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Market Overview

Living in a Fractured World

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We can see it manifest in several European countries at the moment. In the United States, it’s playing out on the grand stage at this very moment with the entire world watching.

Governments are simply not functioning as they should. People to the left and to the right are increasingly supporting radical parties and candidates. When democracies are so far divided the result ends up being a deadlock or even a shutdown.

This will be the main theme at the World Economic Forum in Davos Switzerland this year. For those of you who are not familiar, the annual Davos convention is attended by all the most powerful politicians, bankers, and businessmen in the world. One of the people who will be there this year is someone that everybody who reads these daily updates knows very well… me. 😉

Will keep you updated on how it goes!

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Awesome Day 105
  • South Korean Insiders
  • Crypto Markets Evening Out

Please note: All data, figures & graphs are valid as of January 19th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

As we mentioned above, the chances of a US government shutdown this week are increasing every moment. At this point, the media is simply speculating how long it might last and “who’s fault” it will be.

The stock indices in the USA did come down yesterday, but not by much. In fact, the S&P500 managed to close its 105th day without a 1% correction.

Stocks in the rest of the world are rather mixed but mostly green…


The US Dollar is again at its lows and threatening to drop further, which is propping up gold, and to a lesser extent, oil.

South Korean Insiders

Speaking of propping up. It looks like several government officials in South Korea have now practiced insider cryptotrading. This is the highest profile case to date.

As we know the market has sold off violently this week with the South Korean Finance Minister talking of a total ban on cryptotrading in the country. Reportedly, some dirty politicians sold off their cryptos just before the statements went public.

In a regular market, these guys would be put in jail for a long time. However, regulations regarding digital assets are still not clearly defined in the laws of most countries, including SK.

In my personal opinion, this type of behavior should be punished more than other white collar crime offenses. Lawmakers have a unique opportunity here to set a precedent that could be used worldwide and across many different industries and tell the world that if you do something wrong you will get punished. #WishfulThinking

Crypto Market Evening Out

Hooray, we’re off the lows but we might not be out of the woods just yet.

Here we can see that with the exception of Ripple, things have been rather flat throughout trading on Thursday…

If we follow the same pattern that’s been happening over the last year, a major sell-off is usually followed by a prolonged period of consolidation.

This would actually be an excellent thing for the crypto industry. Stable prices are a blessing as it gives time for the brokers and exchanges to scale their business and prepare for any possible future surges.

In addition, if we’re considering the implementation of a new currency or decentralized platform, extreme volatility is more of a headwind than anything else.

Premium Watch

As you know, we’ve been watching the bitcoin premiums in two key countries very closely over the course of this week. The good news is that these premiums are evening out as well.

Japanese traders on Bitflyer are only paying 12.5% more per coin than their counterparts in the west, and the premium in South Korea is down to 16%. They’re still overpaying but much less than they were at the beginning of December.

The volumes have been stabilizing as well with Japan reclaiming dominance at 63% of volume on the major exchanges earlier today.


The above chart is from cryptocompare.com but it should be noted that coinhills.com has a new tool that also shows the dominance by country and the data is slightly different.

That’s all for today. As always, let me know if you have any questions, comments or concerns, or if you need any further assistance.

Have an amazing 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.

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: Turkey Back in the Crosshairs Amid Sanction Threats

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The “red-bar-green-bar-madness” continues in global stock markets, as after yesterday’s rally, today the major markets are all in the red once again. Emerging market woes are still feeding the bearish narrative, with the Turkish Lira being back in the center of attention. The currency which enjoyed a three-day relief rally slid lower following threats regarding further retaliatory US sanctions, should turkey keep Pastor Brunson in custody.

USD/TRY, 4-Hour Chart Analysis

The diplomatic troubles only add to the problems of the country, while also helping the rhetoric of the Turkish leadership that focuses on a western “attack” on the nation. With the vague budget plans in mind, the endgame for the Lira still seems ugly, even as at the current levels, strong Turkish companies can offer great bargains for a long-term investment portfolio.

DAX Index, 4-Hour Chart Analysis

The divergence between the US and the rest of the world seems to be getting wider by the day, as the Shanghai Composite closed on a fresh bear market low, while most of Asia is also stuck in short-term downtrends, while Europe is looking wounded too from a technical perspective. The main US indices, on the other hand, are still near their all-time highs, and today’s selloff is also just a small blip in the ongoing uptrend.

S&P 500, 4-Hour Chart Analysis

On a slightly negative note, the Nasdaq has been underperforming the broader market ever since Tencent’s earnings miss on Wednesday, and today, it’s also the worst performing benchmark on Wall Street in the wake of Nvidia’s (NVDA) lackluster guidance that came out yesterday after the closing bell.

Today’ session could still go either way in the US, as the overnight losses are moderate, and yesterday’s trade war optimism could still fuel a recovery in the worlds strongest stock market, even amid the deepening emerging market crisis.

Forex Markets Stable As Dollar Consolidates

Dollar Index (DXY), 4-Hour Chart Analysis

The Dollar is consolidating just below its recent 13-month highs, with the EUR/USD pair rebounding to 1.14, and the broader Dollar index settling down near 96.5. The reserve currency is still clearly in a rising trend, and as the short-term overbought momentum readings are almost cleared, the rally could soon continue, especially if risk-off sentiment remains dominant outside of the US.

Copper Futures, 4-Hour Chart Analysis

Commodities are virtually unchanged before the US open, with gold still hovering just above its 17-month low near the $1185 level, crude oil being stuck near $65 per barrel regarding the WTI contract, while copper trying to hold its ground after the recent key breakdown.

Dr. Copper is still signaling troubles ahead for China and the global economy, as although the commodity outperformed today, it’s clearly below the break-down level near $2.7, and the downtrend will likely continue in the coming weeks.

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 321 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

Say No to Currency Contagion

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Hi Everyone,

Once again the deteriorating relationship between the United States and Turkey is leading the news. The Lira is sliding again and it does seem to be bringing some of the other emerging market currencies with it.

As we’ve been saying throughout the week, it’s very possible that the declines in the crypto market earlier this week are due to a stronger US Dollar more than anything else.

As I’ve said before, in order to understand what’s happening in crypto, we must look at what’s happening in the rest of the economy as well. In this case, the US Dollar strength isn’t coming from Turkey, that’s just the catalyst.

The Greenback has been gaining ground since early April on the promise of higher interest rates in a strong economy. So far today, it doesn’t seem that the Lira’s slide is affecting the other major currencies though, nor has it touched crypto for the time being.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Currency Contagion
  • Looking at Metals
  • ETC Backwards

Please note: All data, figures & graphs are valid as of August 17th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Now that we’ve established the underlying theme and why the Dollar’s been surging, it seems that the situation has largely been contained. At the beginning of the week, the strong Dollar was taking out everything in its path. Today, the declines seem to be limited to the emerging markets.

In fact, of the major currencies, the USD is the worst performer today.

So even though the Dollar is rising against the Lira, Peso, and Rand…

… it doesn’t seem to be spilling over into other markets today.

Looking at Metals

Now that we’ve seen one of the biggest declines in the metals markets in recent history, it’s time to examine the long-term charts again.

Frankly, the weakness in metals still doesn’t make much sense to me. As we saw the Dollar strength earlier in the week, it did decline further but the declines seem disproportionate to the gains of the Buck.

Actually, what we’re seeing since 2011 is a precious metals market that’s been trending down.

The question is, has that dynamic come to a head?

The fun thing about the way down is that eventually, you run into a lower barrier at the production cost. Meaning, if the price to mine a metal is higher than the price to sell it, miners will stop mining, which generally tends to drive up the price.

A quick look at the mining costs of all three of the above does seem to indicate that those prices are quite close or even already passed.

A Crypto of its own

It’s good to see the rebound taking hold in the crypto markets despite the emerging currencies continuing to sell-off today. This is a positive indication that crypto is less sensitive to the moves of the Dollar but under extreme circumstances still is susceptible.

One thing that seems to be sticking out like a sore thumb is Ethereum Classic. In this graph, we can see that ETC (white line) has been acting out since mid-June and simply hasn’t been following the rest of the market.

This type of go-it-alone price action is typical when prices are moving up, but we almost never see it when prices are declining.

One of the reasons might be due to the listing of ETC on Coinbase. A new door to this crypto could mean new money flowing in. This could be worth keeping an eye on in the next few days. I’m eager to see how long it will take to fall back in line with the other cryptos or if it increases in market share following the listing.

Wishing you a fantastic 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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Market Overview

Market Update: U.S. Stocks Surge Ahead of China Trade Talks; Bitcoin Eyes Bullish Reversal

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U.S. stocks surged on Thursday after a senior White House official confirmed that trade talks with China will resume later this month, sparking optimism that the world’s two largest superpowers can resolve a lingering tariff dispute.

Stocks Rebound

All of Wall Street’s major indexes put up firm gains on Thursday, with the Dow Jones Industrial Average surging 396.32 points, or 1.6%, to 25,558.73. Shares of Walmart Stores Inc. (WMT) surged more than 9% after reporting its best sales growth in a decade. Boeing Company (BA) and Caterpillar Inc. (CAT) each rose 4.4% and 3.2%, respectively.

The broader S&P 500 Index rose 0.8% to 2,840.69, with all 11 primary sectors reporting gains. The consumer staples category was among the best performers, rising 1.5%. Financials stocks added 1.3% as a whole.

The technology-driven Nasdaq Composite Index finished well off session highs, rising 0.5% to 7,806.52.

A measure of implied volatility known as the CBOE VIX declined on Thursday, partially offsetting the previous day’s sharp climb. The so-called “fear index” fell 9.5% to 13.25 on a scale of 1-100 where 20 represents the historic mean.

U.S.-China Trade Talks Back On

White House economic adviser Larry Kudlow confirmed Thursday that China will send an envoy to Washington later this month to re-start trade negotiations between the two countries. Although the talks are expected to be low-level, they mark important progress in a relationship that has quickly deteriorated.

“The Chinese government, in its totality, must not underestimate President Trump’s toughness and willingness to continue this battle to eliminate tariffs and nontariff barriers and quotas, to stop the theft of intellectual property and to stop the forced transfer of technology,” Kudlow told CNBC’s Squawk Box on Thursday.

U.S. tariffs targeting $50 billion worth of Chinese goods have been implemented so far. President Trump has warned Beijing that the next round of levies will be much larger.

Bitcoin Eyes Breakout

The cryptocurrency market stabilized on Thursday, with bitcoin eyeing a bullish reversal amid reports of a new bitcoin exchange-traded note (ETN) being offered in U.S. brokerage accounts.

According to Bloomberg, the Bitcoin Tracker One ETN will be available to U.S. traders under the ticker symbol CXBTF. The ETN has been publicly traded on Nasdaq Stockholm since 2015. Technically, the ETN will be quoted as a foreign debt in U.S. over-the-counter markets.

Bitcoin’s price reached a high of 6,476.70 on Bitfinex. The leading digital currency would consolidate at $6,380 for a gain of 1.1%. As Hacked reported earlier, BTC has crossed the 50-day moving average and appears poised for further gains amid a sharp rise in momentum.

The broader cryptocurrency market was valued at $206.2 billion Thursday afternoon, with most major assets reporting 24-hour losses. Ethereum Classic was a notable exception; the cryptocurrency spiked 18% after Coinbase Consumer confirmed full support for ETC listings.

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.

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4.6 stars on average, based on 552 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.




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