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Week in Review: Bitcoin Through the Stratosphere, and Nothing Even Comes Close

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Bitcoin put up an epic rally this week, upstaging equities and political developments centered on tax and the Federal Reserve. An impressive rise in crude oil also made headlines, as investors continued looked on favorably to speculation that OPEC is considering extending its production cuts well into 2018.

BTC/USD Hits $7,000, and then Blows Past It

Bitcoin posted one of its more dramatic rallies this week en route to fresh records. BTC/USD surged to $7,000 and beyond, adding a staggering 24% over a five-day stretch. At press time, BTC/USD was trading at $7,213 for a market capitalization of $120 billion.

A multitude of forces have combined to give bitcoin a market cap that rivals some of Wall Street’s biggest companies. Chief among them is the prospect of greater institutional cash flow following news that CME Group is planning to launch BTC futures contracts. In doing so, CME joins rival CBOE in embracing digital currency.

Bitcoin’s rally failed to generate additional buying interest in altcoins this week. Though the altcoin market improved on Friday, the likes of Ethereum, Ripple and Litecoin struggled throughout the week.

Stocks Return to Record Territory

Wall Street put up steady gains this week, as all three major benchmarks closed at record highs. The Dow Jones Industrial Average climbed rose 0.4% during the week to finish at 23,539.19. The large-cap S&P 500 Index eked out a five-day gain of 0.2% to close at 2,587.84. Meanwhile, the tech-driven Nasdaq Composite Index added nearly 1% to settle at 6,764.43 on Friday.

Technology stocks continued their upward climb after being responsible for 75% of equity returns in October.

Implied volatility also dropped to their lowest level since the summer, as investors kept their portfolios heavily invested in the stock market. The Chicago Board Options Exchange (CBOE) Volatility Index plunged 8% on Friday to close at 9.14. The so-called “fear index” trades on a scale of 1-100, where 20 represents the historic mean.

Powell Gets Fed Nomination

On Thursday, U.S. President Donald Trump  nominated Jerome Powell to lead the Federal Reserve once Janet Yellen’s term expires in February. The move ensures continuity in terms of monetary policy only without Yellen, a Democrat who was on the outs with the current administration.

“Today is an important milestone on the path to restoring economic opportunity to the American people,” Trump said in a press conference Thursday.

“He’s strong, he’s committed and he’s smart, and if he is confirmed by the Senate, Jay will put his considerable talents and experience to work leading our nation’s independent central bank,” Trump said in reference to Powell.

Powell is a current governor with the Fed, and is a voting member of this year’s Federal Open Market Committee. Speculation surrounding his appointment upstaged the Fed’s two-day policy meeting that ran until Wednesday. As expected, policymakers kept interest rates on hold until December.

Crude Oil at 2017 Highs as Rally Continues

Oil prices continued to soar this week, reaching their highest levels of the year on an improved demand outlook and signs that peak supplies were simmering down. U.S. West Texas Intermediate (WTI) for December settlement added 3.2% for the week to close at $55.64 a barrel.

The January futures contract for Brent crude added 2.7% for the week to finish at $62.07 a barrel.

Crude prices received a boost on Friday after rig-services provider Baker Hughes reported another weekly drop in active rigs. Drillers operated 11 fewer rigs last week, most of which was due to a loss in the number of active oil rigs. That was the largest decline this year.

U.S. Jobs Market Back on Track

It has been a positive month for the U.S. labor market after two devastating hurricanes took a knife to the official jobs numbers.

On Thursday, the Labor Department said weekly jobless claims fell to the lowest level in over 44 years. Twenty-four hours later, the same department announced the creation of 261,000 jobs for the month of October. Though far below forecasts of 310,000, the prognosticators discounted a sharp upward revision during the previous month. As it turns out, the economy created 18,000 jobs in a hurricane-ridden month. The original report showed a decline of 33,000 jobs.

Fewer layoffs and more hiring are positive signs for an economy that has shifted into higher gear over the last eight months. America under Trump has been more confident and far more optimistic about the future – at least when measured along certain economic indicators and the stock market. The president is still dealing with an abysmal approval rating, although that could be attributed to sharp partisanship on the part of U.S. voters.

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 647 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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Analysis

Selloff Resumes as Italian Budget Crisis Deepens

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It was another ugly day for risk assets globally, with equities getting hit particularly hard and although the major US indices managed to hold on above last week’s lows, the charts are now looking wounded even on Wall Street.

There were plenty of negative catalysts dragging lower stocks during the session, with especially the ugly Italy-European Union budget debate causing turmoil in Italian government bonds, equities, and to a lesser extent, the Euro.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The new bear market lows in the main Chinese indices also weighed heavily on sentiment throughout the day, while the post-Fed-minutes rise in US Treasury Yields also added to the worries. Wall Street opened lower, and after a brief rally attempt sellers took control of the market, and the rout didn’t stop until the closing bell with the Nasdaq leading the way lower yet again.

The tech benchmark shed a bit more than 2% on the day, and stocks finished with deep losses across the board, despite the better-than-expected quarterly report of Philip Morris (PM) and the beat in the Philly Fed Index.

Russell 2000, 4-Hour Chart Analysis

The short-term trend in the US is undoubtedly bearish, and although all benchmarks, including the Russell 2000, are holding up above their recent multi-month lows, we would still treat any rally as a selling opportunity in stocks.

Tomorrow we could see fireworks again, and the Asian session could already be very active, since several key Chinese economic releases are coming out, such as the quarterly GDP, Retail Sales, and Industrial Production.

2-Year US Yield, 4-Hour Chart Analysis

Treasuries had a very hectic session, as yields, especially on the short end of the curve got close to their recent highs in early trading before pulling back due to the intensifying Italy-related worries towards the end of the US session.

Given the recent hawkish tilt in the Fed’s rhetoric, strong flattening of the yield curve could be ahead, should the equity selloff deepen, as we don’t see new highs on long-dated yields in that case, but a quick change in the tightening schedule of the US central seems less likely now.

Dollar Confirms Swing Low amid Risk-Off Flows

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair dipped below the 1.15 level again, and although the momentum of the move is weak, the Dollar Index also confirmed the swing low that we pointed out yesterday. The reserve currency could be ready to test its August highs, even as the most vulnerable emerging market currencies are still relatively strong.

Given the expansive fiscal policy of the Trump administration, it’s no surprise that the Dollar is not surging higher, even as the troubles in the Eurozone are way deeper. Still, the Greenback entered another leg higher in its uptrend, and besides the safe-haven Yen, no major currency is in a bullish technical position compared to the USD even form a short-term perspective.

That said, forex markets could see very hectic conditions in the coming busy months, with the US midterm elections, the possible Chinese crisis, the ongoing quantitative tightening, and of course Donald Trump all capable of causing wild swings in the major pairs.

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 379 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

Market Update: U.S. Stocks Take the Plunge as China Selloff Intensifies; Crypto Institutional Lending on the Rise

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U.S. stocks swung back sharply into negative territory on Thursday, as a fresh selloff in Chinese markets weighed on investors’ sentiment even as Beijing escaped the “manipulator” label. Cryptocurrenices continued to hover in a narrow range, as risk-off sentiment in traditional markets failed to spur new demand.

Stocks Resume Slide

All of Wall Street’s major indexes finished in the red, with the large-cap S&P 500 Index closing down 1.4% at 2,768.84. Nine of 11 primary sectors contributed to the declines, with information technology, industrials and communication services among the biggest laggards.

Sliding tech shares dragged the Nasdaq Composite Index sharply lower. The benchmark settled down 2.1% at 7,485.14.

The Dow Jones Industrial Average plunged 327.36 points, or 1.3%, to close at 25,379.32.

On Tuesday, the major bourses recorded their biggest single-day advance since March, buoyed by upbeat corporate earnings and easing tensions over Saudi Arabia.

China Roils Markets

Stocks in mainland China were at the center of the selloff on Thursday, as the benchmark Shanghai Composite Index fell to its lowest level in four years. The index closed down 2.9%, extending its October slide to a staggering 12%.

The Shanghai Shenzhen CSI 300 Index fell 2.4%. Hong Kong’s Hang Seng benchmark finished flat.

China’s national currency, the yuan renminbi, touched its lowest level in 21 months after the U.S. Treasury refrained from labelling Beijing a currency “manipulator” in its biannual report. The Trump administration has called out China for manipulating the yuan to maintain a lop-sided trade advantage against the U.S. and other nations. This has prompted calls from within the administration to implement heavy import duties as well as recognize China as a currency manipulator. So far, President Trump has pursued tariffs on more than $250 billion in Chinese imports.

Cryptocurrencies Hold Steady

For a fourth straight session, cryptocurrency prices were locked in a narrow range on Thursday, as a lack of trading catalysts kept market players on the sidelines. This comes despite a sharp rise in futures trading volume in the third quarter, according to CME Group.

The combined value of digital assets in circulation reached a high of $212 billion on Thursday. It would later fall back below $209 billion on subdued trading volumes. Bitcoin, the leading crypto based on market cap and volume, continues to trade comfortably above $6,500. It’s share of the overall market has increased to 54.1%, according to CoinMarketCap.

Institutional adoption of cryptocurrency is steadily rising, according to a new report by Genesis Capital, who in March became the first company to launch an institutional lending business. As CCN reports, the new service has originated more than $550 million in loans over the past seven months, with $130 million still outstanding.

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 647 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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Analysis

Pre-Market Analysis And Chartbook: Stocks Turn Lower as Treasury Yields Eye Multi-Year Highs Again

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Thursday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,791 -0.91%
DAX 30 11,664 -0.43%
WTI Crude Oil 69.16 -1.30%
GOLD 1,227 0.16%
Bitcoin 6,438 0.01%
EUR/USD 1.1486 -0.11%

Equities are broadly lower after the opening bell on Wall Street, with the selloff in China and the rise in US Treasury yields setting the tone for the day so far. The risk-off shift that dragged even the mighty US stock market lower last week continues to dominate trading globally, and while volatility is well below its recent peak, bulls are on the defensive with regards to the majority of risk assets.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

The Shanghai Composite hit yet another 4-year low today, amid rumors on forced liquidations following the hawkish surprise of yesterday’s Fed meeting minutes. The Chinese index confirmed its bear market again, and as the trade war rhetoric of the Trump administration will likely heat up before the midterms in November, selling pressure could remain strong.

FTSE 100 Index CFD, 4-Hour Chart Analysis

With the likelihood of a no-deal Brexit increasing, nervous trading continues on the related assets, with especially British equities feeling pain lately. The FTSE 100 has been lagging even the relatively weak European markets, and although the benchmark is trading above its spring lows, thanks mostly to the long-term weakness in the Pound, short-term technicals are very weak, and a breakdown below to a new almost 2-year low looks imminent.

Economic numbers have been mixed today, with British Retail Sales missing the consensus estimate by a mile, while the US Philly Fed Manufacturing Index came in slightly better than expected. The negative surprise added to the pressure on British stocks, although forex markets are little changed and the Pound remained relatively stable.

US Stocks Lower Again amid Choppy Consolidation

S&P 500 Futures, 4-Hour Chart Analysis

The major US indices opened lower and extended their losses in the first hour of trading, with the S&P 500 still trading in a clear short-term downtrend following last week’s plunge. Treasury Yields, particularly on the short-end of the curve are aback near their multi-year highs after yesterday’s Fed surprise, and that weighs heavily on investors sentiment.

Philip Morris (PM) is up by more than 3% following its earnings report, as the company continued the quarter’s trend of positive surprises, but the broader market is still largely ignoring the bullish news, as US investors are focusing more on the mounting funding risks and the strengthening international headwinds.

Copper Futures, 4-Hour Chart Analysis

While currencies are relatively calm today, commodities are having an active session, and crude oil and copper are both headed lower amid the fresh risk-off shift, while old is flat thanks to safe-haven flows. WTI crude hit another one-month low today after yesterday’s breakdown, falling below $69 per barrel and copper is also in a precarious technical position.

The volatility compression pattern looks to be ending in the industrial metal, as we expected, given the weakness in China, it’s no surprise that the commodity moved below its short-term range. A drop below the strong support near $2.70 could mean that copper resumed the broad downtrend, and that would be a bearish sign concerning the global economy.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 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

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold 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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4.6 stars on average, based on 379 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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