indicators alone do not prove that the market has reached its tipping point, almost all tops in history have begun when these indicators became overvalued.

A struggling financial sector is also a precursor to a peak, as we saw in the post-1970 bull market and then again in 2007. When financials begin to sour, investors should seek refuge.

Significant divergences are another indicator of an unhealthy market that is about to peak. When divergence occurs, fewer stocks participate in the uptrend. This can only go on for so long until the market begins to buckle.

Based on this analysis, the Dow Jones may be approaching a market top, but isn’t there yet. Aside from overvaluation, there isn’t much evidence of divergence and even fewer indications that financials are about to crumble.

Attention Shifts to Politics

President Donald Trump, who many say is the chief catalyst behind the latest bull run, is looking keep the rally going indefinitely. Failing healthcare reform, the president is turning his attention to immigration and free-trade. The Trump administration has already put forward a plan to curb illegal immigration and boost the retention of skilled workers. Beginning Aug. 16, the administration will also embark on NAFTA renegotiation with Canada and Mexico.

While August is typically a slow month on Wall Street, political specter will provide plenty to talk about.

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.5 stars on average, based on 358 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Market Overview

Market Update: Stocks Rise on Tech Earnings; Cryptocurrencies Stabilize Following Correction

Published

on

U.S. stocks surged on Thursday after a string of tech earnings blew past expectations and economic data renewed confidence in the domestic recovery.

// -- Discuss and ask questions in our community on Workplace.

Stocks Surge

Thursday was a strong session for all of Wall Street’s major indexes. The Dow Jones Industrial Average rose 238.51 points, or 1%, to 24,322.34. Twenty-five of 30 index members contributed to the gains.

The broader S&P 500 Index rose 1% to 2,666.94, with nine of 11 sectors advancing.

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

Technology shares rose more than 2% after Facebook (FB) reported a 63% increase in profits during the first quarter. Advanced Micro Devices (AMD) also surged after reporting stronger than expected earnings.

A strong tech sector lifted the Nasdaq Composite Index sharply higher on Thursday. The tech-driven gauge added 1.6% to finish at 7,118.68.

In economic data, U.S. jobless claims plunged last week to their lowest levels in 48 years, a strong sign that the domestic labor market was on solid footing.

The number of Americans filing for first-time unemployment benefits dropped 24,000 to a seasonally adjusted 209,000 in the week ended Apr. 21, the Department of Labor said. Analysts in a median estimate called for a slight drop to 230,000.

U.S. Dollar Rallies

Strong economic data helped the U.S. dollar extend its bullish breakout to more than three-month highs. The dollar index (DXY), which is evaluated against a basket of six rival currencies, rose 0.4% to 91.59.

A stronger dollar capped a moderate recovery in the euro, which faced renewed pressure after the head of the European Central Bank struck a dovish tone on Thursday.

The dollar rose to fresh three-month highs against the euro after the European Central Bank acknowledged a “moderation” in economic growth following its policy meeting on Thursday. Officials voted to keep interest rates on hold and said they would seek more clarity before outlining their next move.

EUR/USD bottomed at 1.2108 on Thursday, its lowest since mid-January.

The greenback jumped more than 1% this week as investors tracked a significant rise in interest rates. On Monday, the U.S. 10-year Treasury yield rose to 3% for the first time since early 2014.

Cryptocurrencies Stabilize

The cryptocurrency market stabilized on Thursday after profit-taking disrupted a multi-week rally in the digital asset class.

The combined value of all coins reached a high of $407.6 billion on Thursday, according to CoinMarketCap. The market would subsequently fall to $380.5 billion before recovering around $406 billion.

With the exception of bitcoin and NEO, all cryptocurrencies in the top-ten reported gains. Stellar Lumens was the biggest percentage gainer, climbing 8.5% to $0.38. Meanwhile, Ethereum, Ripple XRP and bitcoin cash were up only slightly.

Bitcoin was back to trading above $9,000 on Thursday. At the time of writing, the cryptocurrency was valued at around $9,074 a coin.

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
3 votes, average: 4.67 out of 53 votes, average: 4.67 out of 53 votes, average: 4.67 out of 53 votes, average: 4.67 out of 53 votes, average: 4.67 out of 5 (3 votes, average: 4.67 out of 5)
You need to be a registered member to rate this.
Loading...

4.5 stars on average, based on 358 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Continue Reading

Analysis

Euro hits 3-Month Low Despite Hawkish Draghi

Published

on

All eyes were on the European Central Bank and Mario Draghi today, as the recent string of disappointing economic data put pressure on the Euro. Investors started questioning that the ECB will follow through with its monetary tightening plans. As far as the actual momentary policies are concerned, the central bank left everything unchanged today, while the head of the bank signaled that he is confident about growth in the Euro-zone, sparking initial buying in the common currency.

// -- Discuss and ask questions in our community on Workplace.

EUR/USD, 4-Hour Chart Analysis

Despite the hawkish words of “Super Mario” the Euro took a sharp turn lower right at the US open, and the EUR/USD dipped below 1.2150, hitting the lowest level since January. From a technical standpoint, the most traded pair is at a very important juncture, and should the break below support hold, a quick move below $1.20 is likely.

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

S&P 500 Futures, 4-Hour Chart Analysis

Stocks are higher for the second day in a row after the strong bearish move in Tuesday, with the NASDAQ leading the way higher, led by Facebook, as the recently troubled social media giant is staging a strong bounce following yesterday’s positive quarterly earnings report. Despite the rally, the charts still suggest that there are more troubles ahead for bulls, with the short-term downtrend clearly being intact in the major indices.

Facebook (FB), 4-Hour Chart Analysis

US Treasury yields which have been in the focus in the last days are slightly lower today, especially regarding the longer end of the curve, as core durable goods orders came in much lower than expected, even as the less reliable headline number beat the consensus estimate. While it’s unlikely that the rising trend in yields will be broken, a correction is in the cards after the strong move higher in rates.

Dollar Rally Dominates Forex Markets

USD/JPY, 4-Hour Chart Analysis

Should Treasury yields pull back substantially from their highs that could mean that a correction the Dollar rally is also ahead, as the Greenback looks stretched from a short-term standpoint too. The Dollar’s strength also weighs on commodities, with gold dropping below $1320 and WTI crude oil falling back below $68 per barrel.

Commodity currencies are still under pressure too, while European and Asian stocks are benefiting from the USD rally, which will remain in the center of attention this week.

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
1 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 51 vote, average: 5.00 out of 5 (1 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.5 stars on average, based on 235 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.




Feedback or Requests?

Continue Reading

Market Overview

Decentralize

Published

on

There’s a fine line between celebrity and politician as we’ve seen clearly with the election of reality TV star Donald Trump.

// -- Discuss and ask questions in our community on Workplace.

Now it seems that famous rapper Kanye West is taking a more proactive stance on politics and has recently had several very public interactions with President Trump on Twitter.

But it’s not just politics. Kanye’s Twitter account has a total of 220 tweets yet it seems that most of them have been posted in the last 48 hours. One of those tweets was a single word. A buzzword in the crypto-community that had a lot of blockchain enthusiasts excited.

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

Not that Bitcoin needs the Yeezy’s endorsement but I don’t think it hurts.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Draghi Day
  • DB Big Miss
  • Ether Chain Split?

Please note: All data, figures & graphs are valid as of April 26th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Stock markets are rather quiet today as we await the announcement from Mario Draghi and the European Central Bank (ECB).

The ECB is currently injecting about €30 Billion of stimulus into the economy each month. Though this is far less than they were doing at the peak of global QE a few years ago the feeling is that they’ll need to reduce it further going forward.

The issue is that despite the massive amount of stimulus the Eurozone has been showing signs of weakness.

Of course, it would be very difficult for any central banker to admit that their respective economies are slowing down. So even though nobody expects any concrete changes to the ECB’s monetary policy, investors today will be watching like vultures.

Here we can see that the Euro has been gaining strength against the USD ever since the French elections in April. After running into some resistance at 1.25 it now seems that this strong trend is under question.

Earnings Continue

Yesterday’s announcements on Wall Street weren’t too bad. Facebook managed to defy the calls of #DeleteFacebook and has even managed to gain new users, and even Twitter managed to put up a profitable quarter for the second time in history.

Over to Europe, things are not looking so hot in the financial sector. Barclays faced a quarterly loss of £764 million but the big news rocking the markets today is that Deutsche Bank, which was expected to announce a Q1 profit of €376 Million, disappointed investors with profits of only €120 Million.

Even though this is a massive miss, it might not be as bad as some think. You’ll recall that DB recently switched CEOs right at the beginning of Q2, so there is a clear scapegoat here.

The new CEO Christian Sewing seems to be treating the below-expected earnings as an opportunity rather than a setback and has announced some massive reforms that he feels can improve the bank’s profitability.

At the moment, DB has more than 100,000 employees in 70 countries. From today, many of those outside of Germany will expect to receive notice as DB consolidates its business to try and focus on its core market.

Sewing was brought in to be the gunman when Crayn simply couldn’t pull the trigger. Now it seems that a lot of people are about to get fired.

Will Ethereum Split?

Though the DNS hack yesterday was shocking the damage was rather contained. Ethereum enthusiasts have a much bigger concern on their minds at the moment, the aftermath of the last major Ether hack.

We discussed the Parity hack that froze about 514,000 ETH in a previous market update titled Security & Stability (dated November 8th, 2017). Now the owners of those tokens are doing whatever they can to try and get them back.

Ethereum Improvement Proposal EIP-999 proposes that the upcoming hard fork that is planned to move Ethereum to the Casper protocol will also be used to release the frozen tokens from the Parity hack.

After a week-long vicious vote, the results are in and it seems Parity is out.

In the wake of this narrow yet clear vote not to go ahead with EIP-999 it seems that some of the top developers plan to go forward anyway.

True to character, Vitalik Buterin has been notably silent on this issue. He generally prefers to allow the community to come to some sort of decentralized resolution without the aid of his authority.

Mind you, even if we do see a chain split it might not have a negative effect on the price of Ethereum. There is a distinct possibility that we could see a new coin created that is different from the original like we did with Ethereum Classic and Bitcoin Cash, both of which seem to have generated wealth for token holders.

Let’s have an amazing 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

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
3 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 5 (3 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 72 rated postsSenior Market Analyst at Etoro.com.




Feedback or Requests?

Continue Reading

Recent Comments

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending