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Market Overview

Pumping and Dumping

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  1. One of the biggest issues of the crypto market as we know it is the lack of regulation.

It’s great to see that some new companies are able to sidestep the traditional finance industry and raise large amounts of seed money in an ICO but of course, many people are taking advantage of this and using this new market to create scams for tokens that may not have any value at all.

The real problem though, is what happens after a worthless token is created. Many times these new tokens become prime targets for pump and dump schemes, which are being perpetrated shamelessly by groups like the “PumpKing Community” on the Telegram app.

I recently had the pleasure of working with Oscar Williams-Grut from Business Insider UK, who put together an excellent article explaining all about it.

@MatiGreenspan
eToro, Senior Market Analyst

 

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

Market Overview

It’s quite common these days for a country to borrow more money than they could ever conceivably payback. For example, the US Government now owes more than $20 Trillion to other countries and private investors. That doesn’t usually become a problem as long as they can pay back the service payments on these loans. When you’re a country, you generally have more freedom to borrow.

Think of it like this, the bank allows you to borrow money in order to purchase a home that costs $20 Million. When giving you that loan, they take a minimal downpayment of $250,000 and largely ignore the fact that it will take you more than 300 years to pay off the full amount. In fact, the only thing they look at is your ability to pay off the monthly mortgage bill of $2,500.

The United States is in no immediate danger of defaulting on their monthly payments but it seems that Venezuela just did.

A month ago, they ran into trouble paying off $200 Million of debt-servicing but they were granted a 30 day grace period to pay up, which has just expired. The most likely situation now is that their investors will remain patient, hoping and praying that they’ll get their money back. There is also a chance though that they will band together and demand payment, in which case things could get pretty ugly.

The main thing to watch is the price of crude oil. State owned Venezuelan oil companies are currently contributing about 6% of OPEC’s oil. So if they’re unable to keep the pumps running, there will be a significant drop off in supply from South America.

“The oil supply coming from Venezuela has been declining lately, but if the country goes into default, it will be extremely difficult for them to even meet their reduced quotas.”

Tali Salomon
eToro, Spanish Region Analyst

The price of oil is already pretty high at the moment, so it will be interesting to see how this saga plays out over the next few days.

Sudden Swings

Just as I’m writing to you, I can see a few charts that have been moving pretty quickly. The reason for the move is still not clear to me but the moves themselves are strong enough to comment on.

There are a few breakouts in some currency pairs but none of them really seem to be connected. Here’s a graph from Finviz that has a good overview.

So the Euro is surging with a clean break above 1.1700…

The Yen is falling, with the USDJPY breaking out above 113.70…

The New Zealand Dollar is the worst off from this violent swing but take a look at Gold touching $1270 an ounce before rebounding.

…but the coolest part of all this is that we might finally have a breakout in ETHEREUM. We’ve been tracking this triangle pattern for a while now. In the last few hours, the upper line of the pattern is getting a serious test…

With all the excitement in the crypto markets lately it’s nice to see ETH finally joining the party, fashionably late as usual. The move may also have something to do with some new upgrades that are being planned on the network that will move away from high electricity mining to a better system known as PoS.

What else?

All eyes and ears are on the big central bank meeting in Frankfurt. Guest speakers will include Mario Draghi, Janet Yellen, Mark Carney, and Haruhiko Kuroda. These four people have more influence over global money flows than anybody else in the world right now.

Numbers have been good lately, really good. Economic growth and employment numbers in most of the developed world have been surpassing expectations and thanks to copious amounts of money that the central banks have injected into the system, stock markets are at record highs.

At some point, possibly soon, the central banks will want to start tightening up the money by raising interest rates and reducing the amount of cash injections.

No doubt we’ll hear a lot of grandiose statements and self back patting from the quartet. Try and see past that. The markets want to know about policy going forward. Sure the “economy is doing great” but what do they intend to do about it. Will they put their money where their mouth is and start to get aggressive?

Will Japan ease off their money printing? Will Europe start signalling that they’re ready to give up on negative interest rates? Let’s see if they come up with a central theme about where things are going, then we can really see the markets start to move.

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.

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 Edge Lower in Tepid Trading; Earnings Up 21% So Far

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U.S. stocks finished mixed-to-lower Friday as trade uncertainty outweighed robust corporate earnings from Microsoft, one of the tech industry’s most closely-watched blue-chips.

Stocks Struggle for Direction

All of Wall Street’s major indexes hovered around break-even in afternoon trade, with the S&P 500 Index and Nasdaq eventually settling lower.

The large-cap S&P 500 edged down 0.1% to 2,801.83. Eight of 11 primary sectors led by utilities and consumer shares finished in the red.

The tech-focused Nasdaq Composite Index closed down 0.1% at 7,820.20.

Dow industrials were virtually unchanged by the close, settling at 25,058.12.

Wall Street’s VIX fear index, which trades on a scale of 1-100, was virtually unchanged at 12.86.

Earnings on Track for Large Gains

Shares of Microsoft Corp (MSFT) rose to all-time highs after the company reported stronger than expected corporate results late Thursday. The tech juggernaut posted per-share earnings of $1.14 on revenue of $30.1 billion during its fiscal fourth-quarter. Analysts on Wall Street called for earnings of $1.08 per share on sales of $29.2 billion.

Guidance was a big factor in the company’s strong performance Friday. Microsoft said it expected first-quarter revenue of between $27.35 billion and $28.05 billion. Analysts had expected a revenue guidance of $27.4 billion.

General Electric Co (GE), a former Dow blue-chip, also reported earnings and revenue that were higher than expected. However, the company’s share price declined sharply Friday.

S&P 500 companies have reported an annual earnings growth rate of 20.8% for the second quarter, according to FactSet. Eighty-three percent of S&P 500 companies have yet to report.

Trump Breaks Precedent

On Thursday, U.S. President Donald Trump scolded the Federal Reserve for raising interest rates, a move that put him at odds with a long line of presidents who have refused to get involved in central bank policy.

According to Trump, the Fed’s plan to raise interest rates could hurt disrupt the economy at a time when the recovery engine was gaining momentum.

A White House statement later clarified that the president is not trying to influence Fed policy:

“Of course the President respects the independence of the Fed. As he said he considers the Federal Reserve Board Chair Jerome Powell a very good man and that he is not interfering with Fed policy decisions ” the statement said. “The President’s views on interest rates are well known and his comments today are a reiteration of those long held positions, and public comments.”

The U.S. central bank has raised interest rates twice this year and is planning on hiking twice more in 2018.

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 504 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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Market Overview

Bankers & Politicians

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Hi Everyone,

Today is the day. Out of all the meetups, conferences, and hearings that we’ve seen regarding the future of money over the last year, imho none are as critical as the decision expected from India’s supreme court today.

Like several other places in the world, the Indian government is now working hard to form their policy regarding bitcoin and cryptocurrencies but the banking sector has made it clear that they will do everything in their power to halt this.

When Prime Minister Modi made the move to remove 86% of the paper money in India on November 8th, 2016 he inadvertently handed a big win to the banking system and it seems they’re willing to do everything in their power to maintain the status quo.

The crypto ban imposed by the Reserve Bank of India earlier this month is a clear example of this effort. Let’s hope that the judicial system sees through this today and strikes down this policy, doing what is right for the wider public now and for future generations.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Central Bank Independence
  • Stock Markets are Mixed
  • Divergence in Crypto

Please note: All data, figures & graphs are valid as of July 20th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

It was funny, but yesterday I was teaching a group of new eToro representatives about central banks and happened to use an example of what’s happening in the news.

The point I was making is that central banks are officially disconnected from politics but that politics do end up influencing their actions and vice versa.

In his testimony on Wednesday, Fed Chair Jerome Powell did his best not to take sides on the current trade dispute between the USA and China. However, when pressed, he did admit that the proposed sanctions of $200 billion on Chinese imports would have a negative impact on the economy.

This is similar to when Mark Carney, the Governor of the Bank of England, stated before the Brexit referendum that if the vote passes it would hurt the Pound. The statement doesn’t take sides, it simply states the view of someone who is in a good position to understand the economic impact.

So, it was a bit surprising that a few hours after our lesson, Donald Trump had a few remarks of his own about what he thinks the Fed should or shouldn’t be doing.

Though President Trump insists that he’s not trying to influence the Fed’s decision, the very fact that he stated his opinion will likely have an impact on policy, it certainly had an impact on the markets.

Here we can see the US Dollar falling at the time of the interview.

The price of gold also reacted to the administration’s new policy.

Well… maybe not a new policy. Trump did blast Yellen while on the campaign trail for raising interest rates but this is the first time that any US President has so publicly disputed central bank policy, at least not since Bush Senior & Greenspan.

Meanwhile, Trump is still under pressure for his performance with Putin in Helsinki and we’re watching that play out in the press and in Congress.

Stock markets remain mixed while all this sinks in.

Mixed Crypto Rally

There’s been a lot of excitement in the crypto markets over the last few days and everybody wants to know where this is going.

Here’s an article that’s rather bullish…

…and here is one that’s quite bearish…

My thoughts…

It’s still too early to say for certain. The chart of bitcoin is sending rather mixed signals. On the one hand, the downward trendline (yellow) that that has loomed over Bitcoin for the better part of this year has now been broken.

On the other hand, the current rally has stopped significantly short of breaking the strong line of resistance (dotted blue) that kept the price notably depressed in early June. A break above that could very well lead us to $10,000 (green line) but only a clean break above that would indicate a shift in the medium term trend.

One point that is giving a positive sign is the level of divergence between different digital assets. Here we can see a graph containing all the cryptos currently traded at eToro over the last few days.

We’ve noticed in the past that when the trend is down the cryptos tend to stick more closely together, whereas when things are moving up we tend to see more mixed results. The price action over the last 48 hours would certainly indicate the latter.

As always, tag me at the links below if you need anything at all. Wishing you a very pleasant 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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4.7 stars on average, based on 115 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Pre-Market: China Tries to Support Markets as Global Stocks Slide

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Yesterday’s risk-off shift continued today in early trading with nervous and choppy trading in Asia and Europe, as global financial markets are still haunted by trade war fears and emerging market weakness. The major US indices rolled over after another period of apparent relative strength, with the Nasdaq being the most robust market once again, while most of the key European benchmarks continue to lag behind.

S&P 500 Futures, 4-Hour Chart Analysis

Chinese assets are still in focus before the weekend, as the Yuan’s recent steep devaluation sparked fears of a credit meltdown in the country. With the largest credit bubble in human history casting its shadow on China, some analysts think that with Trump’s trade war, the bug finally found its windshield and the bubble already started to burst.

USD/Yuan, 4-Hour Chart Analysis

All eyes are on the USD/Yuan pair as Chinese authorities are reportedly intervening in the market of the currency, and most likely local equities as well, trying to prevent a serious run on the most important assets.

With the Chinese stock market already in a bear market, and the Yuan trading at fresh 12-month lows against the Dollar, it might be a bit late to stop the slide, but the intervention could cause spectacular short squeezes.

Italy also made headlines today during the European session, as Italian government bonds got slammed lower, as the future of the new finance minister is uncertain, with another round of political turmoil possibly ahead for Europe’s most vulnerable country.

Unicredit (UCG), 4-Hour Chart Analysis

Looking at the charts of Italian banks, it’s clear that the spring turmoil had a lasting effect on the financial system, as Unicredit is on the verge of hitting a new low, and the other large players also remain under pressure, in part explaining the general weakness in European equities.

Europe Still Far Behind amid Mixed Economic Numbers

USD/CAD, 4-Hour Chart Analysis

The economic calendar is almost empty today with regards to the key markets, as the Canadian Retail Sales and CPI reports are the most important releases. The Canadian Dollar rebounded when the USD entered a correction June, but now the currency edging lower again, as the weakness in commodities and the Greenback’s rally are taking their toll. New highs are likely in the USD/CAD pair in the coming weeks, although strong resistance is just ahead at 1.33.

Commodities are little changed today after yesterday’s volatile session, as the bounce in China helped to stabilize the segment. Notably copper is back above the key $2.70 level, while WTI crude oil is trading at $68 per barrel again, and gold is hovering around $1225.

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 297 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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