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Market Overview

The Easy Way In

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Hi Everyone

It’s quite natural to think that the news influences markets but in many cases, it simply isn’t true. People move markets.

In traditional markets, we see often how an announcement regarding employment or inflation, or an interest rate decision from a central bank can have a huge impact on prices.

This is mainly due to the vast number of investors who are anticipating these type of events and are ready to deploy a large amount of capital at the drop of a hat.

In crypto, we simply don’t have that just yet. You’d think that news of half a dozen major financial institutions will be opening new options for cryptotrading and cryptoasset solutions would have an effect on prices but they’ve so far remained stable.

So it’s not surprising that LibertyX and Genmega are about to convert 100,000 ATM machines across the USA into user-friendly bitcoin vending machines has had no impact on the price of bitcoin.

What this does do though is builds the infrastructure that will be necessary for mass adoption, so that when people do decide to buy, they’ll have an easy way in.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Asia Rally Over
  • Flight to Safety
  • Crypto Correlation

Please note: All data, figures & graphs are valid as of October 23rd. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Looks like Monday’s massive rally in Asia has been short-lived. By the time the bell rang on Wall Street, the mood had already turned sour and stocks across the board ended up down.

The only exception, oddly enough, was the Faang stocks, which managed to hold up the Nasdaq. As we discussed in yesterday’s update investors are looking to invest, but cautiously. Well, it looks like they found their refuge in the top tier brands.

The exception we can notice above is Netflix which dropped with the rest of the market. Also, it’s worth noting that even the Nasdaq futures are down this morning and the entire market threatens to break lower.

Here we can see the S&P500, which is sitting firmly below its 200 day moving average (blue line).

Perhaps the light at the end of the tunnel here is the upcoming earnings reports that will be closely watched by investment managers.

Flight to Safety

As the stocks turn red, we can see some clear signs that the other markets are looking for some safety. Turkish President Erdogan isn’t helping much either with strong accusations against the Saudi government over the Khashoggi incident.

Some are buying bonds as a way to lower the risk. As well the Japanese Yen is up sharply due to its status as a safe haven currency. This graph shows the greenback bowing to the Yen (this morning in the purple circle).

Of course, the most vulnerable at the moment are the emerging markets currencies, which are performing particularly poorly today.

Another clear sign of safe haven trading is the fact that gold has broken out to the upside making significant stretch into fresh highs and now trading at the highest levels since July.

Crypto Follow?

Though we’ve pointed out recently that crypto assets bear only a very small correlation with the stock market, they still are considered to be a high risk asset.

We have seen several times before where fear in the stocks has managed to spill over into the crypto markets and that might just be what’s happening at the moment.

The declines in crypto are very light today. This could be because, as we mentioned above, the tech sector seems to be mostly shielded from the current sell-off. In any case, there’s no denying that bitcoin and the Nasdaq are moving in tandem today.

Wishing you an excellent 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.

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

Stocks, Cryptos Resume Plunge; ICE Postpones Bakkt Launch Until January 2019

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U.S. stocks resumed their selloff on Tuesday, as the tech blowout extended to other segments of the market, pushing the major indexes into negative territory for the year. Cryptocurrencies crashed to fresh 13-month lows, as bitcoin’s elusive search for a bottom continued.

2018 Gains Reversed

All of Wall Street’s major indexes closed in negative territory, with the S&P 500 and Dow Jones erasing their yearly gains. The large-cap S&P 500 Index plunged 1.8% to 2,641.89. All 11 primary sectors finished in negative territory, with energy shares shouldering the biggest loss. A total of ten sectors reported losses of 1% or more.

All 30 companies tracked by the Dow Jones Industrial Average posted losses. The Dow 30 index settled down 554.24 points, or 2.2%, at 24,463.20.

The technology-focused Nasdaq Composite Index fell 1.7% to 6,908.50. That was the first time since April the index closed below 7,000.

Crypto Downturn Intensifies

The crypto downturn intensified on Tuesday, extending a weeklong selloff that wiped as much as $71 billion off the collective market cap. The combined value of all coins in circulation bottomed at $140.7 billion in the last 24 hours, levels not seen in over 13 months.

Bitcoin’s price touched new lows for the year, breaching the $4,300 threshold for the first time since October 2017. Bitcoin cash collapsed more than 32% on Tuesday to reach $225. Majors like Ethereum, XRP and Stellar Lumens all reported double-digit losses during the day.

Analysts and technical practitioners warn that further downside is likely in store for the cryptocurrency market, which continues to search for an elusive bottom. Bitcoin will continue to exert a gravitational pull on the market amid signs that some BTC miners are switching over to mine bitcoin cash.

Bakkt Launch Postponed

Intercontinental Exchange (ICE) is postponing the launch of its highly anticipated bitcoin trading platform until January to allow more time to onboard new clients, the global exchange operator announced Tuesday. Bakkt, as the platform is known, will initially facilitate the trading of physically-settled bitcoin futures contracts once it goes live on the new date of Jan. 24, 2019. Bakkt was initially scheduled to debut in mid-December.

Given the volume of interest in Bakkt and work required to get all of the pieces in place, we will now be targeting January 24, 2019 for our launch to ensure that our participants are ready to trade on Day 1,” Kelly Loeffler, Bakkt’s CEO, said in a Medium post.

As is often true with product launches, there are new processes, risks and mitigants to test and re-test, and in the case of crypto, a new asset class to which these resources are being applied. So it makes sense to adjust our timeline as we work with the industry toward launch.”

Bakkt is Corporate America’s largest venture into the cryptocurrency market, with partners like Microsoft and Starbucks joining a large consortium of dominant industry players looking to streamline adoption of digital assets.

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 672 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

Pre-Market Analysis And Chartbook: Risk-Off Trade Still On as Stocks Plunge Globally

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Tuesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,640 -2.17%
DAX 30 11,054 -1.68%
WTI Crude Oil 54.04 -4.81%
GOLD 1,223 -0.15%
Bitcoin 4,604 -2.75%
EUR/USD 1.1392 -0.52%

The broad risk-off shift that we have been following in recent months continues to be the dominant force in global financial markets, and today, global stock markets and the majority of risk assets are deep in the red again.

With no progress in the main issues, such as the Brexit process, the US-China trade talks, and the Italian budget debate, the major benchmarks are near or at their October lows, while currencies continue to trade in corrective patterns, due mainly to the dip in US Treasury yields.

DAX 30 Index CFD, 4-Hour Chart Analysis

The German DAX index and the Nasdaq are still in the center of attention, being among the weakest major benchmarks, and the prior leaders of the US bull are all under heavy selling pressure. The DAX is testing its October lows as we speak following the release of the strong German Producer Price Index (+0.3% on a monthly basis), with the all-time low in the shares of Deutsche Bank (DB) weighing heavily on the index.

A sustained new low, with a move towards 10,000 would cement the bear market in the key benchmark, and it would be another warning sign for bulls globally, even if a year-end feel good rally materializes in equities.

XHB, 4-Hour Chart Analysis

US stock futures suffered heavy losses overnight, extending yesterday’s intraday trend and in the case of the Nasdaq and the Dow, violating key support levels in the process. The homebuilder sector was once again in the center of attention in pre-market trading, with Building Permits and Housing Starts both coming out before the opening bell, the two measures ticked higher, in line with expectations, and that’s already something to cheer about in the sector following yesterday’s dismal NAHB Index.

The sector’s main ETF fell sharply this year, but thanks to the recent dip in Treasury yields, it started to show early signs of stability, and now, a period of relative strength could be ahead, which could reset the bearish sentiment, even as the long-term outlook is still plagued by the decade-long highs in mortgage yields.

Dollar Attempts Rally of Key Levels as Pound Continues to Struggle

GBP/USD, 4-Hour Chart Analysis

The US Dollar bounced off yesterday’s lows amid the deepening risk selloff, but for now, it remains well below its recent highs against the Euro and especially compared to the safe-haven assets such as the Yen and gold. The Pound, which has seen heightened volatility in recent weeks is hovering above last week’s lows near 1.27 against the Greenback.

The pair looks ready to test that level in the coming days, with the Pound, and British assets in general showing weakness due to the uncertainty surrounding the Brexit process.

WTI Crude Oil, 4-Hour Chart Analysis

The risk-off shift has also been hurting crude oil today, and the weak bounce following last week’s crash is fading away, despite the still deeply oversold momentum readings.

We continue to expect a larger scale bounce in the commodity, even as the WTI contract is already testing the lows from last week due to today’s sharp selloff. With that in mind, opening short positions is not advised here, although until a short-term trend change bulls should also stay on the sidelines.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 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

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

Gold Futures, 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 399 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

What the Dickens?

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Hi Everyone,

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

-Charles Dickens,
A Tale of Two Cities (1859)

I wonder if Dickens was a day trader…

Today’s Highlights

  • Tale of Two Sell-Offs
  • Fed Expectations
  • SEC Twist

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

Traditional Markets

Though we’ve shown in the past that on a day to day basis the stock markets are not very correlated with cryptoassets. However, it’s impossible to shake off the feeling that somehow the current sell-off in tech stocks is somehow related to what we’re seeing with the cryptos.

Indeed, the macro-economic story incorporates all assets and looking at the long-term graphs, we can spot clear similarities between these two seemingly unconnected markets.

This chart shows the movements of bitcoin (in blue) against the Nasdaq 100 (purple) since the beginning of 2017.

The year 2017 was an exceptional year for high risk assets, including cryptos and tech stocks. In 2018, we’re seeing is a retracement of that.

When prices reach levels that are higher than can be justified, they need to pull back and so the cycles continue. It’s important to note that over this time the Nasdaq is still up 30% and Bitcoin, well… you can see the percentage in blue on the above chart.

It isn’t possible to time the markets to a T, so every person needs to take the decision if they’re an investor or a trader. If you’re trying to catch each and every small move, it can prove to be difficult, especially in times of uncertainty such as these. For long-term investors, results are usually much more predictable.

What’s Causing this?

The simple answer is that everything we’re seeing across all markets is still the aftermath of the 2008 financial crisis.

The world’s governments and central banks have pumped very large amounts of money into the system over the last 10 years in order to stabilize the financial system. Much of this money has by now found its way into various markets, often times with little research on the part of the investor as to what the value of the assets should logically be.

With this in mind, it’s important to note that a lot of this cash is still on the sidelines looking for a home. So, whenever these markets do find themselves their respective bottoms, there’s still a mountain of capital that could potentially be put to work. The only question that nobody can answer with certainty is exactly where those bottoms may be.

If things turn around now, it would certainly be a very bullish sign, but it’s also entirely possible that this could last a while longer.

No News is Good News

Despite what many are claiming, my view is that current news events are only having a limited impact on prices at this time.

The current scandal surrounding the auto tycoon Carlos Ghosn, CEO of Renault, has certainly influenced short-term pricing in the automotive sector, but it’s only a very small piece of the larger macroeconomic story playing out above.

Same goes for the Bitcoin Cash Hard Fork and crypto, and OPEC with crude oil. These developments do influence short-term sentiment but are still not the main drivers.

Sometimes people get so wrapped up in finding a story to go with a movement that they misinterpret the new entirely. A great example of this is the SEC ruling that came out on Friday, which many have blamed for the current price action.

If you read the ruling, you’ll notice that this new update brings a lot more clarity than we previously had, and should be serving to bolster confidence rather than tearing it down.

The fact that the SEC chose to settle with AirFox and Paragon is a clear sign that the US authorities are taking a supportive stance towards blockchain startups. Here’s an excerpt from the document.

Consider what this might mean for XRP for example. It’s very possible that the SEC could come out and say, that it is an illegal unregulated security, hand them a fine, have them compensate any outstanding claims, and then they could very well be allowed to register as a security and continue their business.

Of course, we can’t pretend to know how things are going to play out, but this is why it always pays to diversify our investments and think long-term.

Let’s have an amazing 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 135 rated postsSenior Market Analyst at Etoro.com.




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