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Market Overview

Nowhere to Run to Nowhere to Hide

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A zombie apocalypse isn’t something that most of us spend a lot of time thinking about but it seems that Elon Musk is once again ahead of the curve.

The founder of Tesla Motors is having a bit of fun while earning some cash for his new boring company. He’s already sold more than 17,500 flamethrowers for $500 a pop claiming that…

Truth is, nobody really knows what would happen in such an event. What happens if you’re one of the first to turn into a zombie? The flamethrower that you’ve bought might just as easily be used against you than for your own protection.

Best way to prepare yourself is by being the best human you can be. Then, if you are turned, be the best possible zombie.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Incredibly Rare Selloff

Janet Yellen’s Final Spotlight

Look at Cryptos

Please note: All data, figures & graphs are valid as of January 31st. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Like the Blue Blood Moon that will be observed this evening in some parts of the world, this selloff that we’re seeing across all asset classes is incredibly rare.

It’s been more than 100 days since the Dow Jones, S&P500, and the Nasdaq all fell more than 1% on the same day, but now it’s happened.

In most selloff scenarios there will emerge some sort of safe haven, but incredibly none exists today. The usual suspects Gold, the Yen, treasury bonds, and the US Dollar are all dropping like flies. This type of event is particularly difficult to prepare for or react to. The best we can do is to hunker down, ensure that our portfolios are adequately diversified, and hope the storm passes quickly.

Donald Trump’s State of the Union speech was little comfort. In it, he attempted to take credit for the amazing performance of the stock market and the economy over the last year. So what happens if this selloff worsens. Will he have been responsible for that too?

Over to the Banker

At 2:00 PM in Washington DC, Janet Yellen will deliver her last interest rate decision as the head of the US Federal Reserve. She’s to be replaced next month by Jerome Powell.

Nobody expects an interest rate adjustment today. However, Janet could very easily set the stage for Jerome to raise the rates at his first meeting on March 31st. Like Trump, we can expect her to take some credit for the spectacular performance of the economy over the last few years.

However, that the economy is doing well is not the question on investors minds at the moment. The bigger question is, are the stock markets overpriced right now?

That will be a bit more difficult to answer but no doubt we’ll hear something along the lines of “there are no asset bubbles at this time.”

Of course, these are very similar to the words spoken by former Fed Chair Allen Greenspan just before the market crashed in 2008. So Yellen better bring her A-game if she intends to deliver a smooth hand over of the US economy and end her term while markets are at or near their all-time highest levels.

Now for Crypto

This unique and new industry was hardly sheltered from the storm that is prevalent in the rest of the markets.

Double-digit losses were observed in several of the top traded cryptos yesterday and Bitcoin itself is flirting with support at $10k. As we mentioned several times already, the next relevant level of support for the world’s number one cryptocurrency remains at $8,000.

Here’s the chart we posted a week ago (January 23rd) and is still very relevant.

It’s also important to note that we haven’t seen any new lows since January 17th. So all in all, we’re holding up fairly well.

The markets were already red, when two pieces of sour news broke.

1. It seems that the CFTC has launched an investigation into Bitfinex and Tether. The crypto-community has been talking about a possible conspiracy for weeks already. Many claim that Tether has been fudging its books.

2. Facebook has put a blanket ban on all crypto advertising on the world’s largest social network. Not very fair but it seems they’d rather do that than start to pick out the scams with a set of tweezers.

Fun times. Let’s see where all this is headed. Have an awesome 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.

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: Stocks Rebound as Turkish Tensions Ease

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While nothing has been fixed in Turkey overnight with the vague plans announced to fight inflation by the finance minister, global markets rebounded after yesterday’s panicky conditions.US stocks undoubtedly led the way higher yet again, as the Lira, which made it to the mainstream media in the last few days, is up by more than 7%, with the USDT/TRY pair pulling back to 6.50 from a high above 7, and risk-on assets are higher globally, with especially equities staging a rally.

USD/TRY, Daily Chart Analysis

The other emerging market currencies that sold off are also correcting, with the Argentinean Peso, Brazilian Real, and the Russian Ruble all being off their lows. Despite the positive signs today, the underlying trend is still bearish in the FX segment, and the Dollar’s strength doesn’t seem to abate, with short-term Treasury yields also looking stable.

DAX Index, Daily Chart Analysis

While the major European indices are slightly in the green, headed to the closing bell, European banks that are exposed to Turkey are not showing much enthusiasm, and we expect risk-off sentiment to return in the coming days, until meaningful action is taken by the Turkish authorities.

Emerging market currencies are definitely feeling the contagion effects, with the Argentinean Peso, the Brazilian Real, and the Russian Ruble all being down big time in the last few days. So far, the Turkish leadership failed to calm the market, rather they fueled the fire with the aggressive rhetoric, and the seeming ignorance of the basic macro-economic rules.

In economic news, China was all the rage today, and the country that has been targeted by Trump’s tariffs is feeling the pain. It would be foolish to think that the trade war alone is to be blamed for the weaker than expected indicators across the board, but the skirmish between the two mega-powers definitely triggered a slowdown in the credit fueled economy.

Shanghai Composite, Daily Chart Analysis

Industrial production, retail sales, and investments all came in well below the consensus estimates, and with the Shanghai Composite already being in a bear market, and the Chinese Yuan hovering near its 13-month low against the Greenback, all looks set for a harsh awakening in China.

US Still the Island of Caolm

In the US all eyes are on tomorrow’s retail sales report, while today only two less important economic releases came out. The NFIB small business indicator was higher than expected and import prices were unchanged as the Dollar’s rise likely evened out the first effects of the new tariffs.

Nasdaq, 4-Hour Chart Analysis

The Nasdaq rebounded strongly overnight, leading the major indices higher again, and with that it got very close to its all-time high, outperforming the rest of the world by a mile. With powerhouses Apple and Amazon still pushing to new highs, even as more balanced portfolios are left behind, the tech index could set a new record as soon as today, should the otherwise shaky risk-on shift hold.

Copper Futures, 4-Hour Chart Analysis

Commodities are mixed so far today, as copper fell below $2.70 again, as it got hit hard after the Chinese data dump, while oil continued to rally, climbing back above $68 per barrel, with regards to the WTI contract.

Gold also bounced back above $1200, despite the Dollar’s rally against its major peers, and we have to wait and see if the spike below $1200 finally marked the lengthy downtrend in the precious metal.

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 317 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

Reacting to the Buck

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Hi Everyone,

Extreme market action continues. What began earlier this week as a rout in the Turkish Lira has quickly spread throughout all markets and now it seems to be affecting the cryptos as well.

All the major cryptos fell over the last 24 hours. Bitcoin managed to hold the most steady and Ethereum bore the brunt of the selling.

This article on Bloomberg indicates that the reason for this could be that some ICO’s are cashing out.

However, there is a need for further analysis backed up by more in-depth intel before a final conclusion can be drawn.

The reality is that more money is flowing into ICOs than out of them. According to data collected from CoinDesk, $14.3 Billion has been raised so far in 2018. Nearly triple the $5.7 billion raised in 2016 and 2017.

On the ground, we continue to see positive headlines that show a clearly developing crypto industry. So the fact that token prices are falling could very well be a reaction to external factors like the rapidly rising US Dollar, as we’ll explore below.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Volatility is Back
  • Gold < $1200
  • Crypto Reaction

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

Traditional Markets

Looks like we’re getting a bit of a rebound in the markets today as the markets are mostly reversing many of yesterday’s moves.

Looking at the Lira, it seems we’ve backed slowly away from resistance at 7 Lira to the Dollar (USDTRY). We should be hearing from Turkish officials including Erdogan later today.

Stocks are up across Asia and Europe. All except China who is processing some sour economic data.

No Safety

Perhaps the strangest thing about the current market action is the lack of safe haven sentiment.

We can see clearly that volatility is rising…

Yet, gold and other precious metals continue to fall. Yesterday, Gold dropped below the important level of $1,200 for the first time since January 2017.

This is a rather clear indication that whatever volatility is happening it’s not freaking anybody out.

Crypto Reaction

Though I couldn’t say with absolute certainty that the meltdown in emerging market currencies is what’s getting the crypto market down lately, it is the most likely explanation given the current market conditions

As the United States moves to tighten its economy and avoid strong inflation, they’re taking action that is strengthening the Dollar. Because the US Dollar is the global reserve currency, many smaller economies rely heavily on a stable exchange rate with the greenback.

So too, as the Dollar is being seen as a stable store of value at the moment, there really isn’t much incentive for people to store their money in digital assets.

Still, it does seem that we’re seeing some of the excitement spilling over onto the blockchain. In this chart, we can see the TPS (transactions per second) is rising rapidly over the last few days.

As well, we can see a noticeable spike in exchange volumes during the entire market action yesterday.

Many thanks to you for reading and to everyone sending me your questions, thoughts, feedback, and insight. It’s extremely valuable.

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: Stock Volatility Lingers; Ethereum Hits 14-Month Lows

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U.S. stocks declined Monday, as volatility surged to six-week highs in the wake of a diplomatic row between Washington and Turkey that sparked a new all-time low for the lira. Meanwhile, Ethereum saw its price sink to 14-month lows as a battered crypto market struggled to see the light.

Stocks Fall

The S&P 500 Index declined 0.4% to close at 2,821.95, with losses mainly concentrated in energy, materials and financials stocks. The Dow Jones Industrial Average closed down 125,58 points, or 0.5%, at 25,187.56. Dow industrials were down by as much as 150 points earlier. Meanwhile, the technology-driven Nasdaq Composite Index slipped 0.3% to 7,819.71.

A measure of implied volatility known as the CBOE VIX surged to six-week highs Monday, a sign that the equities rally was losing steam. The so-called “fear index” peaked at 15.02 on a scale of 1-100 where 20 represents the historic mean. It would later settle at 14.76 for a gain of 12.2%

Wall Street is coming off a highly volatile Friday session that saw the Turkish lira plunge by as much as 20%. The dollar rose another 9% against the lira on Monday, trading as high s 7.21.

Oil Prices Rocked by Saudi Arabia

U.S. oil prices approached two-month lows on Monday following news that Saudi Arabia has scaled back its crude production in a coordinated effort to boost demand.

The OPEC kingpin reported it had cut its output by an average of 200,000 barrels per day last month. In June, the OPEC cartel agreed to scale back output caps following a year-long recovery in oil prices.

U.S. West Texas Intermediate (WTI) futures traded as low as $65.71 a barrel in New York, which would have marked the lowest settlement since June 21. Prices would later recover at $67.33 a barrel, down 30 cents, or 0.4%.

ICE Brent futures, the international futures benchmark, bottomed at $71.04 a barrel before recovering at $72.74.

Crypto’s New Low

The search for an elusive bottom in crypto prices continued Monday, as Ethereum plunged to its lowest level in over a year.

The ether price bottomed at $284.25, its lowest since June 2017. EOS, XRP and bitcoin cash also declined sharply.

Bitcoin also traded lower on Monday but losses were contained to 1-2%. The leading digital currency consolidated at $6,257, bringing its total market share to 52.3%.

At the time of writing, the combined market value of all cryptocurrencies was $205.3 billion, according to CoinMarketCap. Earlier in the day, coin values fell below $205 billion for the first time in a year.

Investor psychology has been damaged by news that the U.S. Securities and Exchange Commission (SEC) will postpone its ruling on a keenly-awaited bitcoin exchange-traded fund (ETF). The announcement, which was made last Tuesday, has triggered a $50 billion reversal in prices.

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 544 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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