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Week in Review: Ethereum Hits Record High as Stocks Return to Strength

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Ethereum stole the spotlight from bitcoin this week after the world’s no. 2 cryptocurrency soared to new highs. Bitcoin still shot up more than $500 for the week to trade well north of $8,000.

On the commodities front, oil prices spiked to fresh two-year highs amid signs of a rebalancing crude market. This kept energy shares buoyant in a holiday-shortened Friday session.

Ethereum’s Major Breakthrough

ETH/USD had one of its strongest weeks in recent memory as traders took price levels above a key technical threshold. The native ether token spiked more than 38% over the past five days, which is equivalent to $126. Prices touched a high of $466.85 before consolidating around $458. The gains five Ethereum a market cap of $44 billion, according to CoinMarketCap. Trade volumes over the past 24 hours exceeded $2.2 billion.

Activity in South Korea appears to be the major catalyst behind the weekly gains, with won-related ether trades showing strong volumes on Bithumb. Price action suggests ether prices could be headed higher over the short term.

Bitcoin Holds Its Ground

Ethereum may have stolen the show this week, but bitcoin certainly was no slouch. The original blockchain surged to new highs this week on signs that institutional traders will soon pour into the market. BTC/USD touched highs north of $8,370 earlier this week before consolidating in the mid $8,200 region.

Bitcoin Cash (BCH) also posted firm gains, as the market extended its rally from two weeks ago. BCH/USD added more than 44% this week to settle around $1,650. The alternative bitcoin has seen a surge in momentum after backers of the Segwit2x hard fork abandoned their upgrade, citing a lack of consensus.

Crude Oil’s New Two-Year High

Crude prices rose across the board this week as a sharp drop in U.S. stockpiles boosted confidence that the global energy market is rebalancing after a prolonged glut. U.S. West Texas Intermediate (WTI) for January settlement rose 93 cents, or 1.6%, to $58.95 a barrel on the New York Mercantile Exchange. The contract briefly traded above $59.00 in holiday-shortened trade.

ICE Brent futures, which are traded on the global market, climbed 31 cents, or 0.5%, to $63.86 a barrel.

Despite the latest rally, crude prices could face renewed pressure next week as traders evaluate the latest oil rig data from Baker Hughes. On Friday, the energy services provider said active U.S. oil rigs rose by nine to 747 in the latest week. Rig counts are expected to continue rising as oil prices return to health.

Wall Street Notches Weekly Gains

U.S. stocks advanced in a holiday-shortened week, as investors awaited President Trump’s final push for tax reform before Christmas.

Activity on Wall Street was muted this week, with the New York Stock Exchange closing for Thanksgiving on Thursday. Market activity remained limited in a shortened session on Friday.

The large-cap S&P 500 Index, Dow Jones Industrial Average and Nasdaq Composite Index each rose to new highs this week.

The S&P 500 rose 0.2% on Friday to close at 2,602.42. The Dow added 0.1% to finish at 23,557.99. Meanwhile, the Nasdaq notched gains of 0.3% to close at 6,889.16.

Energy stocks were among the better performers on Friday, rising 0.3% as a sector.

A measure of implied volatility known as the CBOE VIX fell back to single-digit territory, signaling renewed optimism in U.S. markets. The VIX “fear index” closed at 9.67 Friday, on a scale of 1-100 where 20 represents the historic mean.

Globally, Chinese markets stabilized at the end of the week following their biggest one-day drop in nearly a year. Volatility hit mainland stocks on Thursday as Beijing took fresh measures to curb market speculation.  The Shanghai Composite Index closed at 3,353.82 on Friday, where it was little changed from the previous session.

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

Hawkish Fed Lifts Yields, Dollar as Stock-Correction Continues

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US stock markets had a choppy and mixed session, and the major indices closed the day virtually unchanged, despite the early losses and the negative news flow. The US housing market disappointed again, the EU-Italy debate over the country’s budget continued, the US-Chinese relations further deteriorated, and the Fed also provided a negative catalyst towards the end of the day.

Dow 30 Index Futures, 4-Hour Chart Analysis

Investors were eagerly waiting for the meeting minute form the Fed’s latest meeting, but those expecting a dovish surprise were let down. The transcript contained more hints to tighter-than-expected monetary policies in the coming months and years, but still after an initial dip stocks rebounded to pre-announcement levels.

US 2-Year Treasury Yield, 4-Hour Chart Analysis

While especially shorter-dated yields rallied after the release, we would add that although there were voices that the Fed should exceed the “neutral” interest rate to cool the economy in the future, those voices will likely be muted by any major correction in financial markets or even a moderate slowdown in the economy.

Russell 2000, 4-Hour Chart Analysis

Stocks weathered the rise in yields so far, but after-hours, futures markets are drifting lower, and should yields resume their recent swift advance, another wave of selling could hit risk assets. With a lot of stocks and benchmarks still clearly in oversold territory concerning the short-term momentum indicators, the choppy correction could also continue, but we remain defensive towards global stocks, and we expect the risk-off period to continue in the coming weeks.

Dollar Extends Early Gains as WTI Crude Dips Below $70

Dollar Index (DXY), 4-Hour Chart Analysis

While the Dollar was already up in early trading against most of its major peers, it got a strong boost from the meeting minutes, with the Dollar Index climbing above the key support/resistance level near 95.50, establishing a swing low.

Barring a quick reversal, the Greenback headed for another important leg higher, and all eyes will be on the 1.15 level in the EUR/USD pair, as an extended move below that could open up the way for a strong momentum move in the USD. On a positive note, the most vulnerable emerging market currencies continue to perform well, in contrast with equities in the segment, and that could give some stability to risk-on currencies in the face of the broadly negative technicals

WTI Crude Oil, 4-Hour Chart Analysis

Commodities mostly finished the day with losses amid the rally in the Dollar, but while gold still only gave back a small part of its recent gains, oil plunged to a new almost one-month low, at least as measured by the WTI contract.

The Brent contract continues to outperform despite the easing of the US-Saudi tensions, but overall the risk-off shift in global markets is clearly hurting oil.  Copper is still stuck in a volatility compression pattern, but given the lengthy consolidation, a significant move is expected in the coming days by the industrial metal.

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 378 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 Sputter as Fed Minutes Signal Assertive Rate-Hike Path

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U.S. stocks traded lower on Wednesday, with financials diverging from the broader market in anticipation of an assertive rate-hike path by the Federal Reserve. Crypto markets were largely unfazed midweek, though Stellar XLM emerged as the most prominent winner with gains of more than 7%.

Stocks Settle Down

Equity markets drifted between gains and losses before settling mostly lower. The Dow Jones Industrial Average closed down 91.74 points, or 0.4%, at 25,706.68. The technology-heavy Nasdaq Composite Index closed at 7,642.70, where it was virtually unchanged. Meanwhile, the large-cap S&P 500 Index pared gains by the close to settle flat at 2,809.21.

Most major sectors finished in the red, with energy, materials and discretionary shares leading the market lower. Technology stocks also declined sharply. On the opposite side of the spectrum, financials stocks rose more than 0.9% on average.

FOMC Minutes Confirm Need for Higher Interest Rates

Several members of the Federal Reserve’s policy-setting board believe interest rates need to rise higher than the long-term average, according to the official transcript of last month’s meeting, which was released on Wednesday. All members agreed to remove reference to accommodative monetary policy from the official statement.

Central bankers last month voted unanimously to raise the federal funds rate to 2.25%, with the official policy statement making a strong case for an additional hike in December. Rate-hike expectations have been baked into the market, with long-term bond yields soaring to seven-and-a-half year highs.

“Participants generally anticipated that further gradual increases in the target range for the federal funds rate would most likely be consistent with a sustained economic expansion, strong labor market conditions, and inflation near 2%over the medium term,” the official transcript read.

The U.S. dollar continued higher after the release of the FOMC minutes at 2:00 p.m. ET. The dollar index (DXY), which tracks the performance of the greenback against a basket of six currencies, jumped 0.5% to 95.48.

Crypto Markets Stabilize

With the exception of Stellar XLM, major cryptocurrencies were largely unchanged Wednesday as a lack of trading catalysts kept speculators on the sidelines. The combined valued of digital assets reached a high of $212.7 billion, according to CoinMarketCap. The total market has since fallen back to around $211 billion.

XLM rose to fresh weekly highs on reports that PrimeTrust, a qualified custodian, was rolling out support for Stellar-backed tokens. The XLM token is currently valued at $0.2412.

Bitcoin, the largest digital currency by market cap, consolidated in the mid-$6,500 range following a sharp run-up in prices at the start of the week. BTC continues to trade at a premium on Bitfinex and other exchanges known for facilitating large USDT orders. USDT, the controversial stablecoin issued by Tether, sold off on Monday, underscoring a broad shift in investor sentiment.

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: Risk Assets Under Pressure as Fed Minutes Loom

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Wednesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,789 -0.98%
DAX 30 11,715 -0.52%
WTI Crude Oil 69.79 -3.27%
GOLD 1,229 0.13%
Bitcoin 6,429 -0.49%
EUR/USD 1.1528 -0.38%

While yesterday we saw a huge oversold rally in equities, with the help of positive corporate earnings, the easing of the US-Saudi standoff and the stability in Treasury yields, today investor sentiment shifted yet again.

Negative news regarding the US-Chinese trade war, which is very likely to intensify before the US midterms, dismal European car sales, and continued worries with regards to the Italian budget and the Brexit process all acted as bearish catalysts.

DAX 30 Index CFD, 4-Hour Chart Analysis

Although European markets followed the lead of Wall Street and rallied today in early trading, the major indices are already well below their intraday highs, after turning back from the first levels of resistance. The DAX ran into resistance near the 11,850 level, below the crucial 12,000 level that could be the line-in-the-sand in deciding the long-term outlook going forward.

The German benchmark, the FTSE 100, and the EuroStoxx 50 are all in strong declining trends, and with the most important Asian markets also under strong short-term selling pressure, the US markets have a steeper and steeper mountain to climb should they resume the bull market.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The Nasdaq opened slightly below yesterday’s cash close, underperforming the Dow and the S&P 500, and since then sellers have been in control of the market. The Russell 2000 that has been showing the way for the broader market lately is deep in the red as well, and we still think that risk assets are facing a prolonged correction if not an outright bear market.

Treasury yields are stable before today’s most important release, the minutes from the Fed’s latest meeting, but the dynamics of the quantitative tightening (the shrinking balance sheets of the global central banks) are likely behind the faltering of global risk assets.

VIX Pulls Back as Dollar Attempts Rally

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

The US Volatility Index fell significantly amid the bounce in stocks, hitting the key 17 level yesterday after plunging below 20, but the chart of the measure still confirms the regime change that would be consistent with a prolonged bearish period. While the bounce could still continue, forming a more complex pattern, the volatility-conditions could very important to judge the stability of the market.

EUR/USD, 4-Hour Chart Analysis

Forex markets continue to experience heavy trading, and today the US Dollar is trying to gain back momentum after its recent correction. Although the worse than expected housing data (building permits and housing starts both missed expectations) could have been bearish catalysts today, the Greenback held on to most of its early gains.

Should the reserve currency form a swing low and continue its broader rising trend, emerging markets could be back in the crosshairs, and risk assets would face another problem. All eyes are on the support zone near 1.15 in the EUR/USD pair, as a move below that would be a bullish sign for the USD, and it would warn of a test of the August low near 1.13.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 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

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

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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4.6 stars on average, based on 378 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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