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FEAR NOT Brave Investors
Strange times But remember The Joker once served as the Iranian ambassador for the United Nations.
Coronavirus, Powell and No Fear
The Week That Was:
What is clear is that we are in an age of dismissal, dismissal of risk, respect and thinking beyond today, These are all hallmarks of greed, some would say gluttany. In a world that worships money that is what takes over, Since could never be clear than the record highs in US equities since he unravelling pandemic in China of Coronavirus . The virus has seen over 30 million Chinese locked in and spread to over 40,000 people across the globe.
We also had Brexit finally happen on January 31 with the UK leaving the EU. with concerns about a failed or no deal being talked about again. More risk denial? After a fifth weekly decline with oil prices, OPEC + is still trying to see if it can, and is willing to prevent prices from collapsing any further. Do we get a commitment of an additional cut of 600K bpd? What game are the Russians playing? Oil needs positive news and /or a significant amount of supply removed.
Gold prices have been on nipping offers as the impact of the coronavirus on the global economy hovers. Bitcoin Bitcoin has been scaling higher which sees the top of the recent $6,400 to $10,000 range threatenedwith safe-haven flows, improved progress in mainstream usage, and the heavily anticipated halving event in May.
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.. Earnings continued with mixed results, in a manic mode EPS are largely ignored it seems. Amazon soared back over a Trillion and the Tesla shortsqueeze ignored the virus sending the stock over $920, up an astonishing 100% in around 4 months, most of that in two huge shoert squeezes. Tesla exemplifies the market in 2020, money gflow, fear and greed.
Whether the Phase One China trade relationship is merely hot air or not it is now on the back burner, particularly with Coronavirus. Next up is U.S. trade relations with Europe. Back in the Middle East expect more noise out of Libya, Iraq and Iran, this war is not over, just back to the proxies and propaganda phase. Rationality left the building a long time ago.
Wall Street has embraced the mantra ‘Greed is Good” more than any before.
Politically this week we have the Senate vote on impeachment , the day after SOTU. 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 trade war and trade relationships have the potential to impact growth strategies with unexpected consequences with this markets also be vulnerable. There is little doubt political uncertainty has become more widespread. With regard to the trade deal It is all dependant on so many factors, clearly the dealing isn’t complete. In a fully fledged stock mania, nothing matters until it does. That is the feral nature of greed. Is Coronavirus that dreaded black swan?
Despite the volatility and pandemic, the put call ratio, Vix and talking heads underscore there is no fear out there. What happens if music for pass the parcel stops playing? What if on China and the U.S. the market calls their bluff?. There is a reason why so many experienced fund managers are closing up shop.
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.
Poltically we have the growing antagonistic and partisan split of the impeachment of the POTUS, in the UK and Europe we have the daily Brexit news cycle. Happy New Year!
Prime Minister Boris Johnson fulfilled his pledge to “get Brexit done” by Jan. 31..
Given the history, markets seem overly optimistic about trade, some would say negligently. 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 BUT economics not being the market. The market has become nothing more than a casino. Very simply you have two different cultures two different political systems and shaming doesn’t do well in either. Read the recent reports with open eyes.
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”
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.
The Week Ahead
This week we could see more volatility with the engulfing uncertainty of the Coronavirus and unrest in Libya and Iraq. Powell’s testimony to Congress on Tuesday and Wednesday will be the main event with investors also paying a close look
Stocks are still not far off all time highs and geopolitical risk on high alert with President Trump under pressure at home and abroad. There are a few American economic reports. The biggest risk alert is valuation, the stock market’s record highs and price earnings ratio of more than 18.5. Following the Iowa Caucus debacle eyes will be on Tuesday’s New Hampshire primary. How long can Joe Biden and his campaign hang in there?
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 RBNZ is expected to hold rates at Wednesday’s meeting, though given the coronavirus outbreak, we may hear comments about the preparedness/scope to ease policy.
We start off with
The U.S. politically remains combustible, led by Democrat impeachment, Turkey, Iran and Saudi moves, trade wars and repo rates.
Watch for the 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 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 hit a 29-month high on Sept. 3. Investors are also transfixed by oil prices in reaction to the Saudi attack and recovery and military respsonses.
(Feb 10th-15th) China Jan Aggregate Financing, New Yuan Loans and Money Supply Data Canada Jan Housing Starts and Building Permits, Australia Jan NAB Business Confidence
Japan closed in observance of National Foundation Day, UK Preliminary Q4 GDP Dec Manufacturing Production and Industrial Production, Eurozone Dec Industrial Production, US Jan NFIB Small Business Index: Fed Powell will discuss the economy and monetary policy before the House Financial Services Committee, New Zealand Central Bank (RBNZ): Expected to keep Official Cash Rate at 1.00% US API Crude Oil Inventories
US MBA Mortgage Applications, EIA Crude Oil Inventories, Fed Chair Powell delivers semi-annual testimony to the Senate Banking Committee, US Jan Federal Budget Balance:, Japan Jan PPI Y/Y
- Thursday Germany Jan Final CPI US Jan CPI US Weekly Jobless Claims, EIA Natural Gas Storage, US Treasury 30-Year Bond Auction New Zealand Jan Business Manufacturing Japan Dec Tertiary Industry Activity
- Friday Germany Q4 Preliminary GDP Q/Q: Eurozone Q4 Preliminary GDP, US Jan Retail Sales Industrial Production, US Feb Preliminary U of Michigan Sentiment, 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 from Alibaba (NYSE:BABA), Cisco (NASDAQ:CSCO), Toshiba (OTCPK:TOSBF), and several car and plane manufacturers. We watch for updates on production in coronavirus impacted regi and if there is extended halting of operations weighing on multi-nationals.
Last week we heard from Check Point, Alphabet, BP, Sony, Gilead, Clorox, Ford, Klac-Tencor, Chipolte, Royal Caribbean, Disney, AGCO, Merck Cognizant Tech, Paycom Software, Novo-Nordisk, Glaxosmithkline, Qualcomm, Boston Scientific, Suncor, General Motors, Metlife, Humana, Spotify, Twilio, Yum China and GrubHub. Bristol-Myers Squibb Estee Lauder Snap-on, Columbia Sportswear, Total, Uber, Yum, Fiat Chrysler, Baidu, Twitter Abbvie, Canada Goose
We start off on Monday with: Allergan, Restaurant Brands, XPO Logistics earnings
Tuesday Earnings Include: Hasbro, Under Armour, Lyft
Wednesday Earnings Include: CVS Health, Barrick Gold, Shopify, Applied Materials, Cisco
Thursday Earnings Include: Pepsico, Kraft Heinz, Waste Management, Expedia Group, Nvidia, Dexcom
Friday Earnings Include: Newell Brands
-comment section below data-
Geopolitical Tinderbox Radar
Last Week’s Big Stories
The Week That Was – Last Weeks Recap
- Into The Vortex – EIA Reports -201 Bcf Draw in Natural Gas Storage
- US Q4 GDP 2.1% vs +2.0% Expected on Exports and Home Investment Boost
- Federal Reserve Keep Rates Steady as Expected, Repos Through April
- Crude and Gasoline Inventories Continue To Build With Record Production
- Coronavirus Highest Risk International Cities Bangkok, Hong Kong and Taipei
- New Zealand Calls September 19, 2020 General Election
- Assets Currently at Very Elevated Levels says ECB Mersch
- Chevron Earnings Hit By Lower Crude Oil and Natural Gas Prices
- ExxonMobil Earnings Hurt by Lower Oil Prices and Chemical Division
- Electronic Arts Earnings Beat But Lowers Gaming Revenue Guidance
- Amazon Surged Above $1 Trillion in Market Capitalization After Monster Earnings
- General Electric Shares Continue To Rise After Stronger Earnings Than Expected
- AMD Micro Wobbles On Earnings After Misses Revenue Forecast
- Apple Earnings and Margins Beat as iPhone, Airpods and Watch Revenue Soars
- Intel Stock Soars Past Dot Com Bubble Highs After Earnings
Biggest Stock Winners and Losers Last Week*
Which Stocks Moved US ETF’s Last Week
US Stock Indices Performance
The #SPX wave 5 extension saw meaningful impulse down which closed under the tenkan after the post Iran hit thrust to new highs in a manic wave 5 or 3 of some degree. All hallmarks of a mania, +5/8 Daily MM over the chikou in 5 violent waves. The question is this a wave 5 and of what degree? Best alternatives (v) of wave V or wave iii higher, Speed and channel lines in tune with algo calibration curve. Note Chikou rebalance in order.
This week we saw the first impulse down since impulse up off the weekly tenkan the weekly SPX closed over the top channel tor new all time highs well ahead of the Chikou, Below we have Kijun and tenkan. Below channel, watch if a spit or clear break support is 50 wma as chikou rebalances
Semiconductors ETF – SMH
(Another ATH Leading underlying strength of US Indices)
CBOE VIX INDEX
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
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.
10 Year Treasury Note
Energy and Commodities
US Crude Oil (WTI)
WTI has retraced in 5 eaves from the Iran blowoff and failed to get back over the tenkan to be rejected as it tests the previous 49-50.50 low. Math and crowd behavior tell the story right to the +2/8 and collapsed back to the break up aand now through the channel, accelrating when Tenkan and 50 dma crosseed. .From here question is was the higher C complete? Resistance tenkan, Kijun and 50 dma zone over the cloud. Rebalancing Chikou and MM 8/8 gave us overbought caution but we had the manic thrust. The impulse meant a C or (Y) complete. Support is MM, Previous Lows and extensions.
WTI accelerated lwoer after broek the weekly uptrend, a fractal of the sharp Key resistance is Kijun and 50wma confluence (green) which all failed aftet the violent spike up. Support channel and fib conflageration with MM 1.8
US Natural Gas (Henry Hub)
Natural Gas continues to test the bottom trend line – but span out and could be a massive bull flag. how could this be possible? Meanwhile drifts from failed tenkan nside the babson lines and median channel Recall it was rejected at the weekly tenkan last bounce, downside accelerated throuh October break up . Resistance from cloud down from impulse. Correcting the Murrey Math 1/8 and Wave iii or Alt C high. Support on downtrend line under 1.80 – not pretty
Natty nothing new. just more failure – failed to get over old trendline break from impulse down after Natural Gas rally rejected at the 61.8% and the March highs with the tenkan and Kijun, We got the Kijun/Tenkan cross after retesting the weekly channel break and the kiss of death.here we are at top of band a break opens up lower band. But take a peak at the daily flag possibilities if breaks tenkan.
Baltic Dry Index (BDI)
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.
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
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.
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.
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.
Euro – EURUSD
Euro tested top of channel after held tenkan with Kijun closing through it – watch for impulse down if starts to break wedge, Again governed by $EURGBP and #Bund volatility. Support pennant break. 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.
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
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.
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.
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.
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.
The Week Ahead
Key US Economic and Central Bank Events This Week
Sunday, February 9, 2020
- 18:50 JPY Bank Lending (YoY) (Jan)
- 18:50 JPY Current Account n.s.a. (Dec)
- 20:30 CNY CPI (YoY) (Jan)
- 20:30 CNY CPI (MoM) (Jan)
- 20:30 CNY PPI (YoY) (Jan)
Monday, February 10, 2020
- 00:00 JPY Economy Watchers Current Index (Jan)
- 01:45 CHF Unemployment Rate (Jan)
- 02:30 CHF CPI (MoM) (Jan)
- 04:00 EUR Italian Industrial Production (MoM) (Dec)
- 04:30 EUR Sentix Investor Confidence (Feb)
- 08:00 BRL BCB Focus Market Readout
- 08:00 USD FOMC Member Bowman Speaks
- 08:30 CAD Housing Starts (Jan)
- 08:30 CAD Building Permits (MoM) (Dec)
- 10:00 USD CB Employment Trends Index (Jan)
- 11:30 USD 3-Month Bill Auction
- 11:30 USD 6-Month Bill Auction
- 15:15 USD FOMC Member Harker Speaks
- 19:01 GBP BRC Retail Sales Monitor (YoY) (Jan)
- 19:30 AUD Home Loans (MoM)
- 19:30 AUD Invest Housing Finance (MoM)
- 19:30 AUD NAB Business Confidence (Jan)
- 19:30 AUD NAB Business Survey (Jan)
Tuesday, February 11, 2020
- All Day Holiday Japan – National Day
- 04:30 GBP Business Investment (QoQ) (Q4)
- 04:30 GBP Construction Output (MoM) (Dec)
- 04:30 GBP GDP (MoM)
- 04:30 GBP Industrial Production (MoM) (Dec)
- 04:30 GBP Manufacturing Production (MoM) (Dec)
- 04:30 GBP Trade Balance (Dec)
- 06:00 USD FOMC Member Daly Speaks
- 06:00 USD NFIB Small Business Optimism (Jan)
- 08:55 USD Redbook (MoM)
- 09:00 GBP NIESR GDP Estimate
- 09:00 EUR ECB President Lagarde Speaks
- 10:00 USD Fed Chair Powell Testifies
- 10:00 USD JOLTs Job Openings (Dec)
- 12:00 GBP MPC Member Haskel Speaks
- 12:00 USD WASDE Report
- 12:15 USD FOMC Member Quarles Speaks
- 13:00 USD 3-Year Note Auction
- 13:30 USD FOMC Member Bullard Speaks
- 14:15 USD FOMC Member Kashkari Speaks
- 16:30 USD API Weekly Crude Oil Stock
- 16:45 NZD Electronic Card Retail Sales (MoM) (Jan)
- 18:30 AUD Westpac Consumer Sentiment (Feb)
- 18:50 JPY M3 Money Supply (Jan
- )20:00 NZD RBNZ Interest Rate Decision
- 20:00 NZD RBNZ Monetary Policy Statement
- 20:00 NZD RBNZ Rate Statement
- 21:00 NZD RBNZ Press Conference
Wednesday, February 12, 2020
- 00:00 SGD Retail Sales (MoM) (Dec)
- 01:00 JPY Machine Tool Orders (YoY)
- 05:00 EUR Industrial Production (MoM) (Dec
- 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
- 07:00 USD OPEC Monthly Repor
- t 07:30 GBP Autumn Budget
- 08:30 USD FOMC Member Harker Speaks
- 10:00 USD Fed Chair Powell Testifies
- 10:30 USD Crude Oil Inventories
- 13:01 USD 10-Year Note Auction
- 14:00 USD Federal Budget Balance (Jan)
- 14:10 NZD RBNZ Gov Orr Speaks
- 18:50 JPY PPI (MoM) (Jan)
- 19:00 AUD MI Inflation Expectations
- 19:01 GBP RICS House Price Balance (Jan)
- 19:15 CAD BoC Gov Poloz Speaks
- 19:15 AUD RBA Governor Lowe Speaks
Thursday, February 13, 2020
- 01:30 EUR French Unemployment Rate (Q4)
- 02:00 EUR German CPI (MoM) (Jan)
- 02:00 EUR German HICP (MoM) (Jan)
- 04:30 ZAR Gold Production (YoY) (Dec)
- 04:30 ZAR Mining Production (Dec)
- 08:30 USD Continuing Jobless Claims
- 08:30 USD Core CPI (MoM) (Jan)
- 08:30 USD CPI (MoM) (Jan)
- 08:30 USD Initial Jobless Claims
- 08:30 USD Jobless Claims 4-Week Avg.
- 08:30 USD Real Earnings (MoM) (Jan)
- 09:30 USD Natural Gas Storage
- 11:00 USD Cleveland CPI (MoM) (Jan)
- 11:30 USD 4-Week Bill Auction
- 11:30 USD 8-Week Bill Auction
- 13:01 USD 30-Year Bond Auction
- 16:00 KRW Export Price Index (YoY) (Jan)
- 16:00 KRW Import Price Index (YoY) (Jan)
- 16:30 NZD Business NZ PMI (Jan)
- 16:45 NZD FPI (MoM) (Jan)
- 17:30 USD FOMC Member Williams Speaks
- 22:00 KRW M2 Money supply (Dec)
- 23:30 JPY Tertiary Industry Activity Index (MoM)
Friday, February 14, 2020
- 02:00 EUR German GDP (QoQ) (Q4)
- 02:00 EUR German WPI (MoM) (Jan)
- 02:30 CHF PPI (MoM) (Jan)
- 03:00 EUR Spanish CPI (MoM) (Jan)
- 04:00 EUR Italian Trade Balance (Dec)
- 05:00 JPY BOJ Deputy Governor Amamiya Speaks
- 05:00 EUR Employment Change (QoQ)
- 05:00 EUR GDP (QoQ) (Q4)
- 05:00 EUR Trade Balance (Dec)
- 08:30 USD Retail Sales (MoM) (Jan)
- 08:30 USD Export Price Index (MoM) (Jan
- ) 08:30 USD Import Price Index (MoM) (Jan)
- 09:15 USD Capacity Utilization Rate (Jan)
- 09:15 USD Industrial Production (MoM) (Jan)
- 09:15 USD Manufacturing Production (MoM) (Jan)
- 10:00 USD Business Inventories (MoM) (Dec)
- 10:00 USD Michigan Consumer Sentiment (Feb
- ) 11:45 USD FOMC Member Mester Speaks
- 13:00 USD U.S. Baker Hughes Oil Rig Count 1
- 14:30 USD CFTC Speculative net positions
Saturday, Feb 1, 2020
- All Day Holiday China – Spring Festival
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.