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Week In Review: Stocks Take-Off Along with Bitcoin and the Dollar

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Stocks, bitcoin and the dollar are seeing green this week, with momentum hard to stop thanks to a multitude of favorable developments in the global financial markets.

Wall Street’s Rally Extends to Six Weeks

U.S. stocks ended in record territory on Friday, with the Dow, Nasdaq and S&P 500 setting fresh highs. Upbeat earnings and progress on the political front have been the main catalysts behind the recent run of gains.

The Dow Jones Industrial Average rose 0.7% on Friday, extending its weekly rally to 2%. The blue-chip index has gained 18% since Jan. 1.

The Nasdaq Composite Index on Friday produced its 62nd all-time for the year, on par with the 1999 tech bubble. The S&P 500 Index also printed fresh records Friday for the 49th time this year. According to Bloomberg, that rate has been eclipsed five times since 1946.

A measure of 30-day volatility known as the CBOE VIX settled in the single digits Friday. Investors have been net short volatility all year long.

The VIX has traded in the 9s for the better part of the month. That’s less than half of its historic mean.

Corporate Earnings Mostly Positive

Several Dow Jones blue chips reported earnings this week, with the likes of UnitedHealth (UNH) and Goldman Sachs (GS) beating forecasts. The broader S&P 500 is on track for another quarter of year-over-year earnings growth, according to FactSet.

The financial researcher says 17% of S&P 500 companies have reported earnings through Friday. Their blended earnings growth is 1.7%. Six sectors have contributed to the gains, with energy leading the way.

Dollar Gains Traction

The U.S. dollar index (DXY) rose half a percent Friday en route to two-week highs after Republican senators approved a budget blueprint that paves the way for President Trump’s tax overhaul. Lawmakers voted along party lines, with 51 GOP Senators backing the budget.

The DXY dollar basket finished the week at 93.70, having gained in five of the last seven sessions. The greenback rose to more than three-month highs against the yen. It also jumped more than 1% against the Canadian dollar Friday to reach the highest level since August.

A stronger dollar also weighed on commodities, which are denominated in the U.S. currency. U.S. West Texas Intermediate (WTI) crude futures finished higher for the week, but were knocked off multi-week highs.

Precious metals were among the biggest losers this week, with gold futures shedding more than $24 to settle at $1,280.50 a troy ounce. That’s the lowest settlement in two weeks on the Comex division of the New York Mercantile Exchange.

Silver futures also sold off 1.9% to $17.08 a troy ounce.

Bitcoin Reaches New Milestone

Bitcoin surpassed its altcoin competitors this week by posting fresh all-time highs. The world’s no. 1 blockchain asset briefly rose above $6,000 on Friday, bringing its total market cap to $100.8 billion. If bitcoin were a stock, it would be more valuable than Goldman Sachs and Netflix.

Like prior rallies, there was no immediate explanation for bitcoin’s massive appreciation. Investors continue buying the dips as bullish sentiment extends globally.

The broader cryptocurrency market didn’t participate in bitcoin’s rally on Friday. The asset class is collectively valued at over $173 billion, according to CoinMarketCap.

The Week Ahead

Economic data are back in focus next week, headlined by U.S. durable goods orders, U.K. GDP and a slew of PMI reports. Corporate earnings from the S&P 500 are also set to continue all week.

On the policy front, the European Central Bank and Bank of Canada are scheduled to deliver interest rate decisions. No change on either front is expected.

The outcome of Japan’s forthcoming election will also be in the spotlight. Prime Minister Shinzo Abe is expected to win big in the Oct. 22 vote.

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 614 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

Times Take Sides

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Hi Everyone,

On the road to cutting costs and improving supply line efficiency, it looks like the retail giant Wal-Mart has accidentally stumbled on one of the biggest arguments currently ongoing in the crypto-space.

Bitcoin Maximalists believe that the only real use case for a blockchain is bitcoin. We can leave the intricacies of this debate for a later time, but it seems like the maximalists have just been joined by The New York Times.

This article, which begins by outlining Wal-Mart’s collaboration with IBM and the endeavour to track produce on a blockchain gradually turns into a collective argument on why this tech isn’t necessary and could have been done much easier with a centralized database.

Here’s an excerpt…

Interesting times!

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Oil Near the Surface
  • Hooray!! It’s Fed Day!
  • Google Unbans Crypto

Please note: All data, figures & graphs are valid as of September 26th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Along with the UN general assembly, the price of oil seemed to be laughing at Trump’s comments yesterday.

President Trump did his best to jawbone the price of oil in his hallmark speech but instead of going down as he intended, the price is holding near its highs as several analysts are starting to talk about $100 barrels for the first time in years.

One hour after Wall Street’s opening bell today, the EIA will release their weekly crude oil inventories. Analysts are forecasting that stockpiles in the United States (which is now the world’s largest oil producer) have fallen by 0.7 million barrels.

Depending on the final result of this announcement, we could see a quick reaction from the market. Less supply means more demand and if we pass that yellow line above (around $74.55 a barrel), it could significantly alter sentiment.

Rate Hike Today

As we’ve been discussing in these updates, rates are on the rise in the United States. This has been a main driver for the financial markets lately and has caused a nice run-up in the US Dollar over the last few months, which has in turn, affected everything from currencies, commodities, to stocks, and even crypto.

Now that the USD has stalled, it’ll take a lot more than the 0.25% interest rate hike from the Fed today to bring the Dollar rally back to life. Investors will be listening closely to see what the Fed has in store for the next few years and how high they plan to raise rates in the long term.

On the other hand, if they hike rates too quickly it could put pressure on the stock markets, which are now sitting at or near their all-time highs.

We know that Japan has been loosy goosy with their monetary policy and the Bank of England is stuck between a rock and a Brexit, but the European Union seems to finally be following the US’s path to tighter money.

The fun starts at 14:00 in Washington DC, when the interest rate decision itself is announced along with an economic projection and a prepared statement from the Federal Open Market Committee. About 30 minutes later we’ll be treated to a press conference with Chairman Powell followed by questions from the press.

Crypto is Back

The crypto community is getting excited today about…

In truth, we always knew this day would come. Crypto ads were only blocked by the advertising leaders temporarily in order to stop the promotion of suspicious ICOs. Now it seems that Google is ready to follow Facebook in bringing them back online.

The sudden restriction of new money coming into the markets when the two giants initially imposed the ban was one of the direct contributing factors to the bear market in early 2018, so now that they’re both coming back online, albeit gradually, is a very positive sign for the market.

Cryptocurrencies are quickly becoming the preferred asset class of our generation and many are seeing now as a good time to get in. Three brand new surveys show just how popular this exciting asset class is to people.

Added to this, one in three Londoners is planning to invest in digital currencies in the near future.

Though he’s not quite a millennial, even my own father, who’s been asking me about crypto for more than a year, finally bought his first bitcoin yesterday.

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.

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 130 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Stocks Go Nowhere Ahead of the Fed

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Global stock markets had a very quiet Tuesday, as traders took a step back before tomorrow much-awaited Fed rate decision. While most of the major indices finished the day virtually unchanged, risk assets gained ground in general, as investors sentiment improved following the slightly nervous Monday session.

DAX 30 Index Futures, 4-Hour Chart Analysis

European and Asian stocks were steadily holding on to last week’s gains, with even the Chinese market settling down with only slight losses, despite the country’s exit from the scheduled trade talks with the US.

On Wall Street, the Nasdaq and the Russell 2000 outperformed the Dow and the S&P 500, signaling a risk-on shift under-the-hood, even as the major indices traded in very narrow ranges in the low-volume low-volatility environment.

EUR/USD, 4-Hour Chart Analysis

Currencies had a much more active season, even as the major pairs didn’t experience real trending moves, before the central bank meeting. The EUR/USD pair, which has been in the center of attention for days finished with small gains after some sudden spikes in both directions, as traders tried to bet on tomorrow’s renewed guidance by the Fed.

In economic news, the US CB Consumer Confidence Index came in above expected at 138.2, a 17-year high, just shy of the all-time high set in 2000, right at the time of the peak of the Dot-Com bubble. On the other hand, the Case-Shiller Housing Price Index missed the already modest consensus estimate, with an only 5.9% yearly price increase, once again confirming the slowdown in the segment in the rising yield environment.

XHB (Homebuilder ETF), 4-Hour Chart Analysis

Shares in the sector are down by 20% on average compared to the January bull market high, and as Treasury yields in the US are still hitting multi-year or even decade-long highs across the yield curve, further pain could be ahead for bulls in the coming months.

That said, a dovish surprise tomorrow could set up a pullback in yields and a possible bounce in the sector, even as the general tightening trend will almost certainly persist for a while.

Rate Hike Near Certainty with All Eyes on the Fed’s Guidance

The odds of the third hike this year by the Fed are almost 100% for tomorrow, but even major changes, and sizeable surprises are possible, with regards to the economic guidance and the Central Bank’s preferred monetary as well.

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

The US-China trade war could serve as a dovish excuse, despite its limited effects so far, while the US economy provided plenty of ammunition to hawks, such as strong growth, an uptick in some of the key inflation measures, and a tight labor market.

While the 2-Year Treasury yield failed to close at a new cycle high, the short-end of the curve is at a decade-long high, so a bigger surprise could lead to a very volatile afternoon session tomorrow.

Copper Futures, 4-Hour Chart Analysis

Commodities also had a mostly quiet and mixed session with WTI Crude oil slightly retreating off its 10-week high near $73 per barrel and gold holding on near the $1205 level, but copper experiencing more volatility and closing with muted losses after Chinese markets reopened.

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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Market Overview

Market Update: U.S. Stocks Drift Lower Ahead of Fed; Bakkt Offers Up Physical Bitcoin Futures

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U.S. stocks drifted mostly lower on Tuesday, as traders reduced their exposure to riskier assets ahead of the Federal Reserve’s upcoming policy decision on Wednesday. Crypto markets were down across the board despite getting some positive news from a keenly awaited blockchain startup.

Stocks Mostly Lower

The S&P 500 Index declined 0.1% at 2,915.57, with seven of 11 primary sectors finishing lower. Losses were largely concentrated in utilities and consumer staples. After a strong open, Dow industrials reversed course to finish down 69.71 points, or 0.3%, at 26,492.34.

The technology-heavy Nasdaq Composite Index bucked the downtrend, climbing 0.2% to 8,007.47.

Monetary policy is back in focus on Wednesday as the Federal Reserve concludes its two-day meeting in Washington. Fed officials widely expected to raise interest rates for the third time this year. The policy statement, which will be released at 2:00 p.m. ET, will be accompanied by a quarterly summary of economic projections covering GDP, unemployment and inflation.

Altcoins, Tokens Plunge

The cryptocurrency market lost more than $10 billion in combined value on Tuesday, though losses were largely concentrated in altcoins and tokens. Ethereum, XRP, EOS and XLM – ranked nos. 2, 3, 5 and 6 by market cap, respectively – each fell by at least 10%.

Capital outflows from bitcoin left the digital currency with a loss of 3.9%. BTC was last valued at $6,381 on total trade volumes of $4.5 billion.

After a promising week, cryptocurrencies entered a brief period of consolidation before resuming their slide on Monday. Combined market values are down $24 billion from Friday’s high. While the pullback wasn’t unexpected, given XRP’s massive rally last week, the extent of the selloff offers further evidence of a prolonged bear market that is disproportionately impacting altcoins and tokens.

ICE’s Bakkt Announces Physical Bitcoin Futures

Although bearish forces still control crypto prices, market fundamentals continue to paint a brighter future for digital assets. Case in point: Bakkt, the new cryptocurrency startup created by Intercontinental Exchange (ICE), is set to unveil the first physically delivered bitcoin futures contracts. The announcement, which was confirmed on Tuesday by ICE, will offer new pathways for institutional investors and retail traders to access cryptocurrency.

“Our first contracts will be physically delivered Bitcoin futures contracts versus fiat currencies, including USD, GBP and EUR,” Bakkt tweeted on Tuesday. “For example, buying one USD/BTC futures contract will result in daily delivery of one Bitcoin into the customer’s account.”

ICE’s new crypto platform is set to launch in November. In addition to securitizing crypto assets, Bakkt has partnered with some of America’s biggest companies to bring bitcoin payments to consumers.

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 614 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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