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FEAR NOT Brave Investors
Strange Time But remember The Joker once served as the Iranian ambassador for the United Nations.
Jackson Hole, Powell and PMI
The Week That Was:
We saw more fear and an obsession with inverse yield curves. Argentina’s currency, bonds and stocks collapsed, Germany showed negative quarter growth and POTUS put off some of the 10% tariffs on China goods until after Christmas. Volatility was the result but after all the doom and gloom stocks rallied to close just under 2900 on the S&P. U.S. Economic data showed some positives, still the market has priced in 100% for a 25 bp and 40% for a 50 bp Fed cut. The flight to safety reflecting both fear and trying to capture falling yields, the bond market is all one way on fear at this point.
Oil had a quiet week with OPEC issuing a bearish demand picture limiting its rally with risk assets Friday. Natural gas witht he record heat is trying to rally but held down by record shorts.
We still have confusion with the whole mess that is Brexit and Italian elections are back in the picture. Negative rates, as foolish as history will remember them are the theme of the moment.
Still the market wants to believe the trade war is constructive, we have warned for over a year about the nonsense of the trade war nearing an end. Very simply you have two different cultures two different political systems and shaming doesn’t do well in either.
This is a market full of players that think its different this time, sure its different negative rates all around, trillions of worthless debt, unstable politics and Central Bankers putting their thumb in their mouths and seeing which way the wind blows. 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”
The market has put on their bets for the next Fed cut and it’s 100% for 25 basis points. For volatility, know what you are in. The indices are gamed by a few high delta stocks leading the way with massive leverage and a game of chicken on daily.
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. We have had mixed economic data, no concrete decision on the China and EU trade wars and no decision on Brexit. Here we are (see what ya wanna see).
The Week Ahead
Another big week for potential volatility, led by trade wars and rate theories. We have RBA monetary policy meeting minutes and US FOMC meeting minutes. All eyes will be on flash manufacturing and service PMI reports, especially out of the U.S., UK., Canada, Italy, Germany and France. We then have a three day Jackson Hole economic policy symposium with a slew of the world elite, bankers, corporates and politicians. Fed chair Jerome Powell speaks at 10 on Friday.
To repeat AGAIN …With the trade war, most analysts still say a US-China trade deal will remain out of reach regardless for some time. On repeat “Again the issue is the disconnect between the story telling about the China deal and inconclusion between the Tories and Labor in the UK. What could go wrong?”
It is now over five months since the latest trade deal between the United States with China deadline of March 1. The White house said it needs more time, then turned around and slapped more tariffs on and said hey we are still talking. Are we the only one that sees the constant reset to keep markets elevated? If you have half a non partisan brain it should be all pretty clear the great game going on.
For emerging markets the still high US dollar means the Fragile 5 continue to shake. Argentina and Turkey are red letter risks. Voters will be going to the polls in Poland, Argentina, 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 China and the U.S.trade wars.
Earnings last week included Barrick Gold, Sysco, RealReal, Tilray, Cisco, Macy’s, Canopy Growth, Tencent, Agilent, Luckin Coffee, Performance Food, NetApp, Walmart, Nvidia, Applied Materials, Alibaba, Tapestry, J.C. Penney, Canadian Solar and :Deere.
We start off on Monday with: Estee Lauder
Tuesday Earnings Include: Medtronic, Kohls Corp, Home Depot, TJX Companies
Wednesday Earnings Include: Analog Devices, Lowe’s Companies, Target, Nordstrom, Synopsys, Keysight Technologies, L Brands
Thursday Earnings Include: Hormel Foods, Ross Stores, Salesforce.Com, HP Inc, Intuit, Gap Inc
Friday Earnings Include: Foot Locker
-comment section below data-
Geopolitical Tinderbox Radar
Last Week’s Big Stories
- U.S. Put 6 Oil Rigs Back in Service, Natural Gas Rigs Fall Another 4
- OPEC Monthly Oil Market Report August 2019
- Into The Vortex – EIA Reports +49 Bcf Natural Gas Storage Build
- Around The Barrel – Crude Oil Storage Builds Two Weeks in A Row
- Mortgage Refinancing at Three Year High as Rates Slide Down
- German Growth Sinks Into Negative As Trade War Hits Exports
- Fed Dilemma With Core Inflation Rising as Real Wages Fall
- Argentina Peso Collapses 30% To Record Low After Election Shock
The Week That Was – Last Weeks Recap
- Applied Materials Earnings Beat Expectations But China Trade War Drags
- NVidia Beat Earnings and Revenue Targets, Focus on AI Growing
- Tilray Reports Another Big Loss With Marijuana Selling Price Down A Third
- Barrick Gold Higher Production Doubles Profits With Rising Prices
Biggest Stock Winners and Losers Last Week*
Which Stocks Moved US ETF’s Last Week
US Stock Indices Performance
There was a reason why we kept harping on about this risk: The performance in shares of small-cap companies which are domestically focused than the large-cap firms is a concern for the optimism in the markets, belies the ATH optimism. The small-cap Russell 2000 index had gained 16.6% for the year, which has underperformed the benchmark S&P 500 index which had risen over 19.5%. Whereas the DJIA, NDX and SPX have marked new records highs, it remained 9.7% below its August 2018 high.
The $SPX continues to trade off our daily speed lines like clock work with this week’s low a perfect test..We closed the week out at the 50% retest of this reason move and above the Tenkan and Kijun. Best alternatives are a (ii) of wave V higher, a A of a larger 2 or this is i of something more powerful down. There is the alernative that the high was a B Plus and the recent low is a C also. Speed and channel lines in tune with algo calibration curve.
On the weekly SPX we see chaotic moves, spitting the Kijun and closing just under tenkan. We have a series of vibrations (blue lines) with Murrey Math confluence. Tenkan and 50 wma with a sharply climbing Kijun will be support with the cloud much lower it will need to hold.
10 Year Treasury Note
Energy and Commodities
US Crude Oil (WTI)
WTI sold off the kijun hard but bounced off the daily tenkan, still finished inside the outer daily downtrend channel well under the cloud base under Kijun and 50 dma adding pressure. Watch for spits now with fear in the pricing.
WTI again finished the week under the weekly Kijun, 50wma (green) and Tenkan,at the bottom of the cloud after rejecting strong impulse higher it closed at the cloud base back to the Chikou. Expect more work and volatility. Watch Murrey confluence with the cloud acting as support, failure.
US Natural Gas (Henry Hub)
Natural Gas bounced off the tenkan (orange) but was rejected at the Kijun and 50 dma. Despite record low futures longs the fails are swift. The1-2 set up retested the flag has potential but flailing.
Natural Gas weekly finished with a green spug after lower lows, and was again rejected at the tenkan, still much work to do with tenkan and channel above. its all about the weekly channel and the tenkan
Baltic Dry Index (BDI)
Australian Dollar – AUDUSD
The Aussie dollar continued to be sold off hard of the Kijun and daily cloud after the bounce off the bottom weekly channel and Murrey Math 0/8 gave up right down to spit the weekly channel. Much repair work to be done into the cloud to get a meaningful bounce in.
New Zealand Dollar – NZDUSD
The Kiwi continues to battle, accelerated weakness since the RBNZ cut. We have support at the channel and Fibs, above tenkan holds it back. Chikou confluence over the downward channel is rebalancing.
Canadian Dollar – USDCAD
The USDCAD countinued to bounce, spitting the Kijun and top of the cloud twice but found support at the tenkan. Loonie continues to find balance in the cloud. The tenkan is now seen as the pivot aspect. Support is cloud base
Euro – EURUSD
Euro emains in the long weekly channel pennant back testing lows after rejected by Kijun and Tenkan. EUR remains a battle between EURJPY and EURCHF selling with EURGBP joining in this week.
EuroPound – EURGBP
After the break higher after GBPUSD collapsed EURGBP reversed perfectly at the chikou and Murrey +2/8 to finish back at the Tenkan, Below 50 wma, Kijun & top of channel support.
Japanese Yen – USDJPY
The dollar yen reversed hard after the cloud and Kijun stopped the rally and saw its first recover this week. Still firmly in the channel needing to break the tenkan to get legs higher. Yen buying continued on the crosses, EURJPY and AUDJPY taking away the cloud twist that drew the dollar up.
Mexican Peso USDMXN
Mexican peso weakened further this week with the Argentina rout and surprise rate cut It closed over Kijun and tenkan. USDMXN is rebalancing if chikou.
Turkish Lire USDTRY
The USD Turkish Lire seems to be avoiding the emerging market downdraft – but be aware of the coiling.It sits locked between the daily Kijun and tenkan. The downtrend formed since May is not in line with the risk profile outside of rates
Bitcoin digesting pennant thrown back at the 61.8% of the major move at pace once to the 38% and tenkan confluence to bounce to the 50%. Use your MM rules as algos control the herd here, support is the cloud and tenkan, be wary of sharp ABC, 1-2 moves.
The Week Ahead
Key US Economic and Central Bank Events This Week
Sun Aug 18, 2019
- 18:45 NZD PPI Input (QoQ) (Q2)
- 18:45 NZD PPI Output (QoQ) (Q2)
- 19:00 GBP Rightmove House Price Index (MoM)
- 19:00 JPY Reuters Tankan Index (Aug)
- 19:50 JPY Adjusted Trade Balance
- 19:50 JPY Exports (YoY) (Jul)
- 19:50 JPY Imports (YoY) (Jul)
- 19:50 JPY Trade Balance (Jul)
Monday, Aug 19, 2019
- 02:00 EUR German WPI (YoY) (Jul)
- 04:00 EUR Current Account (Jun)
- 04:30 HKD Unemployment Rate (Jul)
- 05:00 EUR CPI (MoM)
- 06:00 EUR German Buba Monthly Report
- 11:30 USD 3-Month Bill Auction
- 11:30 USD 6-Month Bill Auction
- 21:30 AUD RBA Meeting Minutes
Tuesday Aug 29, 2019
- 02:00 CHF Trade Balance (Jul)
- 02:00 EUR German PPI (MoM) (Jul)
- 04:30 HKD CPI (YoY) (Jul)
- 05:00 EUR Construction Output (MoM) (Jun)
- 06:00 GBP CBI Industrial Trends Orders (Aug)
- 08:30 CAD Manufacturing Sales (MoM) (Jun)
- 08:55 USD Redbook (YoY)
- 08:55 USD Redbook (MoM)
- Tentative NZD GlobalDairyTrade Price Index
- 16:30 USD API Weekly Crude Oil Stock
- 17:00 KRW PPI (MoM) (Jul)
- 18:00 USD FOMC Member Quarles Speaks
- 20:30 AUD MI Leading Index (MoM)
- 23:00 NZD Credit Card Spending (YoY)
Wednesday, Aug 21, 2019
- 04:00 EUR Spanish Trade Balance
- 04:30 GBP Public Sector Net Borrowing (Jul)
- 04:30 GBP Public Sector Net Cash Requirement (Jul)
- 05:40 EUR German 30-Year Bund Auction
- 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
- 08:30 CAD CPI (MoM) (Jul)
- 10:00 USD Existing Home Sales (Jul)
- 10:30 USD Crude Oil Inventories
- 14:00 USD FOMC Meeting Minutes
- 19:00 AUD Manufacturing PMI
- 19:00 AUD Services PMI
- 20:30 JPY Manufacturing PMI (Aug)
- 20:30 JPY Services PMI
- 21:30 AUD Construction Work Done (QoQ) (Q2)
Thursday Aug 22, 2019
- 00:30 JPY All Industries Activity Index (MoM)
- 02:00 JPY Machine Tool Orders (YoY)
- 03:15 EUR French Manufacturing PMI (Aug)
- 03:15 EUR French Markit Composite PMI (Aug)
- 03:15 EUR French Services PMI (Aug)
- 03:30 EUR German Composite PMI (Aug)
- 03:30 EUR German Manufacturing PMI (Aug)
- 03:30 EUR German Services PMI (Aug)
- 04:00 EUR Manufacturing PMI (Aug)
- 04:00 EUR Markit Composite PMI (Aug)
- 04:00 EUR Services PMI (Aug)
- 06:00 GBP CBI Distributive Trades Survey (Aug)
- 07:30 EUR ECB Publishes Account of Monetary Policy Meeting
- 08:30 USD Continuing Jobless Claims
- 08:30 USD Initial Jobless Claims
- 08:30 USD Jobless Claims 4-Week Avg.
- 08:30 CAD Wholesale Sales (MoM) (Jun)
- 09:45 USD Manufacturing PMI (Aug)
- 09:45 USD Markit Composite PMI (Aug)
- 09:45 USD Services PMI (Aug)
- 10:00 EUR Consumer Confidence (Aug)
- 10:30 USD Natural Gas Storage
- 11:00 USD KC Fed Composite Index (Aug)
- 11:00 USD KC Fed Manufacturing Index (Aug)
- 11:30 USD 4-Week Bill Auction
- 11:30 USD 8-Week Bill Auction
- Tentative USD Jackson Hole Symposium
- Tentative USD 30-Year TIPS Auction
- 18:45 NZD Retail Sales (QoQ) (Q2)
- 19:30 JPY National CPI (MoM)
- 20:00 SGD GDP (QoQ) (Q2)
Friday Aug 23, 2019
- 01:00 SGD CPI (YoY) (Jul)
- 08:30 CAD Core Retail Sales (MoM) (Jun)
- 08:30 CAD Corporate Profits (QoQ)
- 08:30 CAD Retail Sales (MoM) (Jun)
- 10:00 USD Fed Chair Powell Speaks
- 10:00 USD New Home Sales (MoM) (Jul)
- Tentative USD Jackson Hole Symposium
- 13:00 USD U.S. Baker Hughes Total Rig Count
- 15:30 USD CFTC speculative net positions
Stock Buyback Watch
Via Emad Mnati @EmadMnati and MarketBeat
Note these charts, opinons news and estimates and times are subject to change and for indication only. Trade and invest at your own risk.