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Market Overview

We’ve Never Been This Low

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Thousands of protesters. The government on the verge of terminating all Supreme Court Justices who do not bow to the current government. Europe and the United States issuing a warning not to proceed with such anti-democratic measures. You’d think we’re talking about a third world country. Nope.

This is happening in the heart of the free world, in Poland.

For one thing, it’s good to see the people of Poland on their feet and protesting these changes. Though the fact that there are only thousands of protesters and not more is a little worrying.

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@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Dollar Sinking

OPEC IMF & UKUS

Bit-fork Ahead?

Please note: All data, figures & graphs are valid as of July 24th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

This week in the markets has started much like the last one has ended, eerily quiet.

The VIX volatility index closed out on Friday at a new all time record low of 9.36. This graph from Bloomberg shows the “fear index” since inception. We’ve simply never been this low before.

European and U.S. stock markets pulled back a bit on Friday, but Asia is mixed so far this week.

Meanwhile, the U.S. Dollar continues to sink into oblivion. Since the beginning of the year, it’s down almost 8.8%. Let’s take a look at the long term chart.

It’s not just Trump sinking it either. The ramp up that we see on the left side of the chart was a move made largely in hopes that the Fed would be raising their interest rates. Now that the interest rate expectations seem to be slowing, the Buck is losing momentum and starting to fall.

Busy Day Ahead

With plenty of headline events on the agenda today it’s difficult to tell just which ones will have a heavy impact on the markets. The London dispatch to Washington DC could have some effect on the Pound as they seek to establish a framework for post-brexit U.S.-U.K. relations.

The IMF will also have the spotlight for a bit when they announce their global growth forecasts. The International Monetary Fund is probably the most qualified organization to make such predictions about the global economy. An upbeat report today could definitely have an effect on investors moods.

… but the thing that I’m watching most closely is the OPEC meeting in Russia. In particular, we want to hear about Nigeria and Libya. These two countries were exempt from the current production cuts since they’re just recovering from some rough geopolitics.

So now that they’ve more or less brought their production levels back to normal many will be expecting them to join in and put a maximum limit on themselves.

Over the past year, the price of oil has been relatively stable between $40 and $55. The sharp pullback at the end of last week (white circle) was rather dangerous but if OPEC and friends pull off a stunning show today they could try and coax the sticky black stuff back towards the middle of its range.

Trouble Ahead

Judging from the price of bitcoin over the past few days it almost looks like the trouble is behind us but judging from online forums and signals coming from the various mining pools we may yet see more turbulence ahead.

At this point, it looks like a total meltdown of the network may have been avoided as the SegWit solution is almost certain to be implemented shortly. The feeling is that many who are signaling for SegWit are actually supporting SegWit2x and that we could very well be headed for a hard fork by the end of the year.

At this point, we need to consider the technical analysis as well as the fundamentals. At this point, there’s a wide range of about $1200 between the two blue lines. The price is between it’s all time high, just shy of $3000, and the low point of the pullback that ended last Sunday.

Let’s have an awesome week!

This content is provided for information and educational purposes only and should not be considered to be a 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.

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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5 Comments

5 Comments

  1. mvppvm_07

    July 24, 2017 at 2:48 pm

    re: crypto markets / Because most tokens/coins seem unofficially tethered to BTC, doesn’t it make sense to utilize this forum, asks a naive one, to conduct a 90 day “use case review” of TA and other less formal analyses of the price possibilities of BTC?
    The November BTC block size debate conclusion, the SegWit signaling, versioning, correlation of funds in/out….a whole host of scenarios present themselves as ways for ‘Hacked’ to offer multiple insights into the way this market morphs (or not) with the 40% variance illustrated in your $3000 – $1800 range of money making opportunities. I’d love to see more detailed risk analyses on this during the next 3 months.

  2. Mati Greenspan

    July 24, 2017 at 2:52 pm

    That actually seems like a really good idea.

  3. thesupermk

    July 25, 2017 at 1:27 am

    About Poland – it’s not that easy. Currently the judges basically appoint themselves to Supreme Court and it’s been a long term problem with Polish judicary system, that there’s absolutely no control over judges. They are practically above law.

    There have been many, many cases, both involving individuals, and big issues concerning the whole country, where judges were corrupted and no one could do anything.

    The reform was an attempt to change it. It might not have been the best one, but it’d make the judges accountable to something. But since there are groups that are benefiting from the current state of affairs, and there’s a lot of hysteria among the opposition (who said themselves their only aim in politics now is to get rid of the ruling party) – hence all the commotion.

    I’m far from saying the reform was good, but it’s not “back to communism”, it’s not “third world country”, etc. It was very clickbait slogans, very emotional, aimed to create an atmosphere of immediate danger.

    Fun fact – the previous (absolutely corrupt) establishment is doing that since Sep 2015 (when the current ruling party won), and basically according to them democracy and freedom ended at least three times already. That’s why only 50 thousand or so people (out of 38kk in Poland) were protesting – only those who would lose directly with the change, and this small group that believed in the hysteria.

    I’m just writing that to clarify that it’s not that one-sided as it’s painted.

    It has been vetoed by the president anyways now, so I guess we’re stuck with the current judicary system for longer.

  4. Lexarich

    July 25, 2017 at 9:58 am

    Just wanted to straight one thing You have wrote at the beggining. I’m from Poland and I see there is a lot of propaganda and missunderstanding. You really need to dig dipper if You want to know the truth, about 25years back… And the truth is there is shit loads of corrupted Supreme Court Justices from post communism times, they allowed previous governments to scam our country for years. And now once they finally lost elections, they cant stand it… doing everything to get their “system” back, propaganda, media, a lot of noise and manipulation going on, they even PAY PEOPLE TO PROTEST… And You want to know why there is lack of people on protests? Majority of Poland knows what is going on and we have chosen this government to do this. Like I said, ignore the noise and dig dipper if You want the truth… I’m just surprised what kind of propaganda You have wrote here…

  5. Mati Greenspan

    July 26, 2017 at 9:20 am

    Hi guys,

    Many thanks for the clarification. Indeed, I’m not as sharp on Polish politics as I probably should be and it’s great to hear from two people who know more than myself on this subject.

    Will continue to dig deeper as you suggest and will continue to call the shots as I see them. 🙂

    -Mati

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Cryptocurrencies

Crypto Pullback – Where’s the Support?

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Looks like we have some panic selling on the top cryptos this morning.

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Ripple has slipped below support of $1.5 per XRP and bitcoin has just fallen through $12,000.

The reason for the sell-off is not quite clear but we can see reduced volumes from Japan and South Korea who are usually the ones doing the heavy buying in this market.

In today’s market webinar we’re going to talk about where might be a good place to buy this dip and how to position your portfolio during this kind of pullback.

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The webinar will be at 15:00 GMT and is open to everyone.

https://register.gotowebinar.com/rt/1157869693061562371

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Good Returns
  • Swiss Depreciation
  • Crypto Pullback – How low can you go?

Please note: All data, figures & graphs are valid as of January 16th. All trading carries risk. Only risk capital you can afford to lose.

Traditional markets

Today investors on Wall Street will be coming back from their long weekend in a particularly good mood. The stocks have been flying in Asia so far this year and the Europeans have done a good job recouping the losses from December.

Wall Street herself has been having a record year so far so as long as these trends continue…

Even the bond market, which gave us a bit of a fright last week seems to be cooling down. The US 20 year treasuries have found support at 122.5 and are now holding near their yearly average price.

Swiss Event Today

Thomas Jordan rarely moves the markets but when he does, he does big. Today he will be speaking at the University of Zurich and delivering a speech about how money is created. A subject I’m sure we all would like to know more about.

No doubt he’ll be talking about how the central banks of the world have increased the amount of money in the system over the last decade and how the local banks have leveraged this money.

What he probably should be talking about is how to reduce the money supply from a system that is flooded with capital.

We’ll be watching his speech today with great interest, which will take place at 18:00 Swiss time. Just after our webinar. 😉

For reference, here’s a chart of the Euro against the Swiss Franc. Just about every large movement on this chart, and there are quite a few notable ones, have been created by Mr. Jordan. So it pays to pay attention to what he says.

The Crypto Pullback

The pullback seems to be coming from a lack of volumes in Asia. Cryptotraders in Japan and South Korea tend to dominate this market but so far this year have been notably silent.

Reports from Bloomberg of a further crackdown in China are not helping things but the real story here is Japan.

Japan was the first country in the world to fully legalize bitcoin as a currency last March and investments in BTC have reportedly raised the countries GDP significantly. The digital currency frenzy is also making a blockbuster entrance into Japanese Pop Culture with the new girl band…

So to see Japanese Bitcoin volumes of just 11% of the market at 18:00 Tokyo time is kind of odd.

My best guess is that Japanese and Korean traders are simply tired of paying the premium and are waiting for the market to even out. The price per bitcoin in these two countries is usually more than 25% above the prices in the West. So they might just be taking a step back, waiting for the FUD to blow over and get a better entry price.

The issue is that the markets have gone up so quickly that they didn’t have enough time to build in proper support. Here we can see that bitcoin does have some temporary support at the moment but if it does fall through it we could easily find ourselves below $10,000 pretty quickly and that’s a scary thought for some.

Whatever is causing this pullback it is making a lot of people nervous, which is why we should always remember that even though crypto has been the best performing asset class in history over the last year it’s still incredibly risky. No doubt many will see this dip as an excellent opportunity to get in but anybody who bought at the top is not doing well at the moment.

Hope to see you in the webinar. Let’s have an awesome 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.

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

Crypto Proxy Stocks Follow Market Lower on ‘Bloody Tuesday’

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“Bloody Tuesday” wasn’t just limited to cryptocurrencies, but stocks with direct and indirect exposure to the digital asset class. These once celebrated companies posted sharp losses on Tuesday alongside the world’s biggest cryptocurrencies.

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The Decline of Crypto Proxy Stocks

In terms of losses, shares of Riot Blockchain Inc. (RIOT) were among the hardest hit. The firm plunged 16.5% to $18.28, the lowest since early December. Riot  is the first pure play blockchain company to be listed on the Nasdaq.

LongFin Corp (LFIN), a U.S.-based alternative finance company, shed 8.5% to close at $39.96.

Meanwhile, tZero parent Overstock.com (OSTK) plunged 11% to $70.25 for its lowest settlement in nearly a month.

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Other crypto proxy stocks to fall on Tuesday included chipmaker Nvidia Corp (NVDA), Canada-based Hive Blockchain Technologies Ltd. (HIVE) and Eastman Kodak Co. (KODK), the imaging company that has its eye on the mining enterprise.

These companies are no stronger to crypto-related volatility, having routinely been dragged around by the performance of bitcoin. Losses for these stocks were practically inevitable on Tuesday as the global cryptocurrency market declined by as much as $190 billion.

Virtually every cryptocurrency in the top 100 was down on rumblings that South Korea was considering extreme measures to eliminate speculation from the cryptocurrency market. At the time of writing, authorities were still weighing proposals to rein in speculation on domestic exchanges. Seoul announced Monday it would decide on a next course of action after “sufficient consultation and coordination of opinions.”

The Future of Crypto Stocks

Although it’s difficult to project where the crypto equity class is headed, it’s important to distinguish established technology companies from those looking to pivot into digital currency for some publicity. The likes of Overstock.com and Nividia are certainly some of the more promising businesses to venture into cryptocurrency. However, the lesser-known players will still be snatched up by investors given the relative dearth of traditional assets tied to cryptocurrency.

That being said, institutional investors are starting to get a taste of cryptocurrency. Last month, bitcoin futures hit the market, joining a small list of traditional assets with direct exposure to the crypto market. In addition to futures contracts, Grayscale operates the Bitcoin Investment Trust (GBTC), which recently launched a 91-for-1 stock split. This means that each investor in the fund will get an additional 91 shares for every one share they own.

GBTC also declined sharply on Tuesday, with the market price per share falling 11.8% to $1,731.50. The fund could be vulnerable to bigger declines on Wednesday as bitcoin prices continue drifting lower. The world’s biggest cryptocurrency touched a session low of $10,047.06 on Tuesday, its lowest since early October.

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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Market Overview

I Have a Dream Today: HK, Oil & Gold Up, ETC and Ethereum

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Today we celebrate the birthday of a true American hero. One who fought for freedom for all in a country that promised the world and delivered nothing.

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“In a sense, we have come to our nation’s capital to cash a check.”

King said in his famous speech, referring directly to the promise of freedom on which the United States was founded but “it is obvious today that America has defaulted on this promissory note…”

Indeed, the United States seems to enjoy writing checks that it cannot cash. Still, Martin Luther King Jr. was quite optimistic. He believed that his people need only demand payment on that check for its promises of freedom to be redeemed.

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By now many of Dr. King’s initial demands have been met but the fight has evolved. Victims of inequality are not necessarily defined by the color of their skin, nor do they reside solely within the borders of the United States.

We must press on in his symbolic shadow and demand freedom for everyone throughout this entire planet that we all call home.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Record Run in HK
  • Oil & Gold up on Weaker USD
  • Crypto Atmosphere

Please note: All data, figures & graphs are valid as of January 15th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The Asian markets have put on a fantastic show so far today. The China A50 index has now surpassed it’s highs from April of 2015 and is now the highest it’s been since 2008.

The gains in China were propelled further by what’s happening in Hong Kong. The founder and CEO of Alibaba, Jack Ma announced that he is considering listing Alibaba shares on the Hang Seng.

Alibaba’s shares in the US currently hold a record for most stocks sales in an IPO and the company’s daily turnover is about 30% of the entire Hong Kong Stock Exchange.

Furthermore, there are rumors that a subsidiary of the Chinese Insurance giant Ping An will be looking to raise $60 Billion from the Hong Kong market in April.

Money comes to money, and as we’ve seen so many times in the crypto market. More activity on an exchange means that everything listed on that exchange can see a boost.

Sinking Buck

The second strongest trend of 2017 was the declining US Dollar. The Dollar Index went from a high of about 103.50 in January to a low of 91.4 in December.

2018 hasn’t been great for the buck either and it’s gotten off to a rather rotten start.

Along with the weakening Dollar comes a strength in commodities. Gold and Oil are priced in USD so they have a very strong reverse corolation.

As we can see here, since Thursday morning the USD has declined 1.8% and Gold has climbed by the same amount.

Though Oil has been a lot more volatile than gold or the buck, it’s strength lately has been astounding. This strong breakout above $60 was certainly unexpected by many…

Don’t get me wrong, oil rising against a weaker Dollar is understandable, but oil rising against more production in the United States is baffeling.

Friday’s Baker Hughes report shows that 280 new rigs came online in the United States over the last year.

Very likely we could see those rigs really get going now that they can get $60+ a barrel for their output.

Crypto Market

It’s easy to make money when everything is rising but when thing get choppy like they are now it can start to get a bit frustrating, especially for beginning traders.

Over the last few weeks, we’ve seen a general pumping pattern where one specific crypto will dominate the market for a few days before flatlining or even pulling back.

Over the weekend, this momentum has been on Ethereum Classic, which went from $31 to $46 in about 60 hours but now may have lost the propulsion.

Ether Classic (ETC) is the hardest crypto for me to explain simply because I don’t see it as useful. It’s not a great store of value and is not meant to be a medium of exchange. So I’m scratching my head trying to figure out why crypto traders latched onto this one.

Of course, if we zoom out a bit we can see the incredible gains of ETC’s younger sister ETH. A platform that has hundreds of projects being built on top of it and currently processes more transactions than any other blockchain.

The present rise in ETC might just indicate that alternative investors are looking for a bit more risk at the moment, and if that’s the case we may see some of the altcoins or even the exotic cryptos gaining a bit. In the chart above we can spot a nice rising trendline (yellow) but if that fails to hold we should have a nice support level just below $900 a token.

Remember: Several of the traditional markets will be closed tonight for the holiday in the USA. Crypto trades 24/7. 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.

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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