Market Talk

Google Ad

Where have we been and where are we going? Join our weekly market thread on Traders Community...

FEAR NOT Brave Investors
 

All alone
 

Strange times But remember The Joker once served as the Iranian ambassador for the United Nations.

Isolation - Job Losses - Easter

The Week That Was:

The Covid-19 crisis continues to reek havoc and attempts to curtail the damage highlighted the week again. The US Labor Department reported the largest one-month rise in unemployment since 1975 on Friday for March as the Coronavirus hit the economy. Unemployment was higher to 4.4% This is a lagged report however and the past two jobless claims tells us job losses are much higher.

U.S. oil surged on expectations of Saudi and Russian oil production cuts and President Trump meeting wth oil executives. WTI rose 25% on Thursday for its best day on record, and gained another 12% on Friday. It finished the week with a 32% surge, breaking a 5-week losing streak and posting its best weekly performance ever, back to the contract’s inception in 1983. The meeting with the oil executives spoke of filling up the SPR, energy independance and the key to the US economy.

However on Saturday Putin and KSA traded barbs which has pushed the oil/Saudi meeting to Thursday, Basically Russia attempts to rewrite tha walk out by Russia of the OPEC+ deal. Covid 19 reaping havoc throughout the world.

We saw the small business program begin to roll out Friday, tthis is a key component of the Fed QE infinity programme is a yield curve control policy with long government bond yields coming down but bond supply and continued central bank resistance to more negative policy rates limits the move.

Central banks have been cutting rates and adding liquidity to avoid systematic failure.  Where to from here as the world isolates with added financial, fear and psychological damage escalating. Investors will continue to monitor updates related to COVID-19  in the face of depression. . The virus and unexpected consequences keep “fat tail risk”, in both directions alive. 

Historically bear market rallies are fast and furious, and we are at the beginning of an economic recession (depression). In 2008 we had a 20% and 25% bounce in the S&P 500 during the total 57% top to bottom price fall. For the virus we have the great unknown with medical expertise not at a consensus how the virus destruction and recovery will play out. Will virus cases level off in late spring and vanish so things can get back to some sort of normality by late summer? Or will there be a second wave of cases during the autumn/winter, forcing new lockdowns or leading to fear and voluntary social distancing (a W-recession scenario). For how long are you immune after having had the virus, a long time or a couple of months? Will there be a vaccine and when?

What will right the ship? At this point people seek comfort, nothing short of massive fiscal responses will gve that until the disease fear factor is reduced. Forward two weeks and we have warmer climates in the Northern hemisphere and with that hope, but then there is the Southern hemisphere.Meantime be smart and self isolate and stay in contact with loved ones.

Our best advice is stay rational and be prepared for many alternatives, either way. With crisis comes opportunity. From a market point of view this is not unprecedented, many other bubbles have popped with similar results. What is unprecedented is the pandemic, the mass media and social media fear mongering, the massive QE and printing and the strange era of entitlement and no responsibilty fed down from politicians to the youth of today for electoral purproses. Put all that together and we see the result.  Again this isn't unprecendented just a different catalyst and fuel. Stay tuned. take a breath and think clearly.

I Wonder To Myself

This maybe one of the wizard's greatest moments of redirection. "The same extreme bulls are now extreme bears, what did we tell you about the madness of crowds?"

For now the focus is that the virus incubates for around 2 weeks so how many  carriers is an exponential number. Patient zero was from Wuhan, a city of over 11 million. (Yet the infections have slowed dramatically) With this knowledge shrewd investors are looking past past earnings rebound and focusing on the spillover impact from the coronavirus on U.S. corporations.

Remember. nothing is as it seems.

Stay alert to the political and geopolitical shifts with the world in flux. Government policies related to the environment, trade and tech sit high on the watch list.  Political and economic agendas that Influence policy-making is top of the list. For the US it is not just external threats, including increased political tensions between countries but also internal threats highlighted by the partisan impeachment devide. 

Politics influence all, directly or indirectly.  The virus and psychological affect on domestic and trade relationships have the potential to impact growth strategies with unexpected consequences with this markets are also vulnerable.  In a  fully fledged stock mania, nothing matters until it does. That is the feral nature of greed. Is Coronavirus that dreaded black swan?

Behind it all is world wide low interest rates and QE pump priming by the world's major central banks,  the Federal Reserve, Swiss National Bank and ECB all preached more of the same. This has just been ramped up a notch.

Meanwhile tje Fed is committed to about 50 Billion a day in repo, funds  into the system to maintain liquidity, in its not QE4 repo program.The consumer has been keeping the economy robust. How will they act to alleviate the panic of the market drop, this is essential given the security of the repos they have out.

The fear of missing out and blind partisan politcs creates intertesting bed fellows. Be alert and put your ear plugs in and watch the whole spectrum its all related, geopolitical, debt markets, commodities, stocks, herds, greed and entitlement,

The spectre of Deutschbank overhangs Europe as does the new British PM, Boris Johnson. Their are other spectres out their we just don't know it, or want to.

"Negative yields on long-dated government securities are more reflective of distorted market conditions than of stronger sovereign credit profiles, Fitch Ratings says. Lower interest service costs support sovereign creditworthiness, but this must be weighed against the impact of the economic conditions leading to lower yields and historically high government debt levels in a number of countries.- Fitch"

We remind you to stay on your toes, ad nauseum we repeat; In this surreal world that market prices can only go up, with bizzare acceptance that we can't go down and you are a fool if you think otherwise. In saying that the old saying, the trend is your friend rings true.

Akio Morita mistakes

The Week Ahead

This week is shortedned as we head into Easter with most markets closed. We expect more volatility with the engulfing uncertainty of the Coronavirus and in commodity markets, particularly in oil and other commodities, not to mention unrest in Libya and Iraq.  

Geopolitical risk is on high alert with President Trump under pressure at home and abroad. There are a few American economic reports  The biggest risk alert remains valuation, the stock market’s record highs and price earnings ratio of more than 18.5 have still not been rinsed. That has obviously being adjusted after this month's crash.

Expectations are mixed in the UK on whether Boris Johnson will be able to secure a trade deal before the end of the year.

The Coronavirus has created fear in the world which has spread to financial markets, how doe the markets react from here? U.S. politically remains combustible, Turkey, Iran and Saudi moves, trade wars and repo rates.

The markets are fixated on the COVID-19 news such as the infections count update. Watch for how much the data indicates further economic destruction after the surge in initial claims already in March means substantially higher unemployment Central banks in Australia and South Korea meet, a follow up on their emergency actions in mid March. China consumer and factory prices for March will be looked over for any signs of how the coronavirus is impacting supply chains and demand. in the US ahead. Watch for MBA mortgage report also it has had huge swings each week and is key to the economy and homebuilders. In the U.S. investors will be watching data that can help us gauge trade war and coronavirus fallout.

U.S. goods are more expensive due to a stronger dollar boosted by geopolitical woes and negative interest rates in Europe. The dollar index was rampant this week as the attached charts show  Investors are also transfixed by oil and bond prices in reaction to the virus attack, recovery and respsonses.

  • Monday 
    Germany Factory US PMI Construction
  • Tuesday
    UK Halifax House Price Index, EU Industrial Production, US Consumer Credit, API Oil Inventories
  • Wednesday:
    Germany, Italy and France Industrial Production, Bank of France’s business sentiment index, US Mortgage Applications, EIA Crude Oil Invemtories,Fed meeting minutes
  • Thursday Germany Balance of Trade, Current Account, UK Balance of Trade, Gross Domestic Product, Index of Services, Industrial Production, Manufacturing Production, RICS Housing Market Survey. Canada jobs report, US Producer Price Index, U. of Michigan Confidence (Prelim), Wholesales Inventories, US Weekly Jobless Claims and EIA Natural Gas Storage
  • Friday US Baker Hughes Oil Rig Count, CFTC Speculative net positions

For emerging markets the high US dollar means the Fragile 5 continue to shake. Argentina and Turkey are red letter risks. Voters will also be going to the polls in Poland, Indonesia, the Philippines and Thailand this year.

Over $4 trillion of EM debt matures by the end of 2020, of which around a third is denominated in foreign currency, according to the Institute of International Finance. Nevertheless Banks are telling investors to buy, buy, buy, who is selling you should ask? 

If you wanted to play in the big room at Vegas, you are living it. Understand risk and the madness of crowds for your own sanity and wealth.

Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2019. One suspects it will be a year long Groundhog day for Trump, the GOP and the Democrats. We still have trade wars.

Earnings  will see critical updates on production in coronavirus impacted regi and if there is extended halting of operations weighing on multi-nationals. Last week we heard from RH, McCormick, pVH, Walgreens, CarMax, Chewy and Constellation Brands

We start off on Monday with earnings from Simply Good Foods (NASDAQ:SMPL)

Tuesday Earnings Include :Greenbrier (NYSE:GBX), Revlon (NYSE:REV), Levi Strauss (NYSE:LEVI) and Lindsay (NYSE:LNN)

Wednesday Earnings Include: PriceSmart (NASDAQ:PSMT)

Thursday Earnings Include: Delta Air Lines (NYSE:DAL), Shaw Communications (NYSE:SJR) and WD-40 (NASDAQ:WDFC)

Friday Earnings Include

-coment section below data-

Geopolitical Tinderbox Radar

Trade Imbalances IMF

Italy CDS
Turkey Geopolitical

Last Week's Big Stories

The Week That Was - Last Weeks Recap

Covid-19 Central

Stocks

 

Stock Markets

Biggest Stock Winners and Losers Last Week*

Top 5 SPX Stocks W 4 3 2020

 Which Stocks Moved US ETF's Last Week

Top 5 ETF Stocks W 4 3 2020
 US Stock Indices Performance

US Indices W 4 3 2020
 

S&P 500

We got the completion expected after the SPX wave 5 extension as Covid19 fed impulse accelerating when it closed under the tenkan. From there we see the ABC or 1-2-3 The impulse down found little support until the October 2019 lows  A manic wave 5 or 3 of some degree resolution for the ages.  Recall all hallmarks of a mania, +5/8 Daily MM over the chikou in 5 violent waves.  Note the 100% extension from the emotive element and MM levels when the spit kicks in.

 SPX D 4 3 2020

Acceleration in three waves and through previous IV mark which spat  hard - note channel fractal and adams rule we have cloud and breaks above. Watch Chickou rebalance expect violent off the 3 waves after spit.  Weekly tenkan key, Kijun and tenkan kisses to be watched. Watch if a spit or clear break support as chickou rebalances

SPX W 4 3 2020
 

Semiconductors ETF - SMH

SMH W 4 3 2020
 

Apple $AAPL

( Leading underlying strength of US Indices)

 AAPL W 4 3 2020

Amazon $AMZN


AMZN W 4 3 2020
 

CBOE VIX INDEX - A Reminder of RIsk Ahead of Time

Data via Ole S Hansen @Ole_S_Hansen

VIX caution: Not only did the net-short hit a record but so did the percentage of total open interest which reached 50%. History tells us that positions this elevated could leave the short side very vulnerable to a sudden change in direction $SPX $SVXY $XIV

Image

Speculators increased their VIX futures net-short by 17k lots to a RECORD 188k lots in the wk to Oct. 29. During the past month the #SPX rally has helped widen the contango thereby fueling short-selling strategies though futures and inverse ETFs $SVXY and $XIV.

 Image

Fixed Interest

10 Year Treasury Note

TNX W 4 3 2020
 

Energy and Commodities

US Crude Oil (WTI)

WTI spent the week working off the chikou with the outside trend line under $20 in 5 waves from the recent highs the next target to -2-8 & -1/8.  We need impulse from here for reversal. Question is was that completing a C or 3 of something larger.  Math and crowd behavior tell the story right to the +2/8 and collapsed back to the break up and now through the channel, accelerating when Tenkan and 50 dma crossed.  Note 1.618 extension of previous emotive wave.

WTI D 4 3 2020

After WTI accelerated lower after broke the weekly uptrend, a fractal of the sharp and all the way to 16yr lows from here we see traction to work out from 3 waves  Key resistance is Kijun and 50wma confluence (green) which all failed after the violent spike up. Support channel and fib conflageration with MM 0 -8 and -2-8

WTI W 4 3 2020
 

 US Natural Gas (Henry Hub)

Natural Gas spat the previous low and -2/8 with an island reversal to test the Kijun and downtrend line but fell back to Tanken The big question is was that a completed move down there or a 3?   Support on downtrend Tenkan.

NG D 4 3 2020

Natty  sat lower trend line to test the weekly tenkan and Kijun.  We got the Kijun att he cloud above, remember kiss of death.brought it down  Much work to do here through channels.

.NG W 4 3 2020

  Baltic Dry Index (BDI)

BDI W 4 3 2020

 

Precious Metals

Gold

Gold is back testing the previous wave 3 after it finally cracked the Tenkan after correcting in 3 waves from 1556 to Murrey Math +3/8. Support is Kijun while market decides.  From there a C or 3?  Watch Fibs and chikou. Watching for corrective 2 waves to tell us what this move is.
 Gold W 4 3 2020

Silver

Silver diverged further from gold not breaking the previous iii or C as Gold did.  Since we have continued a reversal harder , a  much more violent impulse than gold after correcting the 3 or C. Key is the 50% after it rallied in 3 waves to retest the September 2017 breakdown  here is also a chance this is an X. We watch recent lows if this a 4 down or C complete
 Silver W 4 3 2020

 

Currency Markets

Australian Dollar - AUDUSD

The Aussie dollar is floundering around the tenkan after reversed hard after breaching the cloud and tested the 50 wma and around Kijun now support. Fell after the move to MM +1/8 first target.

AUD W 4 3 2020

 New Zealand Dollar - NZDUSD

The Kiwi spent the week retesting the breakup after the bounce faltered much like the AUD and came back through the cloud.  We are watching as Tenkan and Kijun trying to cross back through which could bring the 'kiss of death'. The Chikou needs to rebalance.  

 NZD W 4 3 2020

Canadian Dollar - USDCAD

The USDCAD back retesting old channel after was rejected hard at the 50wma and cloud, closing the week under old channel, tenkan and Kijun Resistance top of cloud and 50 wma. The tenkan remains the pivot aspect.

 CAD W 4 3 2020

Euro - EURUSD

Euro hasn't looked back since it spat the cloud and back through the top of channel in classic ABC and then accelerated after held tenkan Kijun kiss of death it - watch for impulse off Chikou rebalance  Again governed by $EURGBP and #Bund volatility. Unless this is a spit the potential of the measured move comes in around 1.0630 and lower. EUR remains a battle between EURJPY and EURCHF.

EUR W 4 3 2020


 EuroPound - EURGBP

EURGBP back testing tenkan after bounce, weekly cloud is well above and resistance is the May breakup reflecting Brexit politics. Resistance at kijun withr Tenkan support and Nov 2017 lows

EURGBP W 4 3 2020
 Japanese Yen - USDJPY

Classic failure at USDJPY after weeks over the weekly Kijun and closed at 50 wma and the cloud twist but couldnt get legs up. It was drawn by 38% and Murrey 6/8.  It broke out of Wedge as Kijun stayed flat. Yen buying on crosses, EURJPY and AUDJPY taking away the cloud twist that drew the dollar up.

JPY W 4 3 2020

 Mexican Peso USDMXN

Found support at last Gann octave as Mexican peso gave up some of recent gains after it held the cloud. Flat Kijun and Tenkan pulling after the USMC trade deal. Watch if a fractal spit on recent highs.

 MXN W 4 3 2020


 Turkish Lire USDTRY

USDTRY impulse higher continued after found support at daily Kijun and Tenkan to get back above cloud  Impulse is needed to pull away from here. Support is the previous break up and tenkan and Kijun. Keep an eye on geopolitical risk factors.
 

 MXN W 4 3 2020

Bitcoin

Nothing new for Bitcoin, more of the same as it continues to falter after 61.8% spit. Well under the tenkan and kijun. Needs to test downtrend for higher correction. Use your MM rules as algos control the herd here, support is the cloud - we said be wary of sharp ABC, 1-2 moves.

BTC W 4 3 2020
 

The Week Ahead

Key US Economic and Central Bank Events This Week

Sunday, April 5, 2020

Monday, April 6, 2020

  • All Day Holiday India - Mahavir Jayanti
  • All Day Holiday China - Ching Ming Festival
  • 01:00 JPY Household Confidence (Mar)
  • 02:00 EUR German Factory Orders (MoM) (Feb)
  • 04:30 GBP Construction PMI (Mar)
  • 04:30 EUR Sentix Investor Confidence (Apr)
  • 06:30 EUR Spanish Consumer Confidence
  • 10:00 USD CB Employment Trends Index (Mar)
  • 10:30 CAD BoC Business Outlook Survey
  • 11:30 USD 3-Month Bill Auction 0.125%
  • 18:00 NZD NZIER Business Confidence (Q1)
  • 18:00 NZD NZIER QSBO Capacity Utilization (Q1)
  • 18:30 AUD AIG Services Index (Mar)
  • 19:00 KRW Current Account (Feb)
  • 19:30 JPY Average Cash Earnings
  • 19:30 JPY Household Spending (MoM) (Feb)
  • 19:50 JPY Foreign Reserves (USD) (Mar)
  • 21:30 AUD ANZ Job Advertisements (MoM)
  • 21:30 AUD Trade Balance (Feb)

Tuesday, April, 7 2020

  • 00:30 AUD RBA Interest Rate Decision (Apr)
  • 00:30 AUD RBA Rate Statement
  • 01:00 JPY Coincident Indicator (MoM) (Feb)
  • 01:00 JPY Leading Index (MoM) (Feb)
  • 01:45 CHF Unemployment Rate s.a. (Mar)
  • 02:00 EUR German Industrial Production (MoM) (Feb)
  • 02:45 EUR French Current Account (Feb)
  • 02:45 EUR French Reserve Assets Total (Mar)
  • 02:45 EUR French Trade Balance (Feb)
  • 03:00 CNY FX Reserves (USD)
  • 03:30 GBP Halifax House Price Index (MoM) (Mar)
  • 04:00 EUR Italian Retail Sales (MoM) (Feb)
  • 04:30 GBP Labour Productivity (Q4)
  • 04:30 HKD Foreign Reserves (USD) (Mar)
  • 06:00 EUR Eurogroup Meetings
  • 08:55 USD Redbook (MoM)
  • 10:00 USD IBD/TIPP Economic Optimism
  • 10:00 USD JOLTs Job Openings (Feb)
  • 10:00 CAD Ivey PMI (Mar)
  • 10:30 NZD GlobalDairyTrade Price Index
  • 14:00 USD 3-Year Note Auction
  • 15:00 USD Consumer Credit (Feb)
  • 16:30 USD API Weekly Crude Oil Stock
  • 19:50 JPY Adjusted Current Account
  • 19:50 JPY Core Machinery Orders (MoM) (Feb)
  • 21:30 AUD Home Loans (MoM)
  • 21:30 AUD Invest Housing Finance (MoM)
  • 21:30 AUD RBA Chart Pack Release

    Wednesday, April 8, 2020

  • 01:45 CHF Unemployment Rate (Mar)
  • 01:00 JPY Economy Watchers Current Index (Mar)
  • 07:00 USD MBA 30-Year Mortgage Rate
  • 07:00 USD MBA Mortgage Applications (WoW)
  • 07:00 USD MBA Purchase Index
  • 07:00 USD Mortgage Market Index
  • 07:00 USD Mortgage Refinance Index
  • 08:15 CAD Housing Starts (Mar)
  • 08:30 CAD Building Permits (MoM) (Feb)
  • 10:30 USD Crude Oil Inventories
  • 13:01 USD 10-Year Note Auction
  • 14:00 USD FOMC Meeting Minutes
  • 19:01 GBP RICS House Price Balance (Mar)
  • 20:30 JPY BoJ Governor Kuroda Speaks
  • 21:00 KRW Interest Rate Decision (Apr)
  • 21:30 AUD RBA Financial Stability Review

Thursday, April 9, 2020

  • 01:00 JPY Household Confidence (May)
  • 02:00 GBP Construction Output (MoM) (Feb)
  • 02:00 GBP GDP (MoM)
  • 02:00 GBP Industrial Production (MoM) (Feb) 
  • 02:00 GBP Manufacturing Production (MoM) (Feb)
  • 02:00 GBP Trade Balance (Feb)
  • 02:00 EUR Gemran Current Account Balance
  • 02:00 EUR German Trade Balance (Feb)
  • 02:00 JPY Machine Tool Orders (YoY)
  • 04:00 EUR Italian Industrial Production (YoY)
  • 04:00 EUR Italian Industrial Production (MoM) (Feb)
  • 04:30 GBP Index of Services
  • 05:30 ZAR Gold Production (YoY) (Feb)
  • 05:30 ZAR Mining Production (Feb)
  • 07:30 EUR ECB Publishes Account of Monetary Policy
  • 08:30 USD Continuing Jobless Claims
  • 08:30 USD Initial Jobless Claims
  • 08:30 USD Jobless Claims 4-Week Avg.
  • 08:30 USD PPI (MoM) (Mar)
  • 08:30 CAD Employment Change (Mar)
  • 08:30 CAD Full Employment Change (Mar)
  • 08:30 CAD Part Time Employment Change (Mar)
  • 08:30 CAD Unemployment Rate (Mar)
  • 09:00 GBP NIESR GDP Estimate
  • 10:00 USD Michigan Consumer Sentiment (Apr)
  • 10:00 USD Wholesale Inventories (MoM)
  • 10:00 USD Wholesale Trade Sales (MoM) (Feb)
  • 10:30 USD Natural Gas Storage
  • 11:30 USD 4-Week Bill Auction
  • 11:30 USD 8-Week Bill Auction
  • 12:00 USD WASDE Report
  • 13:01 USD 30-Year Bond Auction
  • 19:50 JPY PPI (MoM) (Mar)
  • 21:30 CNY CPI (MoM) (Mar)
  • 21:30 CNY CPI (YoY) (Mar)
  • 23:00 KRW M2 Money supply (Feb)

Friday, April 10, 2020

  • All Day Holiday- Good Friday :New Zealand Australia Hong Kong Singapore South Africa  France Germany Italy Spain  Switzerland Canada United States
  • 02:45 EUR French Industrial Production (MoM)
  • 08:30 USD CPI (MoM) (Mar)
  • 08:30 USD Real Earnings (MoM) (Mar)
  • 11:00 USD Cleveland CPI (MoM) (Mar)
  • 12:30 USD FOMC Member Mester Speaks
  • 13:00 USD U.S. Baker Hughes Oil Rig Count
  • 13:00 USD U.S. Baker Hughes Total Rig Count
  • 14:00 USD Federal Budget Balance (Mar)
  • 15:30 USD CFTC speculative net positions

Saturday, Apr 11, 2020

Stock Buyback Watch

 

----

Note these charts, opinons news and estimates and times are subject to change and for indication only. Trade and invest at your own risk.

Trade Smart!

Log in to comment
Discuss this article in the forums (31 replies).

Google ads