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Market Update: U.S. Stocks Rise as Dow Notches Longest Win Streak in a Month

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U.S. stocks rose again Tuesday, with the Dow matching its longest winning streak since early June as a rosy earnings outlook continued to lift investor sentiment.

Stocks Gaining Traction

The Dow Jones Industrial Average notched its first four-day win streak since June 11, climbing 143.07 points, or 0.6%, to 24,919.66. The blue-chip average closed 320 points higher on Monday.

The broader S&P 500 Index rose 0.4% to close at 2,793.84, with ten of 11 primary sectors contributing to the rally. Utilities stocks and consumer discretionary companies were the biggest gainers, with each sector rising at least 1%.

Meanwhile, the technology-heavy Nasdaq Composite Index pared gains to finish at 7,759.20, where it was virtually unchanged.

Earnings optimism has taken the stress off investors this week even as China and the U.S. embark on a tit-for-tat trade war with far-reaching implications. The CBOE Volatility Index, also known as the VIX, touched its lowest level in over a month on Tuesday. The so-called “fear index” settled at 12.57, where it was little changed compared with 24 hours ago.

Earnings Season Underway

Corporate America is headed for its second-best quarter of earnings since 2010, according to a pair of forecasts from FactSet and Thomson Reuters.

As of Friday, 20 companies in the S&P 500 had reported actual Q2 results. Among them, 85% reported positive earnings surprises and 90% posted higher than expected revenues, according to FactSet data.

Earnings season begins in earnest Friday with a trio of top banks reporting quarterly results. J.P. Morgan Chase & Co (JPM), Citigroup Inc. (C) and Wells Fargo & Co (WFC) are scheduled to reveal their results at the end of the week.

Robust earnings likely ensure a continuation of the recent string of good fortune for Wall Street. Economic data will also play a role in how investors feel about the economy. On Thursday, the Labor Department will release the latest batch of inflation data for June. Consumer prices are forecast to rise 2.9% annually.

Crypto Rally Loses Momentum

Cryptocurrency prices swung sharply lower on Tuesday, as bitcoin and the major altcoins erased more than a week’s worth of gains in a matter of hours.

The cryptocurrency market shed over $20 billion to reach a low of $252.2 billion. It would later recover to around $254 billion on trade volume of $14.1 billion.

After inching closer to $7,000 over the weekend, bitcoin was dragged all the way back to $6,400, a level that proved difficult to penetrate in past rally attempts. The largest digital currency by market cap was down nearly 6% at $6,403, according to CoinMarketCap.

Among the major altcoins, EOS was the biggest decliner, falling more than 10% to $7.36. EOS was down more than 16% earlier in the day.

With the exception of Tether, the top-ten coins were down at least 5% compared with the previous 24 hours.

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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4.7 stars on average, based on 772 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Market Overview

U.S. Stock Futures Point to Tepid Tuesday Start as Democrats Vow to Fight Trump’s Emergency Declaration

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U.S. stock futures headed for modest gains on Monday, as the President’s Day holiday kept trade volumes subdued ahead of what’s expected to be an active week in the market. Meanwhile, cryptocurrencies exploded to the upside as trade volumes reached new highs for the year.

Stock Futures See Modest Gains

The U.S. futures market traded slightly higher in the holiday-shortened session. The Dow Jones mini futures contract edged up 14 points to close at 25,902.00. The benchmark Dow Jones index surged 1.7% on Friday en route to fresh three-month highs.

S&P 500 mini futures ticked up 1.25 points to settle at 2,778.25. The Nasdaq 100 mini contract rose 17 points to 7,080.75.

The New York Stock Exchange was closed on Monday for President’s Day. Regular trading hours are set to resume on Tuesday.

Further reading: Does this Chart Spell Doom for the S&P 500 Index?

Trump vs Democrats (Again)

As CCN reported earlier today, Democrats have vowed to fight President Trump’s emergency declaration to fund a new steel barrier on the southern border with Mexico. Trump exercised his executive powers on Friday shortly after signing $333 billion in new funding agreements that avoided a second costly government shutdown.

The new budget includes $1.38 billion in additional border funding, which is far less than the $5.7 billion Trump requested. By declaring a state of emergency, the president can divert funds from other programs to construct his new steel barrier.

According to The Wall Street Journal, the state of California has already announced plans to sue the Trump administration over the declaration. Xavier Becerra, the state’s Attorney General, told CNBC this weekend that he “definitely and imminently” planned to pursue legal action.

Crypto Bulls Ignite New Rally

Crypto markets put on a show Monday, as the asset class rallied more than $12 billion in the span of a few hours. The combined value of all cryptocurrencies peaked at $133.2 billion, according to CoinMarketCap. That’s the highest level in over five weeks.

The rally was sustained by an incredible surge in trade volume. Turnover spiked more than 66% to $33.4 billion, far exceeding the the volume surge that accompanied the mid-November selloff.

The top 40 cryptocurrencies all reported gains. Bitcoin, the largest of the digital assets, rose 8.4% to $3,932.72. Ethereum climbed 14.4% to $146.89. XRP climbed to $0.3232, having gained 7.6%.

EOS was the standout performer, as the price rocketed 23.5% to $3.48. The cryptocurrency is trading at its highest level since November.

Litecoin maintained its bullish posture, as the price surged 12% to $48.48. Bitcoin cash rallied 19.1% to reach $145.44.

For more on the Monday crypto rally, read: Cue the Crypto Recovery: Coins Surge $9 Billion Overnight as Ethereum, EOS Break Out.

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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4.7 stars on average, based on 772 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Market Overview

Who can Verify it?

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Hi Everyone,

This might be considered old news to some but I didn’t take it seriously myself until this article came out today on bitcoin.com.

Lately, we’ve been talking a lot about bitcoin’s rising transaction rate, which is now coming close to its all-time highest levels.

So, it seems that many of these transactions are coming from an entirely new bitcoin use case, other than just for sending money. It also seems that this is rapidly becoming the focus of hot debate among crypto spheres.

going into too much technical detail, what’s happening here is that some new projects are making use of Bitcoin’s stability as a network to maintain the stability of other crypto projects.

The use of crypto’s main Blockchain in this way has some upset that it could be “spamming the network” and by raising the amount of data stored it could increase the fees.

Proponents of the concept, on the other hand, feel that this is actually just another real use case of bitcoin and the ability to store data in this way is built into the code for a reason.

No matter what side you’re on, at this point we can take comfort in the fact that transaction fees in bitcoin are at a two year low at the moment, despite the added traffic.

As well, real-world use of bitcoin continues to rise, whether or not you consider the above as such. For example, in Indonesia, cryptoassets have just been legally recognized as a trading commodity.

Last week, we noticed a large spike in Indonesian volumes on P2P site Local Bitcoins. Well, that figure has continued on to double this week.

With the size of the Indonesian remittance market topping $2.7 billion in Q3-2018, this is quickly becoming a crypto market to watch.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • US-China trade deadline: 11 days | Days to Brexit: 39
  • Presidents Day (Reduced Volumes)
  • Crypto Markets Rising

Please note: All data, figures & graphs are valid as of February 18th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Markets continued to rise on the news that another US government shutdown has now been averted. This morning, Asian markets are celebrating the completion of the last round of trade talks and optimism for what’s to come.

The timetable for Brexit may have just been shortened. As we know the deadline for Article 50 is on March 29th. However, it seems that the final deadline for May to close a deal has now been shortened by Parliament.

The US session will be partially shut down today in celebration of President’s Day. Check for market hours on the assets you’re trading at this link.

Cryptos Rising

Crypto markets have risen nicely over the weekend. A move that has largely been led by Ethereum.

In this graph, we can see ETH (white line) against a basket of other cryptoassets. Notice the sudden spike yesterday morning, which was followed by a full retracement. After which, Ethereum continued to rise throughout the afternoon and by the evening turned into a market-wide rally.

I was able to put out a short tweetstorm this morning with several graphs and the highlight, in my opinion, is the rising volume across changes. In this chart from coincheckup.com, we can see that global volumes had bottomed out around $14 billion on February 8th but have now come up as high as $27 billion today.

Movements that happen on strong volume tend to be more meaninful in the market as it shows the flows have power behind them.

Let’s have an amazing week ahead!

Best regards,

Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan Twitter: @MatiGreenspan LinkedInMatiGreenspan |Facebook:MatiGreen

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 152 rated postsSenior Market Analyst at Etoro.com.




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Does this Chart Spell Doom for the S&P 500 Index?

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It has been an impressive eight-week stretch for the U.S. stock market, with the S&P 500 Index staging one of its best relief rallies of the past three decades. Investors expecting to ride out another bull market should tread carefully now that the latest earnings forecasts are in.

Scary Chart

Following a painful entry into bear-market territory on the eve of Christmas Eve, the S&P 500 Index has recovered an astounding 18%. On Friday, it closed at 2,775.60, its highest since Dec. 3.

The recent run of good fortune has come largely on the back of better than expected corporate earnings as well as signs of progress on U.S.-China trade talks. But these catalysts could become headwinds in the near future.

Case in point: FactSet recently issued grim guidance for S&P 500 companies, forecasting a year-over-year drop in earnings during the first quarter of 2019. The research firm’s rationale for the downgrade comes from the so-called bottom-up earnings per share (ESP), which is “an aggregation of the median EPS estimates for all the companies” in the S&P 500 Index. This figure declined by 4.1% in January, a much bigger decline than the five-year, ten-year and 15-year averages.

All 11 primary sectors tracked by the S&P 500 recorded a decline in their bottom-up EPS estimate during the month of January. The biggest losses were reported by energy and information technology, the S&P’s largest and fifth largest sectors, respectively.

That leads us to the following scary chart, which appeared on the Quoth the Raven Twitter feed on Friday:

Forward earnings are a forecast of a company’s next-period earnings, usually to completion of the current fiscal year or next fiscal year.

Related reading: The January Stock Rally Could Face a Painful Reversal.

Watch Out for 2,800

Morgan Stanley, one of America’s largest banks, is warning investors not to “get caught up in price momentum” of the latest rally. The warning comes as the S&P 500 is once again approaching 2,800, a level where rallies come to die.

While valuation isn’t a reliable predictor for market timing, the headwinds posed by 2,800 are compelling. Combined with dismal earnings guidance, it’s likely that market fundamentals will detract from the latest rally attempt.

If the S&P 500 does go beyond 2,800, its valuation based on 2019 average per-share earnings will be 16.5 times forward earnings. As Bloomberg notes, that’s the average reading of the past five years and a strong sign that stocks are becoming overvalued.

“Don’t get caught up in the price momentum, as if the market is telling you something that may happen,” Mike Wilson, a strategist at Morgan Stanley, told Bloomberg TV. “The data isn’t improving, and the data probably isn’t going to improve over the next two to three quarters, and that’s going to create uncertainty again when you’re trading at 2,750-2,800.”

Featured image courtesy of Shutterstock. Charts via Barchart.com. 

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 772 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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