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FEAR NOT Brave Investors
Strange times But remember The Joker once served as the Iranian ambassador for the United Nations.
US Elections, Jobs, Chaos
The Week That Was – What Lies Ahead?
- On repeat…Another week where politics of hate ramped up a notch, the hate between Pelosi/Biden and Trump is palpable and has raised even further the partisan blinders of both sides. The inevitable fate we got – fed up investors.
- Apple Inc $AAPL, Microsoft Corp $MSFT, Amazon.com Inc $AMZN, Facebook Inc $FB, and Google-parent Alphabet Inc $GOOGL make up approximately 23% of the total weight of the S&P 500. With that comes gyrations that are an outsized impact on broader markets. When these comapnies sold off on earnings like this week, the impact on the market was clear. The S&P500 dropped 5.6%, the biggest weekly sell-off since March. The Nasdaq100 (NDX) sank 5.5%. Apple dropped 5.4% for the week, Amazon down 5.3%, Facebook 7.6%, Tesla 7.8%, Nvidia 7.8%, Microsoft 6.4% and Zoom 9.9%.
- The S&P500 is up 1.2% y-t-d, the Dow down 7.1%.
- The Utilities declined 3.5% (down 1.2% ytd). The Banks fell 5.0% (down 32.1%), and the Broker/Dealers lost 3.1% (up 2.2%). Transports sank 6.5% (up 1.9%). The S&P 400 Midcaps dropped 5.7% (down 7.9%), and the small cap Russell 2000 lost 6.2% (down 7.8%). The Nasdaq100 fell 5.5% (up 26.6%). The Semiconductors dropped 4.8% (up 21.4%). The Biotechs slumped 3.0% (up 2.9%). With bullion down $23, the HUI gold index declined 2.8% (up 30.0%).
- In Europe for the week Germany’s DAX sank 8.6%, with a two-week drop of 10.5%. France’s CAC fell 6.4%, The FTSE Mib in Italy down 7.0% in Italy and a 6.4% cut for the IBEX in Spain. UK’s FTSE 100 sank 4.8%.
- In Asia Japan’s Nikkei Equities Index fell 2.3% (down 2.9% y-t-d). France’s CAC40 dropped 6.4% (down 23.1%). The German DAX equities index sank 8.6% (down 12.8%). Spain’s IBEX 35 equities index fell 6.4% (down 32.4%). Italy’s FTSE MIB index sank 7.0% (down 23.7%).
- EM equities were under pressure. Brazil’s Bovespa index dropped 7.2% (down 18.8%), and Mexico’s Bolsa fell 4.4% (down 15.1%). South Korea’s Kospi index dropped 4.0% (up 3.2%). India’s Sensex equities index lost 2.6% (down 4.0%). China’s Shanghai Exchange declined 1.6% (up 5.7%). Turkey’s Borsa Istanbul National 100 index sank 6.6% (down 2.8%). Russia’s MICEX equities index dropped 4.5% (down 11.7%)..
- IPO mania is back in full force with Snowflake an indication of, which more than doubled on debut.
- This fortnight’s reversal is a natural reversion after the bull mania after the Dow ended the second quarter with a 17.8% gain, the biggest quarterly rally since the first quarter of 1987, when it ripped up 21.6%. The S&P 500 had its biggest one-quarter surge since the fourth quarter of 1998, soaring nearly 20%. The Nasdaq Composite jumped 30.6% for the quarter, its best quarterly performance since 1999.
- Stock valuations, as measured by forward price-to-earnings ratios are near their highest level since the 2000 dot-com boom.
US Stock Indices Performance
Oil and Gas
- The Bloomberg Commodities Index declined 2.3% (down 11.2% y-t-d).
- WTI crude was clobbered $4.06 to $35.79 (down 41%). Gasoline sank 9.4% (down 39%),
- Natural Gas surged 12.9% (up 24%).
- Risk markets continue to respond to a Conronvirus outbreak and failed negotiations between Congress and the White House over an additional economic stimulus package to boost economic demand.
- U.S. producers production still under pre Laura levels.
- Higher crude prices prompt some U.S. producers start drilling again with rigs up for the fourth week in a row.
Silver and Gold
- The precious metals suffered as well. Silver dropped 4.2%, and Platinum sank 6.4%. Gold losses limited to 1.2%.
- The Bloomberg Commodities Index declined 2.3% (down 11.2% y-t-d). Spot Gold fell 1.2% to $1,879 (up 23.8%). Silver sank 4.2% to $23.646 (up 31.9%). Copper declined 2.6% (up 9%).
- For the week, European currency weakness supported the dollar, the dollar index reversed 1.4% higher on the week to 94.038 (down 2.6% y-t-d).
- For the week the Japanese yen increased 0.1%. the Australian dollar 1.6%, the Canadian dollar 1.5%, the British pound 0.7%,
- Minors for the week, with the Norwegian krone down 2.9% and the Swedish krona falling 1.6%., the Brazilian real 2.2%, the Swedish krona 1.7%, the Mexican peso 1.5%, the Swiss franc 1.4%, the New Zealand dollar 1.1%, the Singapore dollar 0.6%, the South African rand 0.4%, and the South Korean won 0.2%. The Chinese renminbi declined 0.07% versus the dollar this week (up 4.06% y-t-d).
Bond Markets (and Fed Watch)
- Three-month Treasury bill rates ended the week at 0.085%. Two-year government yields were unchanged at 0.155% (down 141bps y-t-d). Five-year T-note yields added a basis point to 0.39% (down 131bps). Ten-year Treasury yields rose three bps to 0.875% (down 104bps). Long bond yields increased two bps to 1.66% (down 73bps). Benchmark Fannie Mae MBS yields were unchanged at 1.41% (down 130bps).
- In Europe Greek 10-year yields increased a basis point to 0.93% (down 50bps y-t-d). Ten-year Portuguese yields dropped seven bps to 0.11% (down 34bps). Italian 10-year yields were unchanged at 0.76% (down 65bps). Spain’s 10-year yields were down six bps to 0.14% (down 33bps). German bund yields dropped five bps to negative 0.63% (down 44bps). French yields fell four bps to negative 0.34% (down 46bps). The French to German 10-year bond spread widened one to 29 bps. U.K. 10-year gilt yields slipped two bps to 0.26% (down 56bps).
- All good while markets hold up but take note that the loosest financial conditions in history have supported a record $1.4 trillion of corporate debt issuance. While easy credit availability has supported economic activity, funding new investment whilst keeping vulnerable companies afloat. THe combination of urban shifts through virus and riots fears has fueled a booming MBS market and record low mortgage rates pushing strong housing markets into Bubble risk territory.
- The Fed QE infinity programme is a yield curve control policy with long government bond yields coming down. 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.
- Investment-grade bond funds saw inflows of $3.317 billion, while junk bond funds posted outflows of $2.513 billion (from Lipper).
- Freddie Mac 30-year fixed mortgage rates added a basis point to 2.81% (down 97bps y-o-y). Fifteen-year rates slipped a basis point to an all-time low 2.32% (down 87bps).
- Five-year hybrid ARM rates increased one basis point to 2.88% (down 55bps). Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates down six bps to a record low 3.03% (down 108bps).
- Federal Reserve Credit last week gained $14.0bn to a record $7.125 TN. Over the past year, Fed Credit expanded $3.159 TN, or 80%. Fed Credit inflated $4.314 Trillion, or 153%, over the past 416 weeks.
- Fed holdings for foreign owners of Treasury, Agency Debt last week declined $7.8bn to a four-month low $3.395 TN. “Custody holdings” were down $26.7bn, or 0.8%, y-o-y. M2 (narrow) “money” supply expanded $19.8bn last week to a record $18.815 TN, with an unprecedented 34-week gain of $3.308 TN.
- “Narrow money” surged $3.616 TN, or 23.8%, over the past year. For the week, Currency increased $4.3bn. Total Checkable Deposits dropped $62.4bn, while Savings Deposits surged $82.1bn. Small Time Deposits fell $6.6bn. Retail Money Funds added $2.4bn. Total money market fund assets declined $7.4bn to $4.348 TN. Total money funds surged $835bn y-o-y, or 23.8%. Total Commercial Paper was little changed at $974bn. CP was down $140bn, or 12.5% year-over-year.
- “Narrow money” surged $3.639 trillion, or 24%, over the past year.
- For the week, Currency increased $3.2 billion. Total Checkable Deposits jumped $92.8 billion, and Savings Deposits gained $19.4 billion. Small Time Deposits fell $6.4 billion. Retail Money Funds declined $2.8 billion. Total money market fund assets declined $7.6 billion to $4.356 trillion. Total money funds surged $870 y-o-y, or 25%. Total Commercial Paper gained $11.4 billion to $974 billion. CP was down $114 billion, or 10.5% year-over-year.
On the Risk Radar
While we wait for October’s job report this week we reflect on September’s employment report which showed 661,000 jobs added in the month below the 800,000 expected. What we garnered from the anlaysts is the effect of return to school as highlighted by well over 1 million women leaving the workforce and many men also to take care of their children not returning to work. What is clear is the disconnect from the realities by pundits, particarlarly partisn biased rhetoric of the true damage to the economy, the social fabric and the selling of that as a new normal. Covid19 brought with it a new reality of brutal times for workers.
Over 14.5 million are collecting traditional jobless benefits, up from 1.7 million a year ago, with no end in sight. on Thursday, the Labor Department reported under 800,000 Americans applied for unemployment benefits for the second time since the crisis. With the Covid shutdown we lost over 22 million jobs in March and April. The September employment report, the last before the election, showed a slower pace of job growth than in August. There were 616,000 nonfarm payrolls, from 1.37 million in August. The unemployment rate expected dropped to 7.9% from 8.4%.As economies slowly reopened, the economy generated than 12 million jobs in May through September. Still a huge shortfall in jobs, and the big question is will they come back?
November US Election
Here we are a few days before the Nov. 3 election, the market is likely to thin out and with that is likely more volatility, especially if the outcome looks increasingly uncertain. Stimulus stories will be plied around the polls with the probability of having an unclear outcome, contested outcome or both. So far, more than 56 million Americans have voted early, which makes up 37% of total votes from the 2016 election. More than 38 million of these votes have been mail-in ballots. Election experts are predicting a record of 150 million ballots will be cast, meaning the U.S. could have the highest rate of voter turnout since 1908.
The upcoming presidential election is a huge risk with the intense split along Partisan lines of much of America. RealClearPolitics has President Donald Trump trailing former Vice President Joseph Biden in the polls but with a falling margin. A potential for a resurgence in Covid cases will see Trump not benefiting from an economic recovery, and as a result a better chance of Biden being elected. Biden is representative of uncertainty for small business, energy and the working middle class in the main. Potentially higher taxes under a Biden administration are another worry. Biden has proposed increasing the corporate tax rate to 28% from 21%, potentially weighing on companies’ earnings. A separate proposal to tax capital gains and dividends as ordinary income could prompt some investors to sell winners in order to lock in lower tax rates.
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 impacted growth strategies with unexpected consequences In a fully fledged stock mania, nothing matters until it does. That is the feral nature of greed.
- Democrats and Republicans have been far apart in terms of the contents of any stimulus package. Key is the $600 supplemental weekly aid for the unemployed that expired on July 31, and Republicans want to cut it to $200 a week while Democrats want to keep current levels.
- The two parties are also still far apart on the size of the package, after initially starting out with Democrats at $3 trillion and Republicans with $1 trillion and the latest $300 billion.
- President Trump signed an exective order to boost benefits by $300/week if individual states pay an extra $100/week.Additinally there was an order to defer payroll taxes The move also diminishes the urgency to make a deal and gives an indication of Republican strategy.
- Trump’s polling deficit is larger than any incumbent since George H.W. Bush in 1992.
- Biden has said he would seek to raise the U.S. corporate tax rate from 21% to 28%, which could potentially eat into profits and weigh on stock prices
- The first Presidential debate is not until September 29th, so the focus will fall on the several upcoming campaigning events.
- Geopolitical tensions with China and India are on the rise as China increases military hardware near the China and India’s Himalaya border, a potential negative shock not priced by markets.
- War between Armenia and Azberjazan has reopened tensions in the region.
- China tightened its grip on Hong kong and threats with Taiwan continued.
- Russia is showing the affects of low energy prices, filtering into the socio economic dynamic
- Brexit and the EU is bubbling along with increasing antagonism with UK PM Johnson wanting new deal based on Northen Island security anf freedom.
Geopolitically the US-Sino rhetoric is heating up with TikTok, Hong Kong and “China Virus”. We expect continued volatility with the engulfing uncertainty of the Coronavirus and in commodity markets, particularly in oil and other commodities, not to mention unrest in Iran, Libya and Iraq.
- Despite all the US and Chinese rhetoric we are led to believe trade talks between U.S. and China are still expected to recommit to the Phase one deal. China has increased purchases of U.S. oil ahead of their trade deal review, according to Reuters.On a more upbeat note, the UK struck its first post-Brexit trade deal with Japan as it seeks to make a success of leaving the EU.
- Trump did say Phase 2 will be difficult and he sees the virus more important then trade with China..
- In addition to rising tensions with China, the United States Trade Representative said last month said that the USTR is considering a new round of tariffs on $3.1 billion in European exports from France, Germany, Spain and the U.K..
Fat Tail Virus Risk
U.S. daily COVID cases have spiked to near 100,000, with Friday setting a new single-day record of 99,321 new cases according to data compiled by Johns Hopkins University. Unlike the first two “waves,” the surge in new infections is not dominated by particular metropolitan areas or a few large states. COVID has methodically dispersed throughout the heartland, with rural America in the crosshairs. This is a particularly troubling development for small town hospitals and healthcare systems facing limited capacity and scarce resources. Ominously, outbreaks have slammed many northern states early in the winter season. Over the coming weeks, the virus can be expected to shadow cooler weather advancing south..
Several countries are tightening restrictions and contemplating lockdowns as infections accelerate, prompting concerns about the impact on world economies attempting to recover.
Last week when adjusting for population, the number of new coronavirus infections in Europe has now overtaken the United States, with Europe reporting 187 new cases per million people, based on a seven-day average, compared with 162 new cases per million people in the U.S. as of Thursday. Europe is reporting an average of roughly 97,000 new cases per day, up 44% from one week ago.
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?
- AstraZeneca and Johnson and Johnson (J&J) announced they had received permission to resume trials on a COVID-19 vaccine. AstraZeneca was on track to have a vaccine ready before the end of the year, while J&J had said its candidate would be ready by early next year.
- The US deals with a number of pharmaceutical giants have topped roughly $10.79 billion as part of Operation Warp Speed, a program led by several departments within the federal government to accelerate the development, manufacturing, and distribution of vaccines and treatments to fight the coronavirus.
- The operation aims to provide at least 300 million doses of a coronavirus vaccine by January 2021. The companies are Moderna Johnson & Johnson Sanofi and GlaxoSmithKline Pfizer and BioNTech Novavax and AstraZeneca
- Hopes and fears of reopening can outweigh mixed earnings results. No surprise after increased testing, weeks of protesting, people in large airconditioning indoors we have record daily U.S. cases. The U.S. reported 1000 deaths 4 days in a row with coronavirus cases,
- There does appear to a concerted effort to put the blame on an economy reopening and miraclously the mass ongoing priotests have nothing to do with that. Take that for what it is worth. There is little mention of the younger age group in the new cases and much lower mortality rate. Fear is the feature. Use commonsense in your own protection, spreading and decision making.
- Bank earnings season last week with J.P. Morgan Chase, Citigroup, BlackRock, Bank of America, Wells Fargo, Morgan Stanley and Bank of New York Mellon all out.
- Morgan Stanley continues in its aim to become the leading wealth and investment services firm with another aggressive aquisition. $MS announced an intention to buy Eaton Vance $EV for $7 billion. This follows the bank completing its $13 bln acquisition of E*TRADE $ETFC.
- In times of recession and credit tightening Banks risk becomes problematic, though since 2008 the World’s Central Banks have been quick to loosen the strings. Add massive QE and purcahse failing assets.
- Banks are benefiting from the Federal Deposit Insurance Commission intending to ease the Volcker Rule, which restricts banks from making large investments into venture capital. The Volcker Rule was enacted in the wake of the 2008 financial crisis, and the new changes could potentially free up billions in bank capital. Bank stocks rose.
- Banks are responding to the Federal Reserve in their annual stress test capped bank dividend payments and suspended share-buybacks for the third quarter.
BE AWARE: 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. Oh and now we have the riots to throw on the kindling ….
- Expect the Fed Stability Report warning on what happens if the pandemic worsens to be the go tto by Fed speakers (We are all watching to see if I spike aftet the Floyd protests and riots with no social distancing).
- The backdrop is the Covid-19 crisis. Despite that the stockmarket is up over 40% from lows and stubborn bears and bulls alike are frustrated based on cognitive biases.
- We continually focus on overcoming our biases and as the accompanying chart highlights stocks and the economy are NOT the same thing despite what we are told by our influencers and biased or selective recalls.
“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 Week Ahead – Have a Trading Plan
Central Bank Watch speeches, reports and rate moves.
- Monday: 09:00 ECB’s Mersch Speaks 22:30 RBA Interest Rate Decision (Nov) RBA Rate Statement
- Tuesday: 03:10 ECB’s Enria Speaks 05:00 German Buba Mauderer Speaks 13:00 German Buba Mauderer Speaks
- Thursday Thursday, November 5, 2020 02:00 BoE Inflation Report 02:00 BoE Interest Rate Decision 06:40 ECB’s De Guindos Speaks 07:30 BoE Gov Bailey Speaks 09:00 SNB Gov Board Member Maechler Speaks 10:00 German Buba President Weidmann Speaks 10:00 ECB’s Schnabel Speaks 14:00 FOMC Statement 14:00 Fed Interest Rate Decision 14:30 FOMC Press Conference 19:30 RBA Monetary Policy Statement
Improvements in some economic indicators, such as home sales, manufacturing activity and in employment data have bolstered investor confidence and helped extend the rally in stocks. Support in markets comes from the Fed’s balance sheet which has ballooned to $7.2 trillion, and the central bank committed to monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities.
There is some important data in the week ahead,
- Monday 03:15 Spanish Manufacturing PMI (Oct) 03:30 procure.ch PMI (Oct) 03:45 Italian Manufacturing PMI (Oct) 03:50 French Manufacturing PMI (Oct) 03:55 German Manufacturing PMI (Oct) 04:00 EU Manufacturing PMI (Oct) UK Manufacturing PMI (Oct) 09:30 Canada RBC Manufacturing PMI (Oct) US 09:45 Manufacturing PMI (Oct) 10:00 Construction Spending (MoM) (Sep) 10:00 USD ISM Manufacturing PMI (Oct) 19:00 Total Vehicle Sales
- Tuesday: US Presidential Election All day Tuesday, November 3, 2020 All Day Holiday Japan – Culture Day 8:55 Redbook (MoM) Sales 09:45 ISM NY Business Conditions ISM-New York Index 10:00 Factory Orders (MoM) (Sep)10:00 IBD/TIPP Economic Optimism 13:00 52-Week Bill Auction 16:30 API Oil Inventories
- Wednesday: US MBA Mortgage Applications 10:30 EIA Crude Oil Inventories
- Thursday: US Thursday, November 5, 2020 03:30 EU IHS Markit Construction PMI 04:30 UK Construction PMI (Oct) 07:30 Challenger Job Cuts 08:30 Jobless Claims, Nonfarm Productivity, Unit Labor Costs 10:30 Natural Gas Storage 14:00 Fed Interest Rate Decision 14:30 FOMC Press Conference 16:30 Australia AIG Services Index (Oct) 18:30 Japan Household Spending (MoM) (Sep) 19:30 RBA Monetary Policy Statement
- Friday: US 12:05 p.m Baker Hughes Oil Rig Count, CFTC Speculative net positions
For emerging markets the lower US dollar is helping the Fragile 5. Argentina and Turkey are still red letter risks with Covid however. Voters will also be going to the polls in 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 2020. One suspects it will be a year long Groundhog day for Trump, the GOP and the Democrats.
Earnings Week Ahead
Last week about a third of the S&P 500 companies report earnings, including large tech names. Microsoft, Apple, Amazon, Alphabet and Facebook, plus big oil Exxon and Chevron. Big banks kicked off third-quarter earnings reports on Oct. 13, helping to set the tone for the broader U.S. stock market, as businesses cope with the eighth month of the pandemic. Banks reaped the rewards of the initial public offerings and record corporate borrowings during the pandemic. Investors (and algos) will focus pn the conference calls and outlooks. Everyone is expecting the worse. We will see critical updates on production in coronavirus impacted regions and if there is extended halting of operations weighing on multi-nationals.
Last week we heard from HCA Healthcare, Hasbro, SAP, Otis Worldwide, Twilio, Boyd Gaming, F5 Networks, National Oilwell Varco, NXP Semiconductor, TrueBlue, Chegg, Microsoft, 3M, Caterpillar, Merck, Pfizer, Aflac, Novartis, Chubb, Advanced Micro Devices, JetBlue, Xerox, Restaurants Brands International, Eli Lily, BP, HSBC, Centene, Stanley Black and Decker, Polaris, Harley-Davidson, Invesco, Raytheon, Crocs, Corning, Cummins, S&P Global, Franklin Resources, Hubbell, Akamai, FireEye, Lattice Semiconductor, Denny’s, Edison International, First Solar, Terex, Varian, Juniper Networks, Merck, HCA Healthcare, Hasbro, SAP, Otis Worldwide, Twilio, Boyd Gaming, F5 Networks, National Oilwell Varco, United Parcel, Boeing, General Electric, Ford, ServiceNow, Etsy, Pinterest, Apple, Amazon, Alphabet, Facebook, Comcast, Twitter, MGM Resorts, Starbucks, Kellogg, Dr. Pepper, Ralph Lauren, Activision Blizzard, ConocoPhillips, Kraft Heinz, Shake Shack, Archer Daniels Midland, Devon Energy, Ethan Allen, Avis Budget, Cheesecake Factory, Hartford Financial, Stryker, Flex Cabot Oil, U.S. Steel, Mohawk Industries, Anheuser-Busch Inbev, Avis Budget, Illumina, Yamana Gold, IMAX, Honeywell, Chevron, Colgate-Palmolive, Exxon, Under Armour, Abbvie, Altria, Charter Communications, Phillips 66,Weyerhaeuser, Newell Brands, Booz Allen, CBOE Global Markets, Total, Lear earnings
This week we hear from:
- Monday starts us off with Estee Lauder, Clorox, Skyworks Solutions, PayPal, Paypal Nutrien, Williams, Steris, Ingersoll Rand, Healthpeak, Alliant, Solaredge
- Tuesday with earnings from BMO: Humana,Ferrari, Eaton, Emerson Electric, Exelon, Thomson Reuters Johnson Controls Wec Energy Sysco Mckesson Wayfair Fox Zebra Catalent Gartner Bausch Health Lgi Homes Vishay AMC: Progressive Prudential Alleghany Mercury Systems Super Micro Computer Nabors
- Wednesday Earnings Include: Acacia, Apache, Cimarex, Marathon Oil, Pioneer Natural Resources, Qualcomm
- Thursday Earnings Include: Alibaba Bristol-Myers Squibb Linde Zoetis Cigna Dominion Energy Duke Energy Becton Dickinson Regeneron Pharmaceuticals General Motors Barrick Gold Sempra Energy T-Mobile Square Uber Booking Monster Caesars Electronic Arts Peloton Trade Desk Republic Cloudflare Roku Take-Two Interactive
- Friday Earnings Include: CVS Health Corp SYSCO Booz Allen Hamilton Henry Schein Regal Beloit Mylan Cardinal Health Jones Lang LaSalle Michael Kors Colfax Lamar Advertising Stewart ON Semiconductor
IPO Week Ahead
- After an active September and October ahead of the chaotic US election
-comment section below data-
Geopolitical Tinderbox Radar
Last Week’s Big Stories
The Week That Was – Last Weeks Recap
- Into The Vortex – EIA Reports Build of +89Bcf in Natural Gas Inventories
- Federal Reserve Committed To Maximum Employment and Price Stability Goals
- Around The Barrel – Crude Oil Draws as Production Returns From LauraAround The Barrel – Crude Oil Draws as Production Returns From Laura
- OPEC Monthly Oil Market Report September 2020
- ECB Leaves Rates Unchanged, Stands ready to adjust all instruments
- Bank of Canada Again Hold Rates Down Until Economic Slack is Absorbed
- US Unemployment Falls Back To 8.4% Added 1.37 Million Non-Farm Jobs in August
- Germany Economy in an ‘Unexpectedly Fast’ V-Shaped Recovery
- Data Cloud Storage Software Company Snowflake Launches IPO
- Machine Learning Market Data Specialist Splunk Cloud Revenue Surges In Lockdown Economy
- Salesforce, Amgen and Honeywell Replace Exxon, Pfizer and Raytheon in The Dow
- Cloud based E-Commerce Firm BigCommerce Launches IPO
- Online Insurance Artificial Intelligence Startup Lemonade Surges on Debut
US Major Stock Indices
Biggest Stock Winners and Losers Last Week*
S&P 500 Index via @KnovaWave
The SPX recalculated after reacted off +2/8 Murrey Math Daily after 5 waves, We have the 2 clear alternatives of Double top i.e a completitive C or i ? Again it tested and held under Tenkan Friday. Alternatives completed C Wave or a Wave 1. Support is Kijun and cloud and Chikou rebalance. Important to note the high was a retest of the initial breakdown .
The break up was from above the 200dma. The balance from sharp reversal after the initial 3 wave down from the SPX wave 5 extension as Covid19 fed impulse accelerated under the tenkan. From there we had seen the ABC or 1-2-3 spinning around the 61.8% of the move. Support began at the October 2019 lows. A manic wave 5 or 3 of some degree was a resolution for the ages. Note the 100% extension from the emotive element and MM levels when the spit kicks in. A manic wave 5 or 3 of some degree was a resolution for the ages. Note the 100% extension from the emotive element and MM levels when the spit kicks in.
Weekly #SPX is flagging after at MM +2/8 recalculated. Major support is top of channel and Tenkan. Tenkan key support, bulls failure below. We look for 3 waves down and MM grid for wave clues. Keep an eye on the putcall ratio with recognition to the sheer size of contracts AND keep in mind the stimulus distortion. The spit per channel fractal and Adams rule launched back over the cloud where we were encased AND we are back testing it. Watch if a spit or clear break support as chickou rebalances
( Leading underlying strength of US Indices)
BDI Freight Index
Energy and Commodities
US Crude Oil (WTI)
In any break key is crowd behavior to help tell the story. We watch ABC corrections from here. he March breakdown, Support Tenkan and Kijun. In any break key is crowd behavior to help tell the story. We watch ABC corrections from here.
WTI after it’s huge run continues to rebalance chikou indicative of extreme crowd behavior in a series of fractals. We have completed 5 waves as marked, from here we watch 3 develop to confirm.
These are special times, recall “After we regained the pattern 261.8% from the extreme (-$40) move. The climax of the larger acceleration lower after broke the weekly uptrend, a fractal of the sharp and all the way to all time lows to negative pricing we have seen mirror replications.” Support is previous channels, tenkan and Kijun. Above we have 50wma and Murrey Math time and price Above we have 50wma and Murrey Math time and price.
US Natural Gas (Henry Hub)
US Natural Gas continues to work the lows that were either (5) or (iii) of (5). After a b or ii down we have bounced over tenkan and Kijun into cloud. Key is that 3 wave low. Above top of cloud. So far consistent failed breaks despite the strength of spitting the previous low and -2/8 with an island reversal to test the Kijun and downtrend line but fell back to Tenkan The big question is was that a completed move down there or a 3? Support at cloud.
Natty continues in large sideways pattern between weekly kijun and tenkan as they suppress. Above Cloud and 50wma. Support is downward channel and previous low. Talking fractals, remember the tenkan/kijun kiss of death brought it down from the $2 range. Much work here churning away.
Gold (AUG) fell 0.11% to settle at $1,801.9 but gained 0.66% for the week kGold exudes strength after it back tested the previous wave 3 after finally cracked the Tenkan after correcting in 3 waves from 1556 to Murrey Math +3/8. In sight of the intraday high of $1765.43 reached on May 18. We have overcome the negative divergence between the weekly chikou, Silver spread and the recent highs. Support Tenkan & Kijun. From there does the 5 play out? Watch Fibs and chikou.
Silver did a fractal of the sharp C up to breakdown level above the cloud fed by divergence from gold reverting. no Silver reverseds with much more violent impulse than gold . Given that we have to repsect this is a iii but here is also a chance this is an A
Australian Dollar – AUDUSD
Aussie dollar continues higher after it competed 5 waves in emotive fashion. with vigor spitting the 100% panic muster. It has closed over the 50 Wma in 5 waves Resistance cloud is a long way off. Support Tenkan and Kijun. From here we watch for 2 or X
New Zealand Dollar – NZDUSD
The Kiwi mirrored the AUD and has closed over the panic breakdown (0%) correcting all of the panic muster wave. We are now above the Tenkan, which is pivotal. Resistance 50wma
Canadian Dollar – USDCAD
The Loonie continues to correct in ABC after spitting the 261% Fib & Weekly 8/8 after 5 waves lower. We closed at the old 100% 61.8% confluence. Use Fib s for support and resisitance until Tenkan and Kijun catch up,
Euro – EURUSD
The Euro tested and held both the channel and cloud spits after so many false breaks to close at its best level since the BRexit spike. We are still in 3 waves so we need to see development for continuation. Resistance is Fibs as marked. Watch for impulse off Chikou rebalance and Kijun above. Again governed by EURGBP and Bund volatility.
EuroPound – EURGBP
Back testing top of outer band and tenkan of Brexit. Johnson price reaction.after its classic ABC out of failure following the X wave. Tenkan will give us a clue if normalcy is returning to the channel trade.
Japanese Yen – USDJPY
Japanese Yen still stuck in channel trade, a series of failures and sharp bounces after X led 3 wave panic. Any change will come from the weekly Kijun Tenkan kiss. Use your #USDJPY Murrey 6/8 0/8 grid for now. #EURJPY #AUDJPY will determine risk on/off
Mexican Peso USDMXN
The Peso has been correcting in ABC since it collapsed and spat 261% right back to the 100% Fib We have seen violent moves with outisde uncertainty from oil and COVID19. Use the Gann octave and the extension fibs to help measure the noise.
Turkish Lire USDTRY
USDTRY after completing the large 5 waves corrected back to the channel acceleration point and finished testing Tenkan. Alternative is we are still in Wave 5 and this is another 1- Kijun support well above cloud Impulse is needed to pull away from here. 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.
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