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FEAR NOT Brave Investors
Strange times But remember The Joker once served as the Iranian ambassador for the United Nations.
Stock Market Mania, PMI and Tariffs
The Week That Was:
The U.S. stock markets are in full mania mode, the Dow Jones Industrial Average rallied to 28,000 for the first time ever, after White House economic advisor Larry Kudlow said China and the U.S. were getting close to reaching a trade deal. (I may be sceptical but these types of accouncemnts have come out all most daily for a few weeks with no substance, market manipulation at its best knowing the best illiquid times for news algos.)
The Dow closed 222.93 points higher, or 0.7% at 28,004.89. Apple is the best-performing stock in the Dow since July 11, when the index first reached 27,000. Since then the Apple shares are up more than 30%. Intel, J.P. Morgan, United Technologies and Home Depot are some of the stocks that have also rallied more than 10% since July 11. The S&P 500 and Nasdaq Composite made new all-time highs as well, climbing 0.8% to 3,120.46 and 0.7% to 8,540.83, respectively.
On option expiration oil joined in the fun, jumping to just under $58 despite bearish OPEC and IEA reports. More dovish Fed talk dovish Fed cutting rates and a flow on from a robust US jobs report for October, Apple continued to hit all time highs and the highest US index beta stocks dragged the markets up further.
The market shrugged off Brexit, impeachment and geopolitical powder keg risk and Fed injecting 60 Billion into the system to maintain liquidity, in its not QE4 program.
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 No Deal on or off
The U.S. started a 15% tariff on about $110 billion in apparel, footwear and other Chinese imports last month, with same duty on the balance of almost $300 billion in toys, phones and laptops and other products delayed until Dec. 15. The levy was held back from increasing on that already in effect on $250 billion in other Chinese goods to 30% from 25% on Oct. 1, the 70th anniversary of the founding of the People’s Republic of China in the phase one trade deal.
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. Very simply you have two different cultures two different political systems and shaming doesn’t do well in either.
We still have confusion with the whole mess that is Brexit though Italy’s political situation improved. Negative rates, as foolish as history will remember them are the theme of the moment.
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 indices are gamed by a few high delta stocks leading the way with massive leverage and a game of chicken on daily. Apple surging to record highs Friday as earnings were greeted with enthusiasm.
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 now a fresh election in the U.K. Here we are (see what ya wanna see).
The Week Ahead
Another big week for potential volatility with the the market spotlight on President Trump and other officials as their comments have effectively gamed stocks higher. We then have increasing noise from Britain ahead of the next British general elections on 12 December.
The U.S. politically remains combustible, led by Democrat impeachment, Turkey, Iran and Saudi moves, trade wars and repo rates. The market continues to focus on “phase one” of the U.S. China trade talks.
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.
US NAHB housing market index, Fed Mester speaks at University of Maryland
- RBA monetary policy meeting minutes, Canada manufacturing sales,US building permits and housing starts, FOMC member William’s speaking at Capital Market conference, New Zealand global dairy trade price index, BOC member Wilkins speaks
- Wednesday Japan trade balance, Canada CPI, FOMC meeting minutes, EIA Crude Oil Inventories
- Thursday EIA Natural Gas Storage, ECB monitor policy meeting report, US Philly Fed manufacturing index, Initial jobless claims, existing home sales
- Friday Australia flash manufacturing and services PMI, Japan CPI & flash manufacturing PMI, German final GDP 3Q, ECB Pres. Lagarde speaks, France PMI, German PMI and EU PMI, Canada retail sales, US Markit manufacturing & services PMI, University of Michigan consumer sentiment (final), Baker Hughes Oil Rig Count, CFTC Speculative net positions
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 six 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 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 China and the U.S.trade wars.
Earnings The earnings reporting period continued with Tencent Music, Liberty Broadband, Noah Holdings, Grocery Outlet, CBS, Datadog, Skyworks Solutions, Nissan, Tyson Foods, Advance Auto Parts, DR Horton, Rockwell Automotive, Vodafone, Adaptive Biotech, Tilray, SmileDirectClub, Cisco Systems, Beazer Homes, Copa Holdings, Luckin Coffee, Change Healthcare, Tetra Tech, Tencent, Best Inc,Walmart, Nvidia, Applied Materials, Brookfield Asset Management, International Game Technology, Canopy Growth, Burberry, Wheaton Precious Metals, JD.com, JC Penney
We start off on Monday with: ZTO Zto Express WWD Woodward Inc. BILI Bilibili ASND Ascendis Pharma MANU Manchester United Ltd CRMT America’s Car-Mart
Tuesday Earnings Include: HD Home Depot MDT Medtronic PLC TJX TJX Companies AM ARMK Aramark KSS Kohl’s URBN Urban Outfitters JKS Jinkosolar Holding
Wednesday Earnings Include: LOW Lowe’s Companies TGT Target NTES Netease Ads +L L Brands Inc. Nuance Communications Inc. Lazy Boy SONO Sonos Inc.
Thursday Earnings Include: INTU Intuit Inc. ROST Ross Stores Inc. SPLK Splunk Inc. GPS Gap Inc. JWN Nordstrom Inc. WSM Williams-Sonoma Inc. M Macy’s BJ BJS Wholesale Club Holdings
Friday Earnings Include: JMJ.M. Smucker FL Foot Locker HIBB Hibbett Sports Inc.
-comment section below data-
Geopolitical Tinderbox Radar
Last Week’s Big Stories
The Week That Was – Last Weeks Recap
- Iran To Tap Turkish Copper Demand With $1 Billion Expansion
- Banco de México Cuts Rates as Mexican Economy Risks Remain To Downside
- Chinese Bitcoin Equipment Producer Canaan IPO Slashed With Poor Cryptocurrencies Sentiment
- Swiss National Bank Willing to Intervene in FX market as Necessary
- Fed’s Bullard Says Yield Curve More Normal Bullish For US Economy
- Around The Barrel – Crude Oil Builds Eight Out Of Nine Weeks as Production Hits Another Record High
- Into The Vortex – EIA Reports +3 Bcf in Natural Gas Storage
- OPEC Monthly Oil Market Report November 2019
- Australian Employment Lower Than Expected in October as Trend Participation Remained Strong
- Consumer Price Inflation Rises Most in 7 Months With Medical and Gasoline Costs
- Canada Long-term Environmental and Economic Sustainability Challenges
- Iran is Weathering US Economic Sanctions With Oil Sales To China
- Evaluate Economic Progress With The Inclusive Development Index
- NVidia Earnings and Revenue Beat On Gaming and Demand From Hyperscale Customers
- Applied Materials Earnings Beat, Raises Guidance
- Dental Products Company SmileDirectClub Shares Dumped on High Expenses And Legal Costs
- Tilray European Weed Buy Sees Revenue Increase Five Fold But Still Reports Big Losses
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.
SPX continued higher after consolidating recent gains with impulse to 8/8 MM accelerated after retested tenkan. Watch impulse and hugging of daily speed lines and the tenkan below. Chikou needs rebalance and 50 dma Kijun and daily tenkan are support. Clearly bullish euphoria
Note developing pennant (pink) failed. Best alternatives were a (ii) of wave V higher, A of a larger 2 or this is iii of something more powerful. The alternative that the recent low is a C also played out with new highs. Speed and channel lines in tune with algo calibration curve.
Weekly SPX traded to new all time highs after spat the trend line and back up through the Kijun and tenkan retains energy and in 1 thrust wave so we must be aware of alternatives. Again closed over the top of the channel, watch if this is a spit or clear break and +2/8 Murrey Math confluence support is 50 wma wtenkan and kijun
(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 bounced off the tenkan and 50 dma zone to close over the cloud , is it a significant event? Since it filled the gap without any resistance quickly completing a fractal spit per Adam’s Theory it has built an ABC or 1-2 i ii of 3 in consolidation with the $ES_F supporting. We saw a little bull flag powered by the Kijun holding and powering through tenkan and 50 dma. Tne near 58 highs tells us whether this is 1-2 ot a-b. The impulse meant a C or (Y) complete – bullish case would be a developing X
After WTI spat the weekly 61.8% momentum continued with power through the gap up. We closed right at Tenkan, Kijun and 50wma confluence (green) under the cloud, This week we are back retesting after rallied off channel.
US Natural Gas (Henry Hub)
Natural Gas rebalancing at the chikou with support at Kijun Tenkanafter gapped up over the daily cloud and 50 dma and ran all the way to the Murrey Math 1/8 and Wave iii or Alt C high. Support also near lows and the cloud from underneath
Natural Gas rally so far rejected at the 61.8% and the March highs has got above the 50 wma to close at 3/8 confluence, with the tenkan and Kijun now support. The Kijun/Tenkan cross pumped the move after retesting the weekly channel break.
Baltic Dry Index (BDI)
Gold continues to develope structure after it bounced after 3 waves into the Tenkan but quickly came off to form a higher degree (a) of the B of the 4 – key is the recent lows at tenkan for whether this is a C or 3? Like Silver watch Fibs and Tenkan and Kijun. Watching for corrective 2 waves to tell us what this move is
Silver ralied sharply off the 38% after it rallied in 3 waves to retest the September 2017 breakdown has been correcting the impulse with impulse reversal – meaning C or 3 and we came back to rebalance Chikou and bounced through tenkan and 38% to spit those levels We watch recent lows if this a 1 down or more – watch tenkan above and flattening Kijun below.
Australian Dollar – AUDUSD
The Aussie dollar impulse rally back testing the Kijun this week after tapping the daily cloud above. The move hit the first target through the bull flag break with flat Kijun pulling and then releasing.
New Zealand Dollar – NZDUSD
The Kiwi followed the AUDUSD through the Tenkan higher pulled up by the flat Kijun just shy of the breakdown (muave). Weekly channel in focus with tenkan now support. The Chikou under previous lows key at week’s end.
Canadian Dollar – USDCAD
The USDCAD rebounded sharply with a flat Kijun above back into the cloud over the tenkan after holding the near uptrend testing support of the last rally and 38%. We watch if developing in larger flag (white channel) Resistance now top of cloud and tenkan Kijun and 50 wma. The tenkan remains the pivot aspect. Support is previous lows and channel.
Euro – EURUSD
Euro is back retesting the tenlkan after a firm rejection of Kijun governed by Brexit pound volatility. Support here the 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 and EURGBP.
EuroPound – EURGBP
EURGBP is trying to bounce in a 2 after being down sharply in 3 waves but needs impulse for confirmation if correcting the July breakup or is a deeper move. The weekly cloud gave way and found support at the May breakup to complete min for wave 2 reflecting the madness of Brexit politics. Resistance at chikou and Tenkan with support at channel.
Japanese Yen – USDJPY
The dollar yen recovery finally got over the weekly Kijun – and ran into a wall at 50 wma and the cloud can it get legs and pull away? Not yet, it was halted by the 38% and and Murrey 6/8. Kijun now key again. Yen buying returned on crosses, EURJPY and AUDJPY taking away the cloud twist that drew the dollar up.
Mexican Peso USDMXN
Mexican peso continued to strengthen in a pennant fter it spat the upper channel and has come all the way back through the Kijun and tenkan through the channel bottom which are now resistance. Watch if a fractal spit on the trend continues.
Turkish Lire USDTRY
The USD Turkish Lire is testing over cloud from below after continued to pullback through the daily Kijun and Tenkan which is now resistance. It is so far playing both sides of the channel Support is the previous break up and tenkan, resistance Kijun.
Bitcoin found sharp impulse after the sell of this week off 3 waves, back to the tenkan and kijun. Needs higher for anything more than a 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
Sun November 17, 2019
Monday, November 18, 2019
- 02:00 CNY FDI
- 03:30 HKD Unemployment Rate (Oct)
- 04:00 EUR ECB Financial Stability Review
- 04:00 EUR ECB’s De Guindos Speaks
- Tentative EUR German Buba Monthly Report
- 10:00 USD NAHB Housing Market Index (Nov)
- Tentative USD MBA Delinquency Rates (QoQ)
- 11:30 USD 3-Month Bill Auction
- 11:30 USD 6-Month Bill Auction
- 12:00 USD FOMC Member Mester Speaks
- 16:00 USD US Foreign Buying, T-bonds (Sep)
- 16:00 USD Overall Net Capital Flow (Sep)
- 16:45 NZD PPI Input (QoQ) (Q3)
- 16:45 NZD PPI Output (QoQ) (Q3)
- 17:05 AUD RBA Assist Gov Kent Speaks
- 19:30 AUD RBA Meeting Minutes
- 21:00 NZD RBNZ Offshore Holdings (Oct)
Tuesday Nov 19,2019
- 02:00 GBP Car Registration (MoM) (Oct)
- 02:00 EUR Italian Car Registration (MoM) (Oct)
- 02:00 CHF Trade Balance (Oct)
- 02:00 EUR German Car Registration (MoM) (Oct)
- 02:00 EUR French Car Registration (MoM) (Oct)
- 03:30 EUR ECB Hakkarainen Speaks
- 04:00 EUR Italian Industrial New Orders (MoM) (Sep)
- 04:00 EUR Italian Industrial Sales (MoM) (Sep)
- 04:00 EUR Current Account (Sep) 28.2B
- 05:00 EUR Construction Output (MoM) (Sep)
- 06:00 GBP CBI Industrial Trends Orders (Nov)
- 08:30 USD Building Permits (Oct)
- 08:30 USD Building Permits (MoM) (Oct)
- 08:30 USD Housing Starts (MoM) (Oct)
- 08:30 CAD Manufacturing Sales (MoM) (Sep)
- 08:55 USD Redbook (MoM)
- 09:00 USD FOMC Member Williams Speaks
- 10:20 NZD GlobalDairyTrade Price Index
- Tentative USD MBA Delinquency Rates (QoQ)
- 13:00 CAD BoC Gov Council Member Wilkins Speaks
- 16:00 KRW PPI (MoM) (Oct)
- 16:30 USD API Weekly Crude Oil Stock
- 18:30 AUD MI Leading Index (MoM)
- 18:50 JPY Trade Balance (Oct)
- 20:30 CNY PBoC Interest Rate
Wednesday, November 20, 2019
- All Day Holiday Brazil – Black Awareness Day
- 02:00 EUR German PPI (MoM) (Oct)
- 04:00 EUR ECB Financial Stability Review
- 04:30 GBP Labour Productivity (Q3)
- 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) (Oct)
- 10:30 USD Crude Oil Inventories
- 14:00 USD FOMC Meeting Minutes
- 18:50 JPY Foreign Bonds Buying
- 18:50 JPY Foreign Investments in Japanese Stocks
- 19:00 SGD GDP (QoQ) (Q3) 2.1% 0.6%
- 21:00 NZD Credit Card Spending (YoY)
- 23:30 JPY All Industries Activity Index (MoM)
Thursday, November 21, 2019
- 02:45 EUR French Business Survey (Nov)
- 03:10 EUR ECB’s Mersch Speaks
- 03:30 HKD CPI (YoY) (Oct)
- 04:00 EUR Spanish Trade Balance
- 04:30 GBP Public Sector Net Borrowing (Oct)
- 04:30 GBP Public Sector Net Cash Requirement (Oct)
- 04:40 EUR ECB’s De Guindos Speaks
- Tentative GBP BoE MPC Treasury Committee Hearings
- 07:30 EUR ECB Publishes Account of Monetary Policy Meeting
- 08:00 ZAR Interest Rate Decision (Nov)
- 08:30 USD Continuing Jobless Claims
- 08:30 USD FOMC Member Mester Speaks
- 08:30 USD Initial Jobless Claims
- 08:30 USD Jobless Claims 4-Week Avg.
- 08:30 USD Philadelphia Fed Manufacturing Index (Nov)
- 08:30 CAD ADP Nonfarm Employment Change
- 08:40 CAD BoC Gov Poloz Speaks
- 10:00 USD Existing Home Sales (MoM) (Oct)
- 10:00 EUR Consumer Confidence (Nov)
- 10:10 USD FOMC Member Kashkari Speaks
- 10:30 USD Natural Gas Storage
- 10:30 CAD BoC Financial System Review
- 11:30 USD 4-Week Bill Auction
- 11:30 USD 8-Week Bill Auction
- 13:00 USD 10-Year TIPS Auction
- 13:30 EUR ECB’s De Guindos Speaks
- 17:00 AUD Manufacturing PMI
- 17:00 AUD Services PMI
- 18:30 JPY CPI, n.s.a (MoM) (Oct)
- 19:00 SGD GDP (QoQ)
- 19:30 JPY Manufacturing PMI (Nov)
- 19:30 JPY Services PMI
Friday Nov 22, 2019
- 02:00 EUR German GDP (QoQ) (Q3)
- 03:15 EUR French Manufacturing PMI (Nov)
- 03:15 EUR French Markit Composite PMI (Nov)
- 03:15 EUR French Services PMI (Nov)
- 03:30 EUR German Composite PMI (Nov)
- 03:30 EUR German Manufacturing PMI (Nov)
- 03:30 EUR German Services PMI (Nov)
- 03:30 EUR ECB President Lagarde Speaks
- 04:00 EUR Manufacturing PMI (Nov)
- 04:00 EUR Markit Composite PMI (Nov)
- 04:00 EUR Services PMI (Nov)
- 04:30 GBP Manufacturing PMI
- 04:30 GBP Services PMI
- 08:30 CAD Retail Sales (MoM) (Sep)
- 09:45 USD Manufacturing PMI (Nov)
- 09:45 USD Markit Composite PMI (Nov)
- 09:45 USD Services PMI (Nov)
- 10:00 USD Michigan Consumer Sentiment (Nov)
- 11:00 USD KC Fed Composite Index (Nov)
- 11:00 USD KC Fed Manufacturing Index (Nov)
- 13:00 USD U.S. Baker Hughes Oil Rig Count
- 14:30 USD CFTC Speculative net positions
- Tentative USD Treasury Department Report
Saturday, Nov 23, 2019
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.