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Market Overview

Wall Street Fear Index Back in Double Digits as Stocks Falter

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A measure of implied volatility rose on Monday, closing at a level not seen in two weeks as equities backtracked from record territory.

Fear Index Returns to Double Digits

The Chicago Board Options Exchange (CBOE) Volatility Index rose 7.1% to close at 10.33. That was the first time since Sept. 26 that the VIX closed in double digits.

Volatility has now increased in back-to-back sessions, rising more than 12% over that period.

The fear index has traded at uniquely low levels all year long as stocks shot up through the stratosphere on pro-growth optimism. A pullback in equities is usually accompanied by a rise in Vol, as evidenced by the market’s performance on Monday.

All of Wall Street’s major indexes finished in negative territory in early-week trade. The large-cap S&P 500 Index declined 0.2% to close at 2,544.73. Six of 11 sectors contributed to the declines, with healthcare stocks shedding 0.7%.

The CBOE VIX trades inversely with the S&P 500 Index roughly three-quarters of the time.

Trump Eyes Deal With Democrats Over Healthcare

Health stocks came under pressure after President Donald Trump said he was open to cutting a short-term deal with Democrats as a first step in reforming the nation’s healthcare system.  GOP infighting has prevented the Trump administration from tabling any meaningful reforms.

“If we made a temporary deal, I think it would be a great thing for people, but it’s really up to them,” Trump said this weekend, in reference to rival Democrats.

“So if we could do a one-year deal or two-year deal as a temporary measure, you’ll have block granting ultimately to the states, which is what Republicans want,” he added.

FOMC, Economic Data Eyed

Activity on Wall Street is expected to pick up in the coming days as investors eye the minutes of last month’s FOMC policy meeting. The official transcript could shed light on the Federal Reserve’s timetable for raising interest rates.

A pair of high-profile data sets will also make the rounds on Friday. The Labor Department’s consumer price index (CPI) will be released Friday at 8:30 a.m. ET. Separately, the Department of Commerce will issue its monthly retail sales report.

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 466 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

Strike the Hammer While the Iron is Hot

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Mixed emotions as the EOS token is live for trading again but has lost a lot of its premium value.

The crypto-market has come down quite significantly since EOS began their switch from the Ethereum network on June 1st. The launch of the EOS Mainnet was supposed to take only a few days but in the end, lasted about three weeks.

Even though the launch was shaky, the decline in price is actually more or less in line with the rest of the crypto market.

In fact, over the last month, it was the least worst performer of the three tokens that are competing for the title “Ethereum Killer.”

For those involved in the crypto space, the price movements are less interesting than the future potential of the technology. The question of which network will come out on top is now prevalent.

Now that EOS is online, its creator Dan Larimer has released a series of tweets disparaging the Ethereum model and explaining why he feels EOS is better than Ether. Of course, Twitter is a rather uphill battle for Mr. Larimer who has only 30,000 followers.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Trump’s Tech Block
  • TRY Fly
  • BTC Spike

Please note: All data, figures & graphs are valid as of June 25th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Trading last week was dominated by relations between the US and China and the so called trade war. This week probably won’t be much different.

The latest escalation in the tit-for-tat saga is that President Trump is now considering a block on Chinese investment in American Technology.

This puts an entirely new spin on the broadening negotiations between the world’s two largest economies.

Stock markets in Asia are taking a hit this morning as they process the news. Here we can see the China 50, Hong Kong 50, and even the Nikkei 225, declining this morning.

Turkey’s Fate

There was no surprise in the elections this weekend. Erdogan the incumbent took a sweeping victory and won another five year term as President.

After winning the nation-wide referendum last year, term limits have now been abolished and Parliament’s role has been drastically reduced. In other words, the President is now more powerful than ever. Many believe that his next move is to raise his level of influence with Turkey’s central bank.

The bank is rather worried about the high levels of inflation, and rightly so. The President, on the other hand, prefers a strategy that values economic growth over the stability of the Lira.

The Lira did get a bit stronger on the election results, though it’s not clear why. Some are calling it a relief rally as some of the uncertainty has been removed. Many traders, on the other hand, are using this as an opportunity to up their Lira shorts.

Here’s a long-term chart of the USDTRY. (Remember, the chart is inverted so a move up means a weaker Lira.) The last candle (circled in purple) is the reaction to the elections. Technical chartists will no doubt point out that the classic pattern formed here is known as a “bullish hammer,” especially if it closes the day higher.

Bitcoin’s Spike Down

It’s been a rough year so far for bitcoin hodlers. The retracement from the peak in December to the lows on February 6th, was the third largest retracement in bitcoin’s history in percentage terms.

Here’s a technical analysis graphic that we released at that time.

Since then, not much has changed until yesterday when the February 6th lows were taken out with a spike.

For now, the fact that the price bounced back and is now holding above $6,100 is a testament to bitcoin’s resilience. Many times when a level of support is broken, the tendency of the market is to carry it lower. Though it is possible for the price to carry lower from here, the bounce back is a clear sign that there are buyers in the market.

Let’s keep a watch on it for the next few days and see if it can sustain this level of support, and monitor the volumes which have been rather mellow over the last few weeks.

Wishing you a very mellow mood this week.

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 105 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Fed Tests Big Banks & Adds Support for Crypto

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Hi Everybody,

Every year since the financial crisis the Federal Reserve creates a simulated crisis to see which banks are healthy enough to survive in the event of an emergency.

The tests were particularly difficult this year because the economy is doing well, but it does seem that a few U.S. banks passed by the skin of their teeth.

Here we can see the results for some of the top banks.

It’s important to note that this simulation is not indicative of a real world situation. Next week the Fed will perform a few more tests that should give us a better understanding of the situation.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Greek Debt Deal
  • Win for Mom & Pop
  • Fed Adds Ethereum

Please note: All data, figures & graphs are valid as of June 22nd. All trading carries risk. Only risk capital you can afford to lose.

Greek Debt Deal

The negotiations have been going on for far too long and have brought the markets to their knees several times already. Today the crisis has finally been declared over.

Though the Greeks didn’t get anything close to the deal that Prime Minister Alexis Tsipras advocated in his famous 2015 election campaign, they did win a number of concessions from the European Union that will make it easier to operate the country and start borrowing money from the public again.

Much of the €96 billion owed will be pushed back by 10 years, which should allow the country to breathe and grow the economy in the meantime.

The Euro is gaining a bit of ground this morning on the news (purple circle), although hasn’t quite recovered from Draghi’s announcement last Thursday.

Win for Mom & Pop

A landmark case has now passed the US Supreme Court that could have an impact on your portfolio going forward.

Until now, online stores in the United States were exempt from local sales taxes in states where they do not have a physical presence.

Bricks and mortar stores claim that they have been disadvantaged by this for the last 25 years. Some even say that this has been a major contributing factor to the retail apocalypse of the last decade.

Going forward, online retailers will be subject to the same taxes that everyone else is, which should level the playing field a bit, but won’t necessarily reverse the online shopping trend.

The clear winners here are the state governments because they’re about to get billions more in tax revenues. This may be a good time to look at the stocks you’re holding as bottom lines for both online and offline retailers will be affected by this.

Fed adds Crypto

While many old school financial institutions see cryptocurrencies as a threat, the Federal Reserve Bank of St. Louis is extremely supportive of them.

They have already released a significant amount of research detailing how the introduction of a new form of decentralized money can have a stabilizing effect on the global economy.

This week, the Federal Reserve Economic Data (FRED) website, run by the St. Louis Fed, has taken a massive step towards legitimizing cryptocurrencies in the eyes of the financial world by adding price tracking graphs for Bitcoin, Bitcoin Cash, and Ethereum, and Litecoin.

Here’s bitcoin on FRED…

…and Ethereum


Though the United States has been more skeptical about ICOs lately, they’re certainly looking a lot more friendly towards the more established cryptocurrencies.

What Else?

Remember that today is the much anticipated OPEC meeting. Watch for volatility in crude oil throughout the day.

Also, the Turkish elections will be held on Sunday. A month ago this looked to be a clear win for Erdogan the incumbent. Today, the scales have tipped just a little showing a slightly more favorable outlook for the opposition. Don’t get your hopes up too much though. Just keep an eye on the USDTRY.

Wishing you and yours an outstanding weekend 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,

Best regards,
Mati Greenspan
Senior Market Analyst

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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Analysis

Italy Spooks markets Again as Stocks Remain Under Pressure

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European stocks Led the way lower today despite a bullish start in Asia, as equities gave back their gains when Daimler published a surprising profit warning, which was deeply affected by the recent trade war developments, reigniting fears of a tariff-driven downturn in global trade.

DAX, 4-Hour Chart Analysis

The Old Continent got into more trouble later on, when two anti-EU officials were named in Italy, resurrecting fears of a clash between the systematically crucial country and the core of the Eurozone. Italian yields rose in European trading, and although they are still shy of the levels hit during the May scare, the periphery could be in trouble as the ECB pledged to exit the market by the end of the year.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The main European indices were smashed lower during the session, with the DAX hitting a two month low, still being very weak relatively speaking compared to its US peers. US stocks sold off heavily following the opening bell and they failed to recover, unlike two days ago, and the major benchmarks traded well below yesterday’s levels just before the close.

The Nasdaq and the Russell 2000 lost some of their recent mojo, pulling back heavily of the all-time highs during the day. All in all, the risk off shift continues to dominate across the board, as we expected and we remain negative on risk assets here, especially regarding emerging markets, even as the Dollar’s rally could be over for a while.

Dollar Pulls back as Pound Surges

USD/CAD, 4-Hour Chart Analysis

The Dollar took a beating as the Philly Fed Index came in much worse than expected, and as the Bank of England sent hawkish signals, pushing the Pound and the Euro higher. The central bank left its benchmark rate unchanged at 0.5%, but a rate hike this year got much closer, with a key member of the bank voicing inflationary concerns.

The Greenback fell more than what the events would imply, so a larger scale consolidation could have already started in the currency following the recent gains and the marginal new high yesterday. With the EUR/USD pair nearing the 1.1450-1.15 support zone, the USD/CAD hitting 1.33 and the AUD/USD touching 0.7350, a meaningful counter-trend move would be timely in the surging reserve currency.

WTI Crude Oil, 4-Hour Chart Analysis

Gold continued to drift lower before the Dollar’s reversal and it hit $1262 for the first time since lat December before bouncing back above the $1270 level in late trading. Crude oil also fell sharply in early trading, and the WTI contract traded with a $64 handle before rallying back to $66 per barrel.

The OPEC meeting, which is expected to result in a supply increase by the cartel made the crucial commodity very volatile in recent days, but we expect the bearish trend to continue, with a likely dip to the $60 level in the coming weeks.

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 280 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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