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Strange times But remember The Joker once served as the Iranian ambassador for the United Nations.
Brexit Deal or No Deal?, Central Banks and Jobs
The Week That Was:
Despite more chaos globally with Brexit, impeachment and mainly dissappointing earnings the S&P 500 index traded above the previous high close 3025.86 intraday, but fell short of the all-time high level at 3027.98 to close just below at 3022.20. The market continues to be underpinned by the Fed injecting 60 Billion into the system to maintain liquidity, in its not QE4 program. Over in Europe Mario Draghi chaired his last ECB meeting with no change in rates.
Oil traded higher as the EIA reported the first crude storage draw in 6 weeks. Natural gas continued to tread water and gold closed over $1500 for the week. 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
Oil, despite the risk off bump this week has record US Production and IEA, EIA and OPEC all lowering demand forecasts overhanging. On oil remember that it had dropped $13 or twenty percent after speculators bet wrongly on the biggest move since 1991 after Houthi rebels from Yemen launched successful drone attacks on the world’s biggest petroleum processing facility in Saudi Arabia in less than 2 weeks
The U.S. started a 15% tariff on about $110 billion in apparel, footwear and other Chinese imports last Sunday, with same duty on the balance of almost $300 billion in toys, phones and laptops and other products delayed until Dec. 15. The levy is increasing on that already in effect on $250 billion in other Chinese goods to 30% from 25% starting Oct. 1, the 70th anniversary of the founding of the People’s Republic of China.
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 trade deal and iPhone speculation mounted.
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 a No Deal Brexit looking more likely. Here we are (see what ya wanna see).
The Week Ahead
Another big week for potential volatility with the Federal Reserve, Bank of Japan and Bank of Canada all having monetary policy meetings. The week finishes with the US job report. The U.S. politically remains combustible, led by Democrat impeachment, Turkey, Iran and Saudi moves, trade wars and repo rates. The market contues to focus on “phase one” of the U.S. China trade talks again.
In the UK British lawmakers continue to work on a long-debated Brexit deal that would make way for the United Kingdom to leave the European Union. Over in Canada we have the fallout from a federal election. 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. At the end of the week the US jobs market followed the unexpectedly soft August report. Eyes were on the growth of average hourly earnings. Investors are also transfixed by oil prices in reaction to the Saudi attack and recovery and military respsonses.
- Monday US Goods Trade Balance, Wholesale Inventories, Dallas Fed Mfg Business Index, South Korea Manufacturing BSI Index
- Tuesday French Consumer Confidence, Spanish Retail Sales, Italian PPI, BoE Consumer Credit, US S&P/CS HPI Composite, CB Consumer Confidence. Pending Home Sales,API Weekly Crude Oil Stock, Japan Retail Sales, Australia New Home Sales, CPI
- Wednesday French GDP and Consumer Spending, Italian Business and Consumer Confidence, Swiss KOF Leading Indicators and ZEW Expectations, Spanish CPI, German Unemployment and CPI, EUR Business and Consumer Survey, US MBA Mortgage Applications, ADP Nonfarm Employment Change, GDP Q3, PCE Prices, Canada Interest Rate Decision, EIA Crude Oil Inventories, FOMC Interest Rate Decision, Brazil Interest Rate Decision. Korea and Japan Industrial Production. Australia Building Approvals, Export Price, China Composite, Manufacturing and Services PMI, BoJ Interest Rate Decision
- Thursday German Retail Sales, Spanish GDP, French CPI, Italian Unemployment, GDP and CPI, US Challenger Job Cuts, Jobless Claims. Core PCE, Employment Cost Index, Personal Income and Spending,Chicago PMI, Canada GDP, EIA Natural Gas Storage, Australia AUD AIG Manufacturing Index, Korea Trade Balance and Nikkei Manufacturing PMI, Australia PPI, Japan Manufacturing PMI, China Caixin Manufacturing PMI
- FridayUK Manufacturing PMI, Canada RBC Manufacturing PMI, US jobs report, ISM Manufacturing PMI, Construction Spending, Total Vehicle Sales, 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. Argentina Oct. 27 general election with current President Macri, a free-marketeer came to power in 2015 is expected to lose the general election to Fernandez, whose running mate, populist ex-leader Cristina Fernandez de Kirchner sends chills down the spine of global investors and big business. 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 Halliburton, TD Ameritrade, SAP SE, McDonald’s, Kimberly-Clark, United Technologies, Chipotle Mexican Grill, UPS, Procter & Gamble, Travelers, Centene, Lockheed Martin, Discover Financial Services, Hasbro and Kimberly-Clark, Boeing, Caterpillar, Waste Management, Thermo Fisher, Microsoft, PayPal, Anthem, Blackstone, Boston Scientific, Canadian Pacific, Cleveland-Cliffs, eBay, Edwards Lifesciences, Eli Lilly, Equifax, F5 Networks, Ford,Tesla and General Dynamics,Intel, Visa, Amazon, Comcast, Raytheon, Southwest Airlines, T-Mobile, Twitter and Northrop Grumman, Anheuser Busch, VF Corp and Verizon
We start off on Monday with: Alphabet, G00GL AT&T, T Spotify, SPOT T mobile, TMUS Beyond Meat, BYND
Tuesday Earnings Include: Electronic arts, EA Advanced Micro Devices, AMD Stryker Corp., SYK Sprint, S Corning, GLW ConocoPhillips, COP Merck, MRK General Motors, GM Pfizer, PFE MasterCard, MA
Wednesday Earnings Include: Apple, AAPL Yum Brands, YUM GE, GE Cirrus Logic, CRUS McKesson, MCK Hyatt hotels, each Starbucks, SBUX Facebook, FB
Thursday Earnings Include: Alibaba group, BABA Bristol-Myers Squibb, BMY Clorox, CLX International Paper, IP Celgene CELG Cigna, CI Kraft Heinz, KHC
Friday Earnings Include: Exxon Mobil, XOM Chevron, CVX Colgate-Palmolive, CL
-comment section below data-
Geopolitical Tinderbox Radar
Last Week’s Big Stories
The Week That Was – Last Weeks Recap
- ECB Leaves Rates Unchanged, Rates at Present or Lower Levels Until Near inflation Goal
- Around The Barrel – Crude Oil Inventories Draw For First Time in Six Weeks as Exports Rise
- Into The Vortex – EIA Reports +87 Bcf in Natural Gas Storage
- Did Doug Ford Cost the Conservatives the Federal Election?
- Shanghai Gold Exchange Now The Largest Physical Gold Exchange in The World
- Gulf of Mexico Oil and Gas Infrastructure Weather Risk
- Amazon Earnings Miss as AWS Cloud Business Growth Slows
- Tesla Reports Surprise Profit Sending Stock up 20%
- Microsoft Earnings Beat on Robust Azure and LinkedIn Revenue
- Caterpillar Earnings Miss as Dealers Decrease Inventories, Lower China Demand
- Halliburton International Momentum Continues, Short Squeeze Pops Stock Higher
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 ina tight range consolidating recent gains and trading just short of all time highs. – given the 3 waves from here we watch impulse and hugging of daily speed lines. Chikou rebalanced and Kijun and daily tenkan are support. Clearly bullish euphoria
Note developing pennant (pink) failed. Best alternatives are a (ii) of wave V higher, A of a larger 2 or this is i of something more powerful down or up. The alternative that the high was a B Plus and 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 just shy of all time highs after spat the trend line and back up through the Kijun and tenkan retains energy and in 3 waves so we must be aware of alternatives. On the flip side the retest of the 50wma under the larger channel and +2/8 Murrey Math recalc confluence under 50 wma with the cloud and channel much lower cautions bulls with top of huge flag, channel near.
(Another ATH Leading underlying strength of US Indices)
10 Year Treasury Note
Energy and Commodities
US Crude Oil (WTI)
After WTI 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 reflecting mindless speculation from the herd. From there CL_F is trying to find balance with the chikou and popped the tenkan, Kijun and 50 dma above. 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 and Reversed back under Tenkan, Kijun and 50wma (green) under the cloud, This week we are back retesting after we have found support at previous spit zone get back out.
US Natural Gas (Henry Hub)
Natural Gas was again stopped by the 50 sma (green) is correcting the cloud from underneath since reversing off Murrey +3/8 and the tenkan in iv of (C) or (1). and support failing note bounced off breakup line (white) before retest here. – either a iv or X i sequence Chikou rebalanced and Tenkan 50 dma resistance above held.
Natural Gas for now is locked between the weekly 50wma and 3/8 confluence with the tenkan and Kijun and 50 dma above. Watch Kijun/Tenkan cross here Resistance MM & Kijun 50wma, support the weekly channel
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 lower fibs with Kijun below.
Australian Dollar – AUDUSD
The Aussie dollar impulse rally was halted by the Kijun this week and will need to clear for the daily cloud above. The move hit the first target through the bull flag break with flat Kijun pulling.
New Zealand Dollar – NZDUSD
The Kiwi followed the AUDUSD through the Tenkan higher but was unable to reach the Kijun before pulling back. Weekly channel in focus with tenkan now support. The Chikou under previous lows key at week’s end.
Canadian Dollar – USDCAD
The USDCAD has fallen all the way to the break up level bounce failed at 50% and fell back through top of cloud and tenkan Kijun and 50 wma we see Loonie testing trendline and weekly pennant after Canadian election The tenkan is now seen as the pivot aspect. Support is previous lows.
Euro – EURUSD
Euro spat the Kijun prior to the Fib Pound volatility encircled. Support remains Tenkan with 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 correcting the July breakup as the pound rallied in hopes of a Brexit deal. 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 – can it get legs and pull away? The bounce came as Tenkan held to get legs higher with Kijun now key again. Yen buying continued on crosses, EURJPY and AUDJPY taking away the cloud twist that drew the dollar up.
Mexican Peso USDMXN
Mexican peso continued to strengthen after 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 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, resisantance Tenkan.
Bitcoin found impulse after the sell of this week off 3 waves, is their hope for a move higher? The tenkan and kijun need to be retaken 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 October 27, 2019
- All Day Holiday Singapore – Deepavali
Monday, Oct 28, 2019
- All Day Holiday Singapore – Deepavali
- All Day Holiday New Zealand – Labour Day
- All Day Holiday India – Diwali-Balipratipada
- 03:00 EUR German Import Price Index (MoM) (Sep)
- 03:00 EUR German Import Price Index (YoY) (Sep)
- 04:00 EUR M3 Money Supply (YoY) (Sep)
- 04:00 EUR Loans to Non Financial Corporations (Sep)
- 07:00 GBP CBI Distributive Trades Survey (Oct)
- 08:30 USD Chicago Fed National Activity (Sep)
- 08:30 USD Goods Trade Balance (Sep)
- 08:30 USD Retail Inventories Ex Auto (Sep)
- 08:30 USD Wholesale Inventories (MoM)
- 10:30 USD Dallas Fed Mfg Business Index (Oct)
- 11:30 USD 3-Month Bill Auction
- 11:30 USD 6-Month Bill Auction
- Tentative USD Loan Officer Survey
- 17:00 KRW Manufacturing BSI Index (Nov)
- 19:30 JPY Tokyo CPI (YoY) (Oct)
Tuesday Oct 29,2019
- 03:00 GBP Nationwide HPI (MoM) (Oct)
- 03:00 EUR German Import Price Index (MoM) (Sep)
- 03:45 EUR French Consumer Confidence (Oct)
- 04:00 EUR Spanish Retail Sales (YoY) (Sep)
- 05:00 EUR Italian PPI (MoM) (Sep)
- 05:30 GBP BoE Consumer Credit (Sep)
- 05:30 GBP Mortgage Approvals (Sep)
- 08:55 USD Redbook (MoM)
- 09:00 USD S&P/CS HPI Composite – 20 s.a. (MoM) (Aug)
- 10:00 USD CB Consumer Confidence (Oct)
- 10:00 USD Pending Home Sales (MoM) (Sep)
- 10:30 USD Texas Services Sector Outlook (Oct)
- 16:30 USD API Weekly Crude Oil Stock
- 19:50 JPY Retail Sales (YoY) (Sep)
- 20:00 AUD HIA New Home Sales (MoM)
- 20:30 AUD CPI (QoQ) (Q3)
Wednesday, Oct 30, 2019
- 02:30 EUR French GDP (QoQ)
- 03:45 EUR French Consumer Spending (MoM)
- 04:00 EUR Italian Business Confidence
- 04:00 EUR Italian Consumer Confidence
- 04:00 CHF KOF Leading Indicators (Oct)
- 04:00 EUR Spanish CPI (MoM)
- 04:55 EUR German Unemployment
- 05:00 CHF ZEW Expectations (Oct)
- 06:00 EUR Business and Consumer Survey (Oct)
- 06:00 EUR Business Climate (Oct)
- 06:00 EUR Consumer Confidence (Oct)
- 06:00 EUR Services Sentiment (Oct)
- 06:00 EUR Industrial Sentiment (Oct)
- 07:00 USD MBA 30-Year Mortgage Rate
- 07:00 USD MBA Mortgage Applications
- 07:00 USD MBA Purchase Index
- 07:00 USD Mortgage Market Index
- 07:00 USD Mortgage Refinance Index
- 07:00 EUR German CPI (MoM) (Oct)
- 07:00 EUR German HICP (MoM) (Oct
- ) 07:45 EUR Spanish Business Confidence
- 08:15 USD ADP Nonfarm Employment Change (Oct)
- 08:30 USD Core PCE Prices (Q3)
- 08:30 USD GDP (QoQ) (Q3)
- 08:30 USD PCE Prices (Q3)
- 08:30 USD Real Consumer Spending (Q3)
- 10:00 CAD BoC Monetary Policy Report
- 10:00 CAD BoC Interest Rate Decision
- 11:15 CAD BOC Press Conference
- 11:30 USD Crude Oil Inventories
- 14:00 USD FOMC Statement
- 14:00 USD Fed Interest Rate Decision
- 16:00 BRL Interest Rate Decision
- 17:45 NZD Building Consents (MoM) (Sep)
- 19:00 KRW Industrial Production (MoM) (Sep)
- 19:50 JPY Industrial Production (MoM) (Sep)
- 20:00 NZD ANZ Business Confidence (Oct)
- 20:01 GBP GfK Consumer Confidence (Oct)
- 20:30 AUD Building Approvals (MoM) (Sep)
- 20:30 AUD Export Price Index (QoQ) (Q3)
- 20:30 AUD Housing Credit (Sep) 20:30 AUD Import Price Index (QoQ) (Q3)
- 20:30 AUD Private House Approvals (Sep)
- 20:30 AUD Private Sector Credit (MoM) (Sep)
- 21:00 CNY Chinese Composite PMI (Oct)
- 21:00 CNY Manufacturing PMI (Oct)
- 21:00 CNY Non-Manufacturing PMI (Oct)
- 22:00 SGD Bank Lending (Sep)
- Tentative JPY BoJ Monetary Policy Statement
- Tentative JPY BoJ Outlook Report (YoY)
- 23:00 JPY BoJ Interest Rate Decision
Thursday Oct 31, 2019
- 01:00 JPY Household Confidence
- 01:00 SGD Business Expectations (Q3)
- 02:00 JPY Construction Orders (YoY)
- 02:30 JPY BoJ Press Conference
- 03:00 EUR German Retail Sales (MoM) (Sep)
- 03:00 EUR Spanish GDP (QoQ) (Q3)
- 03:45 EUR French CPI (MoM)
- 04:30 HKD GDP (QoQ)
- 05:00 EUR Italian Monthly Unemployment Rate (Sep)
- 06:00 EUR Italian CPI (MoM) (Oct)
- 06:00 EUR CPI (YoY) (Oct)
- 06:00 EUR GDP (QoQ)
- 06:00 EUR Unemployment Rate (Sep)
- 07:00 EUR Italian GDP (QoQ) (Q3)
- 07:30 USD Challenger Job Cuts (Oct)
- 08:30 USD Core PCE Pr08:30
- 08:30 USD Employment Cost Index (QoQ) (Q3)
- 08:30 USD Continuing Jobless Claims
- 08:30 USD Initial Jobless Claims
- 08:30 USD Jobless Claims 4-Week Avg.
- 08:30 USD PCE price index (MoM) (Sep)
- 08:30 USD Personal Income (MoM) (Sep)
- 08:30 USD Personal Spending (MoM) (Sep)
- 08:30 USD Real Personal Consumption (MoM) (Sep)
- 08:30 CAD GDP (MoM) (Aug)
- 08:30 CAD IPPI (MoM) (Sep)
- 08:30 CAD RMPI (MoM) (Sep)
- 09:45 USD Chicago PMI (Oct)
- 10:30 USD Natural Gas Storage
- 11:30 USD 4-Week Bill Auction
- 11:30 USD 8-Week Bill Auction
- 12:00 USD Dallas Fed PCE (Sep)
- 17:30 AUD AIG Manufacturing Index (Oct)
- 19:30 JPY Unemployment Rate (Sep)
- 20:00 KRW Trade Balance (Oct)
- 20:30 KRW Nikkei Manufacturing PMI (Oct)
- 20:30 AUD PPI (QoQ) (Q3)
- 20:30 JPY Manufacturing PMI (Oct)
- 21:45 CNY Caixin Manufacturing PMI (Oct)
Friday Nov 1, 2019
- 01:30 AUD Commodity Prices (YoY)
- 03:30 CHF CPI (MoM) (Oct)
- 05:30 GBP Manufacturing PMI (Oct)
- 08:00 BRL Industrial Production (MoM) (Sep)
- 08:30 USD Average Hourly Earnings (MoM) (Oct)
- 08:30 USD Average Weekly Hours (Oct)
- 08:30 USD Manufacturing Payrolls (Oct)
- 08:30 USD Nonfarm Payrolls (Oct)
- 08:30 USD Participation Rate (Oct)
- 08:30 USD Unemployment Rate (Oct)
- 09:30 CAD RBC Manufacturing PMI (Oct)
- 09:45 USD Manufacturing PMI (Oct)
- 10:00 USD Construction Spending (MoM) (Sep)
- 10:00 USD ISM Manufacturing PMI (Oct)
- 15:00 USD Total Vehicle Sales
- 13:00 USD U.S. Baker Hughes Oil Rig Count
Saturday, Nov 2, 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.