Buy the dip for Value-companies still works
The stock markets are again dominated by the idea of weaker growth, which will require an extension of the current stimulus for some more time.
New highs in the Nasdaq contrast with the retreat of the Dow Jones and DAX, all repeating last year's situation when markets bet on "growth" (mainly Tech) stocks. The re-birth of this idea has increased following a series of weak US economic reports and signs that the pace of recovery in Europe and China is fading.
However, there are also differences from what we see now and a year ago, when investors really didn't see the light at the end of the tunnel, and it was many months before the widespread use of vaccines.
A good reminder that the world is heading towards a reduction in stimulus is the end of the additional jobless payment programmes in the US.
Major central banks, for their part, are already officially choosing the moment to start policy normalisation, and it may come sooner than optimists hope. The outperformance of technology companies risks an abrupt halt as soon as the monetary watchdogs confirm their policy stance towards a withdrawal of support. This makes a buying strategy relevant for downturns in "value" stocks, which retain their global appeal but have been somewhat subdued of late.
The stock markets are again dominated by the idea of weaker growth, which will require an extension of the current stimulus for some more time.
New highs in the Nasdaq contrast with the retreat of the Dow Jones and DAX, all repeating last year's situation when markets bet on "growth" (mainly Tech) stocks. The re-birth of this idea has increased following a series of weak US economic reports and signs that the pace of recovery in Europe and China is fading.
However, there are also differences from what we see now and a year ago, when investors really didn't see the light at the end of the tunnel, and it was many months before the widespread use of vaccines.
A good reminder that the world is heading towards a reduction in stimulus is the end of the additional jobless payment programmes in the US.
Major central banks, for their part, are already officially choosing the moment to start policy normalisation, and it may come sooner than optimists hope. The outperformance of technology companies risks an abrupt halt as soon as the monetary watchdogs confirm their policy stance towards a withdrawal of support. This makes a buying strategy relevant for downturns in "value" stocks, which retain their global appeal but have been somewhat subdued of late.
#NTG (Natural gas) broke major resistance area
• Likely to rise to resistance levels 5.0 and 5.2
Natural gas earlier broke through the major resistance area located between the multi-year resistance level 4.895 (which started the sharp downtrend at the end of 2018) and the resistance trendline of the weekly up channel from April.
The breakout of this resistance area is aligned with the active sharp upward impulse waves 5 and (C).
If the price closes today above 4.895, Natural gas can be expected to rise further toward the next resistance levels 5.0 and 5.2.
• Likely to rise to resistance levels 5.0 and 5.2
Natural gas earlier broke through the major resistance area located between the multi-year resistance level 4.895 (which started the sharp downtrend at the end of 2018) and the resistance trendline of the weekly up channel from April.
The breakout of this resistance area is aligned with the active sharp upward impulse waves 5 and (C).
If the price closes today above 4.895, Natural gas can be expected to rise further toward the next resistance levels 5.0 and 5.2.
#EURUSD reversed from resistance area
• Likely to test support level 1.1750
EURUSD currency pair recently reversed down from the resistance area set between the pivotal resistance level 1.19 (which has been reversing the price from July) and the 38.2% Fibonacci correction of the downward impulse (C) from May.
The downward reversal from this resistance area started the active corrective wave (2).
EURUSD currency pair can be expected to fall further toward the next support level 1.1750 (target for the completion of the active corrective wave (2)).
• Likely to test support level 1.1750
EURUSD currency pair recently reversed down from the resistance area set between the pivotal resistance level 1.19 (which has been reversing the price from July) and the 38.2% Fibonacci correction of the downward impulse (C) from May.
The downward reversal from this resistance area started the active corrective wave (2).
EURUSD currency pair can be expected to fall further toward the next support level 1.1750 (target for the completion of the active corrective wave (2)).
During the day, Bitcoin dropped to $44,400, but the price managed to return to the level above $46,000. The altcoin market froze, waiting for the next BTC price move.
The decision of El Salvador, apparently, does not allow many to sleep well. Suddenly, the Ukrainian parliament adopted the law about digital assets, which will officially introduce cryptocurrencies into the legal field. But don't be in a hurry to rejoice. The essence of the project is that people can now open crypto accounts in banks, and if the fact of fraud with cryptos is recorded, one can go to court with that and get some protection. It is still impossible to pay with coins for products and services in Ukraine.
Perhaps this is for the best: Bloomberg published an article that El Salvador faced a sell-off in government bonds on Wednesday. In this way, investors are reportedly trying to take revenge on the country for adopting BTC.
Trade cryptos 24/7 on the FxPro platforms: https://www.fxpro.com/trading/cryptocurrencies 👈🏻
The decision of El Salvador, apparently, does not allow many to sleep well. Suddenly, the Ukrainian parliament adopted the law about digital assets, which will officially introduce cryptocurrencies into the legal field. But don't be in a hurry to rejoice. The essence of the project is that people can now open crypto accounts in banks, and if the fact of fraud with cryptos is recorded, one can go to court with that and get some protection. It is still impossible to pay with coins for products and services in Ukraine.
Perhaps this is for the best: Bloomberg published an article that El Salvador faced a sell-off in government bonds on Wednesday. In this way, investors are reportedly trying to take revenge on the country for adopting BTC.
Trade cryptos 24/7 on the FxPro platforms: https://www.fxpro.com/trading/cryptocurrencies 👈🏻
Sellers’ pressure in stocks is now moving from the periphery to the centre
The stock market currently acts like a tired climber, moving up in smaller and smaller steps while resting more often.
This dynamic can easily be attributed to poor preparation, given how many unprofessional retail investors have entered the markets in recent months.
Most of the market upturn at the start of the week was due to buying shares in a few large companies. For example, Apple shares made a new all-time high of 157.26 early in the week, but yesterday the bulls’ efforts were not enough to withstand the sellers’ onslaught as it comes from the periphery to the centre.
The American dollar retraced to the levels of early September, which created a headwind for the equities market. On a separate note, Turkish and Brazilian assets were on the sell-off in emerging markets, as their currencies lost over 2.5% since September 7th. This move quite logically complements the 12% collapse in Bitcoin over the same time frame.
The stock market currently acts like a tired climber, moving up in smaller and smaller steps while resting more often.
This dynamic can easily be attributed to poor preparation, given how many unprofessional retail investors have entered the markets in recent months.
Most of the market upturn at the start of the week was due to buying shares in a few large companies. For example, Apple shares made a new all-time high of 157.26 early in the week, but yesterday the bulls’ efforts were not enough to withstand the sellers’ onslaught as it comes from the periphery to the centre.
The American dollar retraced to the levels of early September, which created a headwind for the equities market. On a separate note, Turkish and Brazilian assets were on the sell-off in emerging markets, as their currencies lost over 2.5% since September 7th. This move quite logically complements the 12% collapse in Bitcoin over the same time frame.
Not improving investor’s sentiment is a new batch of inflation data from China. Producer prices accelerated to 9.5% y/y in August, markedly higher than the forecasted 9.1% and 9.0% a month earlier. Consumer prices, meanwhile, slowed from 1.0% to 0.8%.
Companies in the world’s second-biggest economy are facing the steepest rises in product costs since August 2008 but are shy to start passing them on to consumers. This threatens to send Chinese companies’ profits plummeting.
But the same situation is worth extrapolating to other major economies of the world, whose data will be released later but which correlate pretty closely with the Chinese data.
Companies in the world’s second-biggest economy are facing the steepest rises in product costs since August 2008 but are shy to start passing them on to consumers. This threatens to send Chinese companies’ profits plummeting.
But the same situation is worth extrapolating to other major economies of the world, whose data will be released later but which correlate pretty closely with the Chinese data.
Now seems that only dovish statements by central bankers can lift the cloud that is gathering over the markets. Today it is worth paying attention to the ECB’s rhetoric regarding the outlook for QE and its view on the inflation outlook.
On the US side, influential New York Fed President John Williams said that he doesn’t see the “substantial” progress in the labour market needed to reduce the massive asset purchases on the Fed’s balance sheet.
So far, we are seeing more signs of pressure building up on risky assets, which is increasingly moving from the periphery to the ‘centre’, causing the leading European and US indices to fall. The Dow Jones 30 and DAX 30 closed Wednesday below their 50-day averages, falling into the August lows area.
On the US side, influential New York Fed President John Williams said that he doesn’t see the “substantial” progress in the labour market needed to reduce the massive asset purchases on the Fed’s balance sheet.
So far, we are seeing more signs of pressure building up on risky assets, which is increasingly moving from the periphery to the ‘centre’, causing the leading European and US indices to fall. The Dow Jones 30 and DAX 30 closed Wednesday below their 50-day averages, falling into the August lows area.
In its latest statement today, ECB said that it will continue “with a moderately lower pace of net asset purchases” under PEPP, after two quarters of acceleration. At the same time, its volume (€1.85 trillion) as well as key interest rates remained unchanged.
Key European stock indices are strengthening after the press release as the ECB promised a flexible approach to the volume of monthly purchases based on market conditions. For the markets this means a stabilisation mechanism in case of deteriorating financial conditions.
The single currency, however, also strengthened gains, rewriting intraday highs at $1.1840. In the EURUSD, the tug of war continues at levels just above the 50-day moving average near 1.1800.
The same is true for the DXY dollar index as well as GBPUSD, where bull and bear forces are balanced near key levels. A strong move from current levels could form the basis for a trend right up to the end of the year.
Key European stock indices are strengthening after the press release as the ECB promised a flexible approach to the volume of monthly purchases based on market conditions. For the markets this means a stabilisation mechanism in case of deteriorating financial conditions.
The single currency, however, also strengthened gains, rewriting intraday highs at $1.1840. In the EURUSD, the tug of war continues at levels just above the 50-day moving average near 1.1800.
The same is true for the DXY dollar index as well as GBPUSD, where bull and bear forces are balanced near key levels. A strong move from current levels could form the basis for a trend right up to the end of the year.
🎮 Will the Game ever Stop?
GameStop is an American video games chain that was previously in a difficult situation due to competition from the digital distribution of computer games and the economic impact of the pandemic, causing the share price to fall and prompting many institutional investors to short the stock. At the same time, some investors suggested that GameStop shares were undervalued.
📈Everything changed in January 2021, when Reddit users initiated a historic short squeeze on GME on various stock exchanges. This led to serious financial losses for some of the big bearish players in the US stock market, particularly hedge funds.
In just two weeks, a coordinated buying by small investors boosted the share price from $20 to $500 per share! The volatility has now settled somewhat, with the stock currently trading around $197.
Yesterday, despite reporting rising sales in their quarterly earnings report, GME shares fell by more than 7% in after hours trading. How will the stock perform at today’s US market open?
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GameStop is an American video games chain that was previously in a difficult situation due to competition from the digital distribution of computer games and the economic impact of the pandemic, causing the share price to fall and prompting many institutional investors to short the stock. At the same time, some investors suggested that GameStop shares were undervalued.
📈Everything changed in January 2021, when Reddit users initiated a historic short squeeze on GME on various stock exchanges. This led to serious financial losses for some of the big bearish players in the US stock market, particularly hedge funds.
In just two weeks, a coordinated buying by small investors boosted the share price from $20 to $500 per share! The volatility has now settled somewhat, with the stock currently trading around $197.
Yesterday, despite reporting rising sales in their quarterly earnings report, GME shares fell by more than 7% in after hours trading. How will the stock perform at today’s US market open?
👉Register https://bit.ly/3n8rYtz & Trade CFDs on #Gamestop & more new hot stocks with FxPro.com
Trade Responsibly. 72.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
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#EURCAD reversed from thee resistance area
• Likely to fall to support level 1.4870
EURCAD currency pair recently reversed down with the daily Shooting Star from the resistance area located between the pivotal resistance level 1.5050 (which has been reversing the pair from July) and the upper daily Bollinger Band.
The downward reversal from this resistance area stopped the previous short-term impulse waves (iii) and C.
EURCAD can be expected to fall further toward the next support level 1.4870 (which has been reversing the price from the end of August).
• Likely to fall to support level 1.4870
EURCAD currency pair recently reversed down with the daily Shooting Star from the resistance area located between the pivotal resistance level 1.5050 (which has been reversing the pair from July) and the upper daily Bollinger Band.
The downward reversal from this resistance area stopped the previous short-term impulse waves (iii) and C.
EURCAD can be expected to fall further toward the next support level 1.4870 (which has been reversing the price from the end of August).
#EUR50 reversed from the support area
• Likely to rise to resistance level 4240.5
EUR50 index recently reversed up from the support area located between the support level 4150.00 (former multi-month resistance from June), lower daily Bollinger Band and the 38.2% Fibonacci correction of the upward impulse from July.
The upward reversal from this support area stopped the previous short-term correction (ii).
EUR50 index can be expected to rise further toward the next resistance level 4240.5 (which has been reversing the price from the start of August).
• Likely to rise to resistance level 4240.5
EUR50 index recently reversed up from the support area located between the support level 4150.00 (former multi-month resistance from June), lower daily Bollinger Band and the 38.2% Fibonacci correction of the upward impulse from July.
The upward reversal from this support area stopped the previous short-term correction (ii).
EUR50 index can be expected to rise further toward the next resistance level 4240.5 (which has been reversing the price from the start of August).
Thursday started with a new boom in altcoins, but bitcoin decided to stay in place, and other cryptocurrencies also slowed down by the evening.
BTC is currently trading around $45.9K.
Many are interested in the fact that the price has dropped sharply by 20% earlier this week, and how this could affect the global movement of Bitcoin.
According to the technical analysis, intermediate significant levels when going down: $44-44.7K (200- & 50-day MAs) and $37.3K (August lows).
If we see an uptrend, it will clearly stumble upon a strong resistance level of $56K, which will not be easy to break, but possible. As we said earlier, then the road will open to the psychologically key level of $60K, which is even stronger.
BTC is currently trading around $45.9K.
Many are interested in the fact that the price has dropped sharply by 20% earlier this week, and how this could affect the global movement of Bitcoin.
According to the technical analysis, intermediate significant levels when going down: $44-44.7K (200- & 50-day MAs) and $37.3K (August lows).
If we see an uptrend, it will clearly stumble upon a strong resistance level of $56K, which will not be easy to break, but possible. As we said earlier, then the road will open to the psychologically key level of $60K, which is even stronger.
Japan stocks instead of Chinese, cash instead of shares
On Friday morning, we see moderately positive dynamics again, supported by a rise in Chinese stocks.
China’s regulators agreed to a request to reschedule payments to creditors of troubled real estate development giant Evergrande, which is on the brink of bankruptcy. Some commentators have pointed out that a default by this company could potentially turn out to be China’s Lehman Brothers. The very fact that the regulator made concessions created positive vibes in the markets during the Asian session.
The Japanese market has become the centre of attraction for investors in Asia. The Nikkei225 has surpassed 30,000 marks and is trading near 32-year highs.
Since late August, the main driver of the 10% rally has been news of the imminent resignation of Japanese Prime Minister Suga, creating hopes of stepping up economic reforms. China’s regulatory problems have also contributed to this rally, potentially holding back the potential of the Middle Kingdom.
On Friday morning, we see moderately positive dynamics again, supported by a rise in Chinese stocks.
China’s regulators agreed to a request to reschedule payments to creditors of troubled real estate development giant Evergrande, which is on the brink of bankruptcy. Some commentators have pointed out that a default by this company could potentially turn out to be China’s Lehman Brothers. The very fact that the regulator made concessions created positive vibes in the markets during the Asian session.
The Japanese market has become the centre of attraction for investors in Asia. The Nikkei225 has surpassed 30,000 marks and is trading near 32-year highs.
Since late August, the main driver of the 10% rally has been news of the imminent resignation of Japanese Prime Minister Suga, creating hopes of stepping up economic reforms. China’s regulatory problems have also contributed to this rally, potentially holding back the potential of the Middle Kingdom.
One should not ignore the slide in the US indices for 3rd consecutive trading session, which might point to the prevailing “sell on rise” pattern, taking away 1.5% in three days from the S&P500.
It seems that Fed policymakers are precisely pursuing this tactic. FOMC members Rosengren and Kaplan stated that “to avoid apparent conflict of interest”, they will sell stocks and other assets from their brokerage accounts in September, moving into diversified index funds and cash savings. Both noted that they had come under public pressure because of the active management of their portfolios in 2020 when the Fed was involved in the economic bailout.
The sell-off in company shares and real estate funds, after the dizzying rally of the past year and a half, from the outside looks like an equally active bet on a potential market correction. After all, the Fed’s official announcement of the QE tapering is only weeks away. Such statements could further increase pressure on sellers to lock in profits.
It seems that Fed policymakers are precisely pursuing this tactic. FOMC members Rosengren and Kaplan stated that “to avoid apparent conflict of interest”, they will sell stocks and other assets from their brokerage accounts in September, moving into diversified index funds and cash savings. Both noted that they had come under public pressure because of the active management of their portfolios in 2020 when the Fed was involved in the economic bailout.
The sell-off in company shares and real estate funds, after the dizzying rally of the past year and a half, from the outside looks like an equally active bet on a potential market correction. After all, the Fed’s official announcement of the QE tapering is only weeks away. Such statements could further increase pressure on sellers to lock in profits.
#Nikkei225 index broke round resistance level 30000.00
• Likely to test resistance level 30700
Nikkei 225 index continues to rise after recently breaking the round resistance level 30000.00, which was preceded by the breakout of the multiple resistance levels – 29500.00, 28800 and 28270.
The breakout of these resistance levels accelerated the active medium-term upward impulse wave (3).
Nikkei 225 index can be expected to rise further toward the next resistance level 30700 (previous multi-month high from February and the target for the completion of the active wave (3)).
• Likely to test resistance level 30700
Nikkei 225 index continues to rise after recently breaking the round resistance level 30000.00, which was preceded by the breakout of the multiple resistance levels – 29500.00, 28800 and 28270.
The breakout of these resistance levels accelerated the active medium-term upward impulse wave (3).
Nikkei 225 index can be expected to rise further toward the next resistance level 30700 (previous multi-month high from February and the target for the completion of the active wave (3)).
#Wheat broke round support level 700.00
• Likely to fall to support level 664.50
Wheat continues to fall after recently breaking the round support level 700.00, which is the lower boundary of the narrow sideways price range the price has been trading in from the end of August.
The breakout of the support level 700.00 accelerated the active short-term ABC correction 2.
Wheat can be expected to fall further toward the next support level 664.50 (low of wave (v) from July and the target for the completion of the active wave 4).
• Likely to fall to support level 664.50
Wheat continues to fall after recently breaking the round support level 700.00, which is the lower boundary of the narrow sideways price range the price has been trading in from the end of August.
The breakout of the support level 700.00 accelerated the active short-term ABC correction 2.
Wheat can be expected to fall further toward the next support level 664.50 (low of wave (v) from July and the target for the completion of the active wave 4).
#NZDUSD reversed from support level 0.7085
• Likely to test resistance level 0.7170
NZDUSD recently reversed up from the key support level 0.7085 (former key resistance level which has been reversing the price from the end of June).
The upward reversal from the support level 0.7085 stopped the earlier short-term downward ABC correction 2.
NZDUSD can be expected to rise further toward the next resistance level 0.7170 (top of the previous sharp upward impulse wave 1).
• Likely to test resistance level 0.7170
NZDUSD recently reversed up from the key support level 0.7085 (former key resistance level which has been reversing the price from the end of June).
The upward reversal from the support level 0.7085 stopped the earlier short-term downward ABC correction 2.
NZDUSD can be expected to rise further toward the next resistance level 0.7170 (top of the previous sharp upward impulse wave 1).
Demand for risk assets in financial markets continues to shrink with two significant drivers.
The US S&P500 came under pressure during the New York session on Friday, with pressure intensifying towards the close of trading, reflecting the wariness of professional managers. The index is again a couple of steps away from its 50-day moving average.
The index has fallen to this line around the middle of each month since May, and each time it finds support on dips there.
However, it is dangerous to rely on correlations in the markets as they break too frequently. It is worth paying attention to the performance of the American stocks near the 50-day average and not deciding for a short-term move before it tests these levels.
Consolidation under 4430 could launch a deeper correction towards the 200 SMA at 4100. A pullback from 4430 would focus on returning to the historical highs above 4550 within just a week or two.
The US S&P500 came under pressure during the New York session on Friday, with pressure intensifying towards the close of trading, reflecting the wariness of professional managers. The index is again a couple of steps away from its 50-day moving average.
The index has fallen to this line around the middle of each month since May, and each time it finds support on dips there.
However, it is dangerous to rely on correlations in the markets as they break too frequently. It is worth paying attention to the performance of the American stocks near the 50-day average and not deciding for a short-term move before it tests these levels.
Consolidation under 4430 could launch a deeper correction towards the 200 SMA at 4100. A pullback from 4430 would focus on returning to the historical highs above 4550 within just a week or two.
Two of the world's largest economies are in sync with pressure on their fintech giants.
Access to user data and the growth of ecosystems have effectively created new monopolists that have lately been profiting lavishly from this information themselves and preventing others from doing so.
In 2007, the phrase "too big to fail" became widespread as the government bailed out big banks and manufacturing companies. Now we are witnessing a U-turn, with governments intent on raising taxes on corporations and limiting their monopoly in certain sectors or crushing companies that have become frighteningly large for even the US and Chinese governments, the world's two largest economies by a wide margin.
China presses Alibaba to spin off its financial arm, Ant Group, into a separate company with state ownership. Restrictions on the use of user data and the need to share it with the government deprive fintech of an essential competitive advantage, causing a reassessment of the sector.
Access to user data and the growth of ecosystems have effectively created new monopolists that have lately been profiting lavishly from this information themselves and preventing others from doing so.
In 2007, the phrase "too big to fail" became widespread as the government bailed out big banks and manufacturing companies. Now we are witnessing a U-turn, with governments intent on raising taxes on corporations and limiting their monopoly in certain sectors or crushing companies that have become frighteningly large for even the US and Chinese governments, the world's two largest economies by a wide margin.
China presses Alibaba to spin off its financial arm, Ant Group, into a separate company with state ownership. Restrictions on the use of user data and the need to share it with the government deprive fintech of an essential competitive advantage, causing a reassessment of the sector.