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Oil Hits Mid-2015 Highs as Tech Drags on U.S. Stocks

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U.S. stocks finished lower on Tuesday, as a major overhaul of the  tax code before Christmas failed to brighten investor sentiment. Meanwhile, oil prices rose to their highest level since mid-2015 after a Libyan pipeline blast threatened supplies.

Stocks Struggle for Momentum

U.S. stocks finished mostly lower on Tuesday, with technology companies among the worst performers. The S&P 500 Index closed down 0.1% at 2,680.50, with four of 11 sectors contributing to the decline.

The index’s information technology component fell 0.7%, with hardware companies and semiconductor providers shouldering the heaviest losses.

Shares of Apple Inc. (AAPL) declined on reports of weaker than expected iPhone X demand. Taiwan’s Economic Daily News reported that Apple will slash its outlook for iPhone X sales this quarter to 30 million units from 50 million. Other reports suggested that the iPhone X’s $999 price tag could reduce consumer demand.

Apple’s weak performance weighed on the Dow Jones Industrial Average. The blue-chip index, which tracks 30 of Wall Street’s biggest companies, finished virtually flat at 24,746.21.

Stumbling tech shares also weighed on the Nasdaq Composite Index, which fell 0.3% to 6,936.25.

Other sectors to report losses included utilities, financials and materials.

A measure of 30-day volatility known as the CBOE VIX rose on Tuesday and closed at its highest level in almost two weeks. The so-called “fear index,” which trades on a scale of 1-100, rose 3.5% to 10.25.

U.S. Crude Hits $60

Oil futures traded on the New York Mercantile Exchange rose above $60 a barrel on Tuesday for the first time since June 2015. The West Texas Intermediate (WTI) benchmark for U.S. crude futures rose $1.33, or 2.3%, to $59.80 a barrel. ICE Brent futures climbed $1.56, or 2.4%, to $66.81 a barrel.

Oil prices have been trekking higher on renewed confidence that major oil crude producers will be able to drain the supply glut. However, the Tuesday rally was triggered by news of a pipeline explosion in Libya, which reportedly compromised 90,000 barrels a day in supply. The war-torn African nation pumped 973,000 barrels per day in November.

Rising oil prices lifted other energy-related investments. Energy stocks traded on the S&P 500 Index were the top performers Tuesday, rising 0.8%.

Crude wasn’t the only commodity to strengthen on Tuesday. Gold prices rallied $8.80, or 0.7%, to $1,287.60 a troy ounce on the Comex division of Nymex. That was bullion’s highest level in nearly a month.

Commodity traders took advantage of a subdued U.S. dollar after the holidays. The dollar index (DXY) traded within a narrow range before consolidating at 93.29. The DXY index is headed for a yearly decline of roughly 9%.

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 704 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

Ethereum Rhapsody

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Hi Everyone,

Caught in a landslide, no escape from the reality of the bear market.

One of the Ethereum dev teams currently building the decentralized future wasn’t looking for sympathy but did announce that they are poor.

Bismillah! Their prayers were answered by Vitalik Buterin the creator of Ethereum himself.

This sparked quite a reaction from Vitalik’s followers who were apt to point out Vitalik’s nickname… “Non-giver of Ether.”

Thanks to the transparent nature of Ethereum, we can trace the transaction back to one of Vitalik’s wallets and see a little silhouette of his presence on the network. YOLO!!

Perhaps most notable are his holdings in Maker, Kyber, and OMG. His Spank balance is near empty but he does have one digital kitten…

All jokes aside, the 1000 ETH sent were certainly not a giveaway at all. It was a strategic investment in the network to support the much-needed efforts to scale the Ethereum blockchain.

Let’s hope the rhapsody pays off.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Daily Market Update pays tribute to the most streamed song from the 20th century: https://youtu.be/fJ9rUzIMcZQ

Today’s Highlights

  • Carry on, Carry On
  • Galileo Figaro Magnifico
  • Face the Truth

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

Traditional Markets

Too late. The Fed’s time has come. Monetary tightening sends shivers down my spine. The economy is aching all the time. Goodbye quantitative easing. ZIRP has got to go. Gotta leave the President and the markets behind and face the truth.

Mama… this is the way the wind blows…

Today the US Federal Reserve is expected to raise their benchmark interest rate by 0.25%. Markets have been on edge since early October in anticipation of rising interest rates but at this point, it’s simply too late to back down. Anything but a full delivery of what economists are expecting would project weakness. Certainly, they’d prefer to spare us from this monstrosity.

Now for some perspective here’s a graph of the S&P500 over the last 50 years where each candle is three months. That last one was probably put aside by Beelzebub.

Leave it all Behind & Face The Truth

I don’t wanna die, and neither does the crypto market apparently. The price action over the last few days is clear evidence of that. There are two news stories, which people are pointing to that might be helping drive the positive sentiment.

Number one is this article from Bloomberg, who have done the research and found that Tether does indeed have the reserves promised.

The second is an update from ICE, who seems to be all set for their launch on January 24th (pending regulatory approval). The update is from a week ago, but the timing and dates in the note seem to line up with the market movements quite nicely.

Galileo Figaro Magnifico

Though Galileo loved to look at the moon, he also studied gravity. After all, market action is nothing more than practical physics.

Figaro managed to enter a legal contract of marriage despite harsh authoritative oversight.

And isn’t it magnifico how the crypto markets are moving lately?!

For those wondering why we’re seeing this awesome push from the floor, the only explanation I can give is that this rally is all about short covering.

Especially after the short squeeze, we saw on Monday, today’s action is simply a continuation of that. Markets are made of people and it’s likely that most people will be looking to reduce their exposure before the holidays.

Over the last few weeks, there have been a lot of high leveraged short positions building up and when those sell positions are closed, it creates upward pressure on market prices.

The evidence of this can be found hiding in plain sight.

Take a look at how Bitcoin Cash, which has probably been the most controversial of coins and many have blamed for the recent slide, is up about double of what the rest of the market has done today.

This is the real life, so have a fantastic day!

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 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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4.7 stars on average, based on 139 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

U.S. Stocks Mostly Higher on FOMC Drift; Bitcoin Price Maintains Upward Trend

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U.S. stocks traded mostly higher on Tuesday, as the Federal Reserve’s two-day policy meeting was officially underway in Washington. The cryptocurrency market notched a fresh 12-day high as bitcoin and its altcoin peers maintained their upward traction for most of the session.

Stocks Recover

Wall Street recovered modestly after plunging on Monday to their lowest levels of the year.  The Dow Jones Industrial Average rose 82.66 points, or 0.4%, to close at 23,675.64. The industrial benchmark fell more than 500 points on Monday.

The large-cap S&P 500 Index trimmed all of its gains to finish flat at 2,546.16. Gains were concentrated in six sectors, with consumer discretionary and information technology companies among the biggest gainers. Losses were primarily concentrated in energy and consumer staples.

A strong performance in technology-related industries pushed the Nasdaq Composite Index firmly higher. The index climbed 0.5% to settle at 6,783.91. On Monday, the Nasdaq joined the S&P 500 and Dow in negative territory for the year.

FOMC Drift

The relatively strong performance in stocks ahead of Wednesday’s Federal Reserve policy verdict has a well established historical precedent. Since 1994, gains in the 24 hours before the FOMC meetings represent 80% of excess returns in the market, according to CNBC. The average S&P 500 gain during that stretch is 0.5%.

Policymakers are widely expected to raise interest rates at the conclusion of the FOMC meeting on Wednesday. The accompanying rate statement and quarterly economic projections could shed light on the central bank’s future path at a time when President Trump is pressuring officials to end the tightening cycle.

Based on Fed Fund futures prices, the chance of a liftoff tomorrow is 71.5%. That’s down slightly from Monday and is well below levels seen last month.

Cryptocurrencies Show Stability

The cryptocurrency market traded mostly higher on Tuesday, as bitcoin and the major altcoins avoided a reversal following a strong start to the week.

The market cap for all cryptocurrencies peaked at $115.6 billion, the highest since Dec. 6. At press time, the market came in just shy of $114.1 billion.

Among top-ten cryptocurrencies, bitcoin cash (BCH) was the best performer, gaining 8.6% to $99.36. EOS climbed 4.2% to trade at $2.50. XRP rose 1% to trade at $0.3308. Bitcoin’s price was little changed at $3,552.12.

Stable market prices were accompanied by a sharp rise in trading volumes. Crypto exchanges processed nearly 50% more volume on Tuesday, according to CoinMarketCap. Total market turnover rose above $17 billion, based on latest available data.

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 704 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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Analysis

Forex Update: Dollar Drifts Lower With All Eyes on the Fed

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1368 0.19%
GBP/USD 1.2648 0.20%
USD/JPY 112.55 -0.23%
AUD/USD 0.7201 0.34%
GOLD 1,250 0.14%
WTI Crude Oil 48.53 -1.32%
BTC/USD 3,565 1.96%

With just one day left until the week’s main event, the Fed’s rate decision, it’s no surprise that forex markets are having a very choppy session, with the Dollar and the main safe-haven assets being in focus. The USD has been under pressure in the last couple of days amid the louder and louder critiques regarding the Fed’s rate hikes, and although economic numbers continue to be positive in the US, and the consensus still points an increase tomorrow, leaving the rates unchanged wouldn’t be as shocking as one week ago.

Economic numbers were mixed today, with the German IFO index missing the consensus estimate, but with the US housing market showing stability for the second month in a road. Building permits and Housing Starts both bounced back more than expected amid the pullback in Treasury yields in November, pointing to a still relatively healthy economy in the US.

While the Dollar only managed a small pop higher following the releases, as Treasury yields plunged to new multi-month lows again, the underlying bullish trend seems safe for the reserve currency.

Technical Analysis

GBP/USD, 4-Hour Chart Analysis

The Great British Pound is having another active session, and although it briefly surpassed the crucial 1.27 level against the Dollar, it fell sharply later on, leaving last week’s key technical breakdown intact.  While choppy trading is expected across the forex segment up until tomorrow’s key Fed announcements, the Pound could remain active, with the Brexit chaos and Theresa May’s shaky position still causing headaches for traders.

EUR/JPY, 4-Hour Chart Analysis

While risk assets rebounded today after yesterday’s volatile and bearish session, the main safe-haven assets, such as the Japanese Yen and gold continue to perform well, especially compared to the risk-on currencies. The EUR/JPY pair which has been trading in a broad bearish consolidation pattern since October is testing the key support zone between 127.50 and 127.75, threatening with a key breakdown in the coming weeks. While the short-term momentum indicators are slightly oversold, the pair is clearly bearish both short- and long-term and traders should be looking for entry points on the short side.

USD/CNH, 4-Hour Chart Analysis

Some analysts call the Dollar/Yen pair “most important currency pair of 2019”, and the pair continues to trade in the close vicinity of its October low, despite the recent trade-related optimism. A clear dovish surprise tomorrow could send the Yuan soaring, even in light of the recent weak Chinese economic data, but for the coming months, new highs are very likely (meaning new lows for the Yuan), and a drop to 6.85 would be an optimal entry point for traders.

WTI Crude Oil, 4-Hour Chart Analysis

Oil continues to be in a steep broader downtrend, and despite the deeply oversold long-term momentum readings, the crucial commodity only managed to consolidate in a sideways trading range after dipping below the key $50 per barrel price level in the WTI contract.

Yesterday, the price of the contract fell below its prior low, and today the commodity plunged by more than 5%, violating the $47.50 per barrel level for the first time since mid-2017. Barring a quick recovery, the breakdown could extend to the $44 per barrel level but a strong support zone is already found between $46.50 and $47.

Key Economic Events Tomorrow

ChartBook

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

Commodities

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 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 422 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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