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Weekly Analysis: Bitcoin Takes on $2000 as Stocks Hit by Trump-Scandal

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Donald Trump

Weekly Recap

Asset Current Value Weekly Change
S&P 500 2380 -0.45%
DAX 12638 -1.22%
WTI Crude Oil 50.48 4.77%
GOLD 1255.00 2.11%
Bitcoin 1985 13.43%
EUR/USD 1.1205 2.74%

 

Global stocks had their most volatile days since the US election in November, as the recent scandal of the new US president sparked a strong sell-off on Wednesday. The major indices recovered well after the slump, although the previously leading NASDAQ lagged the other benchmarks, hinting on a change in the underlying trends. European and Asian equities followed the US market lower, with Japanese stocks being hit hard by the renewed safe-haven demand for the Yen. The late week bounce was weak in the Nikkei, the DAX, and the EUROSTOXX 50, while the S&P 500 was helped by the relative strength of the energy sector.

The Chinese market traded sideways during the global correction, but it failed to regain its previous losses, despite being among the stronger regions globally. Commodities head a mostly positive week, even as the mid-week decline affected the risk-on part of the segment. Gold finished above the $1250 level as it got a boost from the negative sentiment, while crude oil surged above $50, as the OPEC and Russia agreed to extend the previous production cut by 9 months, and the global market showed signs of stabilization. The USD has been the weakest major currency amid the political turmoil in the US, while the Yen, the Euro, and the Swiss Franc gained significant ground during the week. Commodity currencies also rallied thanks to the Dollar slump, while the Pound finished above the 1.30 level for the first time since last September.

 

US Dollar Index, Daily Chart Analysis

Cryptocurrencies

The coins experienced yet another rotation-week, as NEM, Bitcoin and Ethereum took over the leadership of the market from Ripple in the second half of the week, as BTC crossed the $2000 mark for the first time in history, while ETH jumped by around 50%. Ethereum caught up with XRP regarding market capitalization while NEM doubled in value, pushing Litecoin lower in the list. LTC got through a deep correction and it currently trades slightly below the $30 level, after getting close to $20 during the week. Ethereum Classic, Dash, and Monero also climbed higher, while Stellar was relatively stable after 2 weeks of crazy trading.

Ripple, 4-Hour Chart Analysis

Economic Numbers

Economic numbers remained mixed at best, especially in the US, where the housing market provided a couple of negative surprises, while industrial production was better than expected, and the Philly Fed index showed an encouraging reading. The British economy showed signs of life after a bearish period, and that helped the local assets against their global peers, with the CPI index and Retail Sales both coming in way above the consensus estimate. The other European releases were generally in line with expectations, but growth remains slow in the Eurozone.

Technical Corner

S&P 500, 4-hour Chart Analysis

The S&P 500 gained relative strength this week, as the broad and deep correction rearranged the US market, amid the surge in volatility. The extended topping process ended with a quick move lower with strong momentum. The decline was led by the NASDAQ, with most of the major global benchmarks losing anywhere between 2-3%. The S&P 500 spiked below the key support zone between 2350-2355 before recovering the majority of its losses and finishing the week near 2380. The short-term trend is now neutral after the benchmark moved out of its rising trend channel.

Key Economic Releases of the Week

Day Country Release Actual Expected Previous
Monday CHINA Industrial Production (yearly) 6.5% 7.0% 7.6%
Monday SWITZERLAND PPI Index -0.2% 0.00% 0.10%
Monday US ES Manufacturing Index -1.0 7.6 5.2
Tuesday AUSTRALIA Montery Meeting Minutes
Tuesday UK CPI Index 2.7% 2.6% 2.3%
Tuesday EUROZONE Flash GDP 0.50% 0.50% 0.50%
Tuesday GERMANY ZEW Economic Sentiment 20.6 22.3 19.5
Tuesday US Building Permits 1.23 mill 1.27 mill 1.27 mill
Tuesday US Housing Starts 1.17 mill 1.26 mill 1.20 mill
Tuesday US Industrial Production 1.0% 0.4% 0.4%
Wednesday UK Average Earnings 2.4% 2.4% 2.3%
Wednesday UK Unemployment Rate 4.6% 4.7% 4.7%
Wednesday EUROZONE Final CPI 1.90% 1.90% 1.90%
Wednesday CANADA Manufacturing Sales 1.00% 1.10% -0.20%
Wednesday US Crude Oil Inventories -1.8% -2.5 mill -5.2 mill
Thursday JAPAN Prelim GDP 0.5% 0.4% 0.3%
Thursday AUSTRALIA Employment Change 37,400 4,500 60,000
Thursday AUSTRALIA Unemployment Rate 5.7% 5.9% 5.9%
Thursday UK Retail Sales 2.3% 1.2% -1.8%
Thursday US Initial Jobless Claims 232,000 240,000 236,000
Thursday US Philly Fed Manufacturing 38.8 18.9 22.0
Friday CANADA CPI Index 0.4% 0.5% 0.2%
Friday CANADA Core Retail Sales -0.20% 0.20% -0.10%

 

The Story of the Week: The OPEC Production Cut: A Tale of Unintended Consequences

 

The Change of the Cost Curve of US Shale Oil Producers (Source: Goldman Sachs)

Shale oil has been dramatically transforming the energy segment in recent years, but how much so? Ecological impacts aside, the fracking technology went from an interesting alternative to deep-water and other extremely costly oil sources, to being a threat to the dominance of the OPEC. The chart above shows how the US producers lowered their cumulative break-even curve to the point where most of the hypothetical production of the shale players would be profitable between $50 and $60 per barrel. Compared that to the fact that 3 years ago there was virtually no profitable shale production below $80 per barrel.

Now, this is where it gets interesting. Last years crude oil rally topped out, guess what, near $55 per barrel, which is eerily close to the estimated breakeven of the bulk of the shale production. And that’s not a coincidence; most analysts agree that shale-oil, given its flexible nature, will do just this— cap the price of crude oil, while also limiting the profits of the traditional oil producers. Sure enough, the OPEC just this week announced the extension of a production cut that was supposed to stabilize the market and help a rebound in prices.

But what are the consequences of the deal? Long story short, it leads to a slow decline in the market share of the cartel, while encouraging shale producers to innovate even more and push this invisible price-cap even lower. And to go back to the root of the historic decline in the price of oil in 2015, it was none other than Saudi Arabia that flooded the market with cheap oil, in an attempt to knock US shale players out. What really happened, is that the slowing of the global demand growth coupled with the “forced” shale revolution brought about a new era for the whole energy complex.

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 393 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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Analysis

Black Friday: How to Capitalize on It

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

The most interesting event this month in the US is the famous Black Friday, the day of large discounts, which is on Nov 23. On this day, Americans make 45% of all their annual purchases. The US economy is doing well compared to other countries, with the Fed hiking the rates in order to cool the markets down. The unemployment rate is at its record lows, which means people have money, and there’s going to be much hype about the Black Friday as usual. With this scenario, a few companies may show great potential during Q4. First, there’s e-commerce that is a very strong competition against offline stores. Amazon (NASDAQ: AMZN) is the leader here, with the market cap of $1T. In Q3, Amazon made a record high when it comes to quarterly earnings. However, the chart shows it is Q4 that is going to be the most profitable for the company.

Unluckily, after the Q3 report, the price was unable to reach new highs. Investors’ expectations were higher than the data that came out, which led to the share price going down. However, Amazon did make profit, and there’s a good trend in it. Furthermore, Amazon management expects to book the record profit in Q4 2018. In October, we analyzed Amazon and said the company stock is going to trade at around $1,400. It is now trading at its low at $1,476, however, and is above the 200-day SMA. When the price goes below $1,700, the volumes get much higher, according to the chart. Thus, this may be the support the price may start recovering from.

If the earnings expectations are met, Amazon may well rise above the round number of $2,000. Another large company that may get nice profits is eBay (NASDAQ: EBAY), which is mostly centered around e-commerce, too. The profits are good here, while the stock price leaves much to be desired.

Still, eBay incomes are rising quarter to quarter. According to the expectations, Q4 is going to be the most profitable in the recent few years.

Over 2018, eBay stock went down by nearly 30%. Perhaps, the reason for that is the increasing debt, with the debt to equity ratio now being 1.11, while, for Amazon, it is just 0.63. Technically, the stock went down till November last year, too, while after the Q4 report it traded at its highs. This time, the stock looks somewhat weaker than before, and may only reach $36 or so.

Walmart, an offline store chain, may also be included into this list, as this company is sure to get good profits thanks to Black Friday sales. Nevertheless, while eBay and Amazon shares corrected before Q4, Walmart is rising and is trying to break out its record highs made a year ago. Walmart earnings, like internet giants’ ones, are sure to be sensitive to the sales before Xmas.

The company reports its earnings on Thursday, and they are expected higher than the same quarter last year. The income is visibly growing up, and the record highs for Q4 earnings expectations are quite logical. Walmart has been recently going up thanks to large hedge funds positions, with around 52 funds now including this stock into their portfolios.

Technically, as said before, the stock is quite strong. The price is currently above the 200-day SMA, showing good growth and ready to hit new record highs. As for the entry, it’s hard to determine the risk. The nearest support levels are $100 and $90, and once the price reaches either, it could be a good entry point for the next few months.

 

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

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 17 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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Altcoins

Zcash Price Analysis: ZEC/USD Penetrating Vital Resistance, Which is Key for Greater Upside

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  • Zcash has remained elevated over the past few days, as a result of potential speculation across the social media space regarding a Coinbase listing.
  • ZEC/USD bulls must break down supply area heading into $140, to unlock chunky buying pressure.

ZEC/USD bulls have been pressing hard to break above the very stubborn resistance, which is seen just above the $140 price territory. For going on six sessions now, the price has failed to clear the above supply area. It is seen tracking from $138 up to $140. ZEC/USD has not been above this territory since 28th September. There has been much penetration of this, which very well could suggest a strong breakout to come.

Zcash Speculation

Efforts by Coinbase to expand its offering has raised speculation that ZEC may be due for consideration. As recently reported, the largest U.S exchange, announced the listing of Basic Attention Token (BAT) on its trading platform and apps. Elsewhere, they opened the doors for trading 0x (ZRX), which was the first ERC-20 token to have been listed on the platform. Given these moves, there has been continued speculation across the social media space regarding possible listing of Zcash along with the likes of Cardano (ADA), and Stellar (XLM).

Technical Review – ZEC/USD

ZEC/USD daily chart

The ZEC/USD bulls are having a hard time, as their rallies continue to be short-lived due to repetitive failure to breach key resistance. On each occasion the price has entered the detailed supply area, heading into $140, it has been sent back south by some force. It could very well be that ZEC/USD is moving within consolidation mode, after the chunky recent surge. The bulls had seen a decent run from October 31st. Gains seen within this period were a chunky 20%.

Support Levels

Looking to the downside, a decent level of daily support can be eyed just sub-$128. During the current form of consolidation eyed, this area has proven to be of use. Further south, eyes would be back on the breached pennant pattern. This is where ZEC/USD began its most recent forceful upside trend. The price had managed to catch some bidding at the lower part of the pattern to then see a breakout to the upside. A potential pullback to the pennant could see the price around $118.

Upside Targets

Should the market bulls manage to gather enough upside momentum, eyes will be on another retest of the supply heading into $140. A breach above will likely see the price heading for another supply zone, observed at $145. ZEC/USD last traded here on 28th September, before resuming its downward trend. Further north, the highs seen early September within the $160 territory. Lastly, any move above here, could likely see some strong buying pressure, with a fast move back into $200.

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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4.5 stars on average, based on 49 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Pre-Market Analysis And Chartbook: Trade Deal Hope Boost Risk Assets as Pound Surges

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Tuesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,737 0.27%
DAX 30 11,381 0.49%
WTI Crude Oil 59.10 0.41%
GOLD 1,203 0.20%
Bitcoin 6,291 -0.42%
EUR/USD 1.1265 0.42%

After yesterday’s equity selloff and Dollar rally today we are seeing a counter-trend move in most asset classes thanks to the reports regarding some progress in the US-China trade talks. The optimism has been sparked by the planned US visit by the main Chinese negotiator which points to a renewed interest on the Chinese side that withdrew from the talks.

Stocks are slightly higher before the US open, but the short-term uptrend that carried the major indices significantly above the October lows seems to be broken, with especially the Nasdaq being set for a re-test as soon as this week. Currencies and commodities are also very active today, and as volatility is increasing across asset classes, a busy US session is likely.

GBP/USD, 4-Hour Chart Analysis

The Pound continues to be the most volatile major currency, even as the Dollar has been in the center of attention since the Fed meeting, with the looming Brexit deadlines increasing the tension in the market of the GBP. Interestingly, the Euro has been underperforming the Pound lately, due to the Italy related worries, and today the Pound is significantly higher against all of its major peers.

The Pound was also boosted by the British Employment Report, as the healthy wage growth figure outweighed the weaker than expected Unemployment Rate, at least as far as the forex markets are concerned. The GBP/USD pair jumped higher off the key 1.2850 support/resistance level that has been “in play” several times in the last few months, but the broader downtrend remains unharmed by today’s move.

S&P 500 Futures, 4-Hour Chart Analysis

The technical troubles are mounting on Wall Street, with the key benchmarks all turning sharply lower off last week’s highs. The Dow, which has been the strongest index this month also broke its rising trendline and dipped below several short-term support levels, similarly to the slightly weaker S&P 500 and the lagging Nasdaq.

The S&P 500 is now testing the key support zone near 2750, and given the broader bearish setup, we expect the large-cap index to revisit the October low in the coming weeks, with even an accelerating selloff being in the cards. The weak market internals are also pointing to further troubles for stock bulls, and we still wouldn’t buy the dip here.

Emerging Market Weakness Casts a Shadow on Risk Assets

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

While the main risk on currencies is higher today, looking at the weakest links of the October risk-rout, emerging market and European stocks, the picture is not pretty. We looked at the DAX’s wounded chart yesterday, and the most important emerging market ETF also shows signs of distress, with a test of the bear market low being seemingly inevitable in the near future, especially given the broad weakness across the developed markets as well.

Copper Futures, 4-Hour Chart Analysis

Commodities are mixed today amid the Chinese optimism, with the increasing volatility in oil still being the most interesting trend in the segment. The WTI contract fell back below the $60 level after yesterday’s initial bounce, and although it only hit a marginal new low today, and we still expect a larger bounce in the coming days in oil, sellers are still in control of the market.

Gold dipped below $1200 for the first time in a month, as the precious metal failed to reverse last week’s breakdown, threatening with a test of the $1180 support level. Copper avoided a new swing low below the $2.65 level, for now, and the metal is still within its broad consolidation pattern, thanks to the renewed trade-deal optimism, with the broader downtrend clearly being intact.

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

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

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

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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4.7 stars on average, based on 393 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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