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Market Update: U.S. Stocks Regain Ground Ahead of Bank Earnings

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U.S. stocks bounced back Thursday from a sharp midweek selloff, as corporate deal-making and earnings optimism pushed the benchmark indexes higher.

Stocks Rebound

All of Wall Street’s major indexes booked solid gains on Thursday, with the Dow Jones Industrial Average climbing 224.44 points, or 0.9%, to 24,924.89. Technology bellwethers Microsoft Corp (MSFT), Cisco Systems Inc. (CSCO) and Intel Corp (INTC) were among the largest gainers.

The broader S&P 500 Index rose 0.9% to close at 2,798.29, with nine of 11 primary sectors finishing higher. Technology, industrials and healthcare stocks rose the fastest.

Meanwhile, the technology-driven Nasdaq Composite Index advanced 1.4% to 7,823.92, a new all-time high.

The CBOE Volatility Index, also known as the VIX, resumed its downward trajectory Thursday, falling for the fifth time in six days. The so-called “fear index” settled down 7.7% at 12.58.

Corporate News, Earnings in the Spotlight

Earlier in the day, U.K. government gave 21st Century Fox Inc. the green light to consolidate ownership of Sky following a lengthy review. Although the approval does not seal the deal for Fox, it removes the last regulatory hurdle for consolidation. Fox is currently in a bidding war with Comcast for ownership of the U.K. company.

Shortly after the approval was handed down, Comcast upped its bid for Sky to £14.75 a share, or £25.9 billion ($34 billion U.S.).

Investors are shifting their focus to corporate earnings with a trio of U.S. banks scheduled to report second-quarter results on Friday. The reports from Citigroup Inc. (C), Wells Fargo & Co (WFC) and J.P. Morgan Chase & Co (JPM) usually signal the unofficial kickoff to earning season.

Financial research firm FactSet is forecasting an earnings growth rate of 20% for S&P 500 companies.

Rising Inflation

U.S. consumer prices rose in June for a third month running, pushing annual inflation to its highest level in more than six years.

The consumer price index (CPI) of goods and services increased 2.9% year-over-year, the Labor Department reported Thursday. So-called core inflation, which strips away volatile food and energy categories, rose 2.3% annually, official data showed.

Firming inflation gives the Federal Reserve a stronger mandate to continue raising interest rates, which it fully expected to do in the second half of the year. The U.S. central bank is scheduled to meet at the end of July but is not expected to hike rates again until September.

Meanwhile, weekly jobless claims approached 50-year lows last week, though interpreting the data is tricky due to seasonal factors and the Independence Day holiday.

Jobless claims fell by 14,000 in the first week of July to a seasonally adjusted 214,000, the Labor Department said. Analysts in a median estimate called for a weekly reading of 225,000.

Featured image courtesy of Shutterstock.

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4.6 stars on average, based on 661 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Market Overview

Market Update: U.S. Stocks Plunge as Tech Correction Deepens; NEM Leads Tepid Crypto Market Rally

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U.S. stocks extended their slide on Monday, as technology companies entered their deepest correction since 2011. Crypto markets were mostly stable, though the likes of NEM and XRP outperformed.

Stock Selloff Resumes

All of Wall Street’s major opened the week in negative territory, with losses extending to most sectors. The large-cap S&P 500 Index fell 2% to 2,726.22, with ten of 11 primary sectors contributing to the declines. Technology shares were the hardest hit, falling 3.5% as a sector. A total of four sectors declined 2% or more.

The Dow Jones Industrial Average plunged 602.12 points, or 2.3%, to 25,387.18. Goldman Sachs Group Inc. (GS) fell 7.5% after Malaysia said it was seeking a full refund of all the fees it paid the bank for its involvement in a state fund called 1MDB.

A rollover in the Nasdaq intensified on Monday after the tech-heavy index fell 2.8% to 7,00.87. The Nasdaq is now its worst correction since 2011, according to Bloomberg.

Volatility Spikes

The sharp drop in share prices on Monday was accompanied by an equally large surge in expected volatility, signaling turbulence ahead for Wall Street. The Chicago Board Options Exchange (CBOE) Volatility Index, the market’s preferred measure of investor anxiety, surged 16.8% to 20.28. That was the highest level in over a week.

VIX trades on a scale of 1-100, with 20 representing the historic mean. The index tracks inversely with the S&P 500 Index roughly three-quarters of the time. Volatility touched record lows at the beginning of the year and spent much of the third quarter subdued. However, the index has nearly doubled since Oct. 3, a period that has witnessed multiple intense selloffs tied to corporate earnings, trade risks and global growth concerns.

Year-to-date, the volatility gauge has added more than 83%.

NEM Surges amid Quiet Session for Cryptos

NEM leapfrogged the broader market on Monday, gaining more than 20% amid news that Japan’s Coincheck exchange was resuming normal trading of the digital currency.

NEM’s native XEM cryptocurrency was the center of a $400 million heist targeting Coincheck at the beginning of the year. The theft, one of the largest of all time, prompted Coincheck to halt deposits and withdrawals. The platform was later acquired by Monex Group, a leading Japanese online brokerage.

At the time of writing, NEM was valued at $0.1079, having gained 16.7% over 24 hours ago.

The only other major gainer in the top-20 was XRP, which rose 3.9% to $0.521815.

The broader cryptocurrency market was little changed compared with 24 hours earlier. The total market capitalization of all coins was $212.4 billion, up slightly from Sunday levels.

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 661 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Market Overview

Line in the Sand

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Hi Everyone,

One of the central developments in crypto over the last year is the interest we’ve seen from large-scale financial institutions looking to get into this space.

Cryptoassets are increasingly being seen as a brand new asset class with significant potential for portfolio managers and financial advisers. However, despite the increased level of access to digital assets, it seems that education among these groups remains low.

In order to get the ball rolling, we’ve put together a paper that looks into the level of crypto knowledge among independent financial advisers and their clients in the UK.

What I found interesting is that clients are seemingly better informed on this subject than the people they’re getting advice from. Here we can see that only 9% of advisors are confident giving advice on cryptos…

Whereas, 26% of their clients have already transacted with them…

To see the full report please visit this link and download the IFA report:

https://www.etoro.com/trading/markets/research/cryptocurrencies/

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Brothers in Oil
  • Dropping on Brexit
  • BCH Hard Fork Explained

Please note: All data, figures & graphs are valid as of 12/11/2018. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Today is Veterans Day in the USA so volumes could get a bit thin. Markets are scheduled to be open but for the short term traders out there you might want to take the day off.

All eyes are on crude oil today. After a deep retracement from the highs, it looks like OPEC, led by Saudi Arabia is stepping in to prop up the prices.

The way down from the top has been a very large swing and the break below the 200 day moving average (blue line) seems to have accelerated the decline.

The Saudis move is a clear indication that they’re willing to defend the floor at $60 a barrel. However, this line in the sand could prove difficult to uphold, especially if they don’t see cooperation from the other producers.

Pound Under Pressure

The British Pound is under immense pressure this morning after some disappointing Brexit news over the weekend.

It seems that Theresa May’s plan to avoid a hard border with Ireland was rejected both by the EU and her own cabinet. The likelihood of a no-deal Brexit has reared its head once more.

Things aren’t looking much prettier on the chart either. The bounce off from resistance last week (purple circle) confirms that we are now in a full-blown descending triangle (yellow lines).

Hard Fork Incoming

It should be clear that as confusing as the Bitcoin Cash hard fork may seem, especially for beginners, it is unlikely to have any significant impact on the broader crypto industry, are very slim. However, this drama is a lot of fun to watch and a great exercise for people to increase their knowledge and understanding of how these things work.

The current fight that’s playing out is between the two main proponents of BCH (Bitcoin Cash) Craig Wright and Roger Ver.

For those of you who are new, Bitcoin Cash forked from Bitcoin on August 1st 2017 and though the proponents claim that this is the real bitcoin, it has failed to gain the widespread adoption that they were hoping for.

This graph from bitinfocharts.com shows the number of active wallets on Bitcoin (BTC) VS those on Bitcoin Cash.

Over the weekend, we’ve seen videos emerging from both Roger Ver and Craig Wright explaining their positions, how this fork came about and what they think will happen next.

Both Roger and Craig are advocating a different version of Bitcoin Cash. The end result will most likely be a split in the network resulting in two different versions of Bitcoin Cash when both upgrades go into effect this Thursday.

For simplicity’s sake ,we’ll call them Bitcoin ABC (Ver’s version) and Bitcoin SV (Wright’s version).

In this video released last week, Ver described Dr. Wright’s behavior as less than professional and even published this letter allegedly sent to him from Craig.

Roger went on to say explain that Craig had yet to explain his position or why he wasn’t happy with the current roadmap.

Yesterday, Craig struck back by going on the record with famous BTC advocate Tone Vays. In the interview, Craig clarified his belief that the Bitcoin ABC version might have elements that some governments will try to block, hence his opposition

Craig then went on to describe his control of most of the network hashrate in BCH, which could give him a clear advantage in the upcoming war.

However, one thing that Dr. Wright failed to mention is the amount of hashpower that is currently allocated to BTC. Crypto miners, for the most part, are not as ideological as Ver and Wright, they’re in it for the profit.

At the moment, BCH is only running about 8% of the total SHA256 hashpower.

This makes it very difficult for people to mine BTC. So it wouldn’t surprise me if some people who are currently mining BTC would switch a small portion of their hash over to Bitcoin ABC or Bitcoin SV, whichever givesthem the best bang for their buck. This might actually be a healthy thing for BTC as well.

Let’s have a great day ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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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4.6 stars on average, based on 134 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Pre-Market Analysis And Chartbook: Dollar Hits 16-Month High as European Assets Fall

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Monday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,771 -0.23%
DAX 30 11,381 -1.28%
WTI Crude Oil 60.95 1.79%
GOLD 1,205 -0.36%
Bitcoin 6,367 0.14%
EUR/USD 1.1265 -0.61%

It has been a choppy and somewhat bearish day so far for risk assets, with the Brexit talks making headlines yet again. European assets are under pressure, since the chances of a deal are fading, while there seems no progress in the EU-Italy debate either.

Equities in Europe are down significantly, lagging the other key markets, but the Euro and the Pound are behaving the weakest, with the common currency hitting a new 16-month low against the Dollar, and the GBP/USD getting close to 1.28 yet again.

EUR/USD, 4-Hour Chart Analysis

The break below 1.13 in the EUR/USD that we have been anticipating could be a key move in forex markets, especially if it’s followed by a quick move towards the 1.10 level. For now, a failed breakdown is still a possibility here, but given the strong broader downtrend, odds favor further new lows in the pair in the coming weeks, together with new highs in the Dollar Index, which also rallied to its highest level since mid-2017 today in early trading.

The next major support zone is found near 1.1125 in the most traded forex pair, while resistance is still ahead near 1.1440 and 1.15.

Dow 30 Futures, 4-Hour Chart Analysis

US stock futures are also pointing slightly lower after Friday’s selloff, but the pre-market losses are muted, and the resilience of the major indices could point to, at least, an initial rally after the opening bell. Today, trading volumes could be lower-than-average on Wall Street, due to the US bank holiday, but given the technical setup, we could be in for an interesting session.

The major indices are at a crucial juncture, as a move towards the October lows could confirm the deeper bearish shift in the US that already took hold of the majority of global markets, while a less likely rally to new swing highs could set up a test of the all-time highs, at least in the relatively stronger indices, the Dow and the S&P 500.

Oil Bounces but Gold Fails to Recover Despite Risk-Off Shift

DAX 30 Index CFD, 4-Hour Chart Analysis

While global equities have been mixed today before the US open, the distinct weakness in Europe points to another leg lower in the broader downtrend, and the DAX could be the most important laggard in the coming days again. While the German index is still well above its recent lows, it is also clearly below the 12,000 level that marked the potential long-term breakdown, which could be the start of a bear market.

The coming days could be crucial in deciding the fate of the current swing, which could define the end of the year across asset classes. For now, markets are quiet, with the main volatility measures being well below the levels seen in October, but should the bearish move accelerate, things could quickly get heated again, as soon as the second half of this week.

Gold Futures, 4-Hour Chart Analysis

Commodities are having a mixed day as well, with crude oil being well in the green, but with gold and copper failing to rally in the face of the Dollar’s rally. The WTI crude contract rallied above $61 per barrel in early trading, while gold fell as low as $1204, extending the breakdown of last week, as safe-haven flows weren’t enough to hold the precious metal.

All eyes are still on the $1215 level, and should gold remain below that short-term resistance, the test of the $1180 level would be likely. Bulls would need a quick rebound to keep the October break-out alive, even gold continues to outperform most of the other safe-haven assets, such as the Japanese Yen and US Treasuries.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

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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4.7 stars on average, based on 392 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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