Weekly Market Update – 23 October 2017 BMO

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Dexes

October Rally Continues

The stock market advanced once again this week, notching a new record high in all five sessions, as investors digested another batch of third quarter earnings. The S&P 500 finished higher by 0.9%, while the Dow (+2.0%) did noticeably better and the Nasdaq (+0.4%) did modestly worse. For the month, the S&P 500 has added 2.2%.

Equities had their best performance on Friday after the Senate voted in favor of a budget blueprint for 2018–a crucial step for an eventual tax overhaul. If the upper chamber can reconcile its version of the budget with the version the House passed earlier this month, Republicans will have the ability to pass tax reform without any support from the Democrats under the reconciliation process.

The S&P 500’s financial sector (+2.0%) was in focus for much of the week thanks to heavyweights like Goldman Sachs (GS) and Morgan Stanley (MS), both of which reported third quarter results on Tuesday morning. Goldman Sachs initially sold off following its release, but bounced back later in the week to finish higher by 2.6%. Morgan Stanley did even better, climbing 4.9%.

Health care stocks also rallied this week, with Dow components UnitedHealth (UNH) and Johnson & Johnson (JNJ) pacing the advance. The two companies ended the week higher by 7.8% and 4.4%, respectively, after reporting better-than-expected earnings on Tuesday. The health care sector added 1.8%, finishing right behind financials at the top of the leaderboard.

Technology giant IBM (IBM) had a strong week, surging 10.2%, after reporting better-than-expected profits and sales on Tuesday afternoon. The company’s positive performance helped the top-weighted technology sector climb 1.0% and helped the price-weighted Dow Jones Industrial Average finish comfortably above the other major indices.

Telecom stocks within the S&P 500 finished slightly ahead of the broader market. Wireless giant Verizon (VZ) was a positive influence, climbing 3.5%, as investors rallied around its above-consensus earnings. The telecom services sector added 1.1% this week, but the advance did little to change the group’s overwhelmingly bearish October trend; telecoms have dropped 4.7% month-to-date.

The consumer staples sector finished at the very bottom of the sector standings with a loss of 1.2%. Procter & Gamble (PG) and Philip Morris (PM) were among the most notable laggards within the group. P&G slipped 5.2% despite reporting above-consensus earnings, while Philip Morris lost 3.9% after missing both top and bottom line estimates and issuing disappointing guidance.

Speculation surrounding President Trump’s Fed Chair nomination heated up this week. Current Fed Chair Janet Yellen could be appointed for another four-year term, but reports indicate that Fed Governor Jerome Powell and Stanford University economist John Taylor are the two leading candidates. Fed Governor Kevin Warsh and chief economic advisor Gary Cohn are also still in the mix.

Following this week’s events, the CME FedWatch Tool places the chances of a December rate hike at 93.1%, up from 82.9% last week.

(Excerpts from Briefing.com)

Currencies: Tracking Weekly Gain

The U.S. Dollar Index is up 0.4% at 93.66, looking to finish near its best level of the week. The index is tracking a weekly gain of 0.6%, having retraced the bulk of last week’s drop. The greenback climbed against the euro and yen in overnight action, continuing its advance against the euro into the U.S. session. The dollar spiked against the Canadian dollar in response to weak Canadian retail sales, and displayed broad strength against minor and exotic currencies.

Bonds Yields: Treasuries Slide, Spreads Tighten

The U.S. Treasury market ended a down week on a lower note after overnight selling in the futures market continued into the cash session. Treasury futures began sliding on Thursday evening, responding to the Senate’s passage of a budget package. It was a close call as only 51 senators voted in favor, but the budget will now be considered in the House of Representatives. Furthermore, this represents a step towards tax reform, provided the House does not make any changes to the budget proposal. Today’s selling pressured 2s and 5s to fresh swing lows while 10s and 30s paused near their lows from early October.

Commodities: Copper keeps rallying, Silver and Gold fall back, Crude rallies for second week

Baker Hughes total U.S. rig count decreased by 15 to 913 following last week’s decrease of 8. 

Agriculture: Grains fall across the board 

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THE WEEK AHEAD

Week 43 is the last trading week for October and the third week of Q3 Earnings Season, the busiest week for earnings.

Monday 23 to Friday 27 October (Week 43)

The forty-third week of 2017 (wk43) is  very bullish across all the average timeframes on our seasonal models.

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The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 43;

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Key Economic Dates

In the US, the most important releases will be the advance estimate of GDP growth, durable goods orders, pending and new home sales, and flash Markit PMIs. Elsewhere, the ECB will announce its interest rate decision, and key data to be released include UK GDP growth; Japan inflation rate and manufacturing PMI; Australia inflation rate; and flash PMI data for the Eurozone, Germany and France.

Mon 23 October

Tue 24 October

Wed 25 October

Thu 26 October

Fri 27 October

Earnings (highlights) Calendar for the week of October 23rd

The busiest week of earnings season sees no less than a dozen of the DOW components on the line. Besides the DOW pieces, we’re also getting numbers from many big and significant players such as, GOOG, AMZN, HAL, LMT, GM, GD, NOC, T, UPS, FCX, LVS, AMGN, F, MO, CELG, BIDU and LLL to name a few.

SUMMARY

As of Friday’s close, the Nikkei completed a historical run of 14 straight gains. The Nikkei Stock Average closed on Friday at 21,457, up 9 points from Thursday.

Nikkei

This streak broke a 57 year-old record. The previous 14-day period began in December 1960 and ended in January 1961. Japan holds an election Sunday and Prime Minister Shinzo Abe’s ruling coalition is projected to remain in power. Abe has helped push stocks up and the yen down by encouraging loose monetary policy.

In the same week, Chinese bond yields formed an inverted yield curve. Not good news for the Asian region is this inversion is sustained.

20171018_EOD1_0

Going forward 6 months to a year from now, we are likely to see slowdowns and even recessionary pressures if this inversion persists. You can read up on it here: www.linkedin.com/feed/update/

And then there all the talk about the en-bloc frenzy that gripping Singapore again. So before we get ahead of ourselves, please be reminded about how history repeats itself especially regarding Singapore’s property market;

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The pattern is an obvious and reliable one … and one that warns you not to follow the herd too eagerly. (Thanks JH JH for the finding this chart).

Happy Hunting!

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Weekly Market Update – 16 October 2017 BMO

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Stocks Tick Up As Earnings Season Gets Under Way

The stock market moved modestly higher this week, touching new record highs yet again. The Dow led the advance, adding 0.4%, while the Nasdaq and the S&P 500 each settled with gains of 0.2% apiece. The small-cap Russell 2000 struggled, however, ending the week with a loss of 0.5%.

Financials kicked off the third quarter earnings season on a mostly higher note; JPMorgan Chase (JPM), Citigroup (C), and Bank of America (BAC) all reported better-than-expected earnings. However, Wells Fargo (WFC) missed both top and bottom line estimates. Despite the largely positive showing, the S&P 500’s financial sector moved lower, dropping 0.9%.

The retreat wasn’t all that surprising as the financial sector did ride a four-week rally into earnings season–climbing 10.6% from September 7 to October 6–and, therefore, was likely overdue for a pull back. A decline in Treasury yields also worked against the sector, which typically benefits from an increase in interest rates. The benchmark 10-yr yield dropped eight basis points to 2.28%.

Softer-than-expected consumer prices had a hand in pushing Treasury yields lower, but did little to dial back the market’s rate-hike expectations. The Consumer Price Index increased less than expected in September (0.5% actual vs 0.6% Briefing.com consensus), as did the core Consumer Price Index, which excludes food and energy (0.1% actual vs 0.2% Briefing.com consensus).

The minutes from the September FOMC meeting were also released this week, but contained little to no new information. In short, the minutes showed that the Fed favors staying on a path of gradual rate hikes, although there was growing concern that the factors keeping a lid on inflation may not be transitory after all.

Following this week’s events, the CME FedWatch Tool places the chances of a December rate hike at 82.9%, down modestly from 93.1% last week.

Industrial heavyweight General Electric (GE) had a rough showing this week, dropping 5.8%, after announcing that several of its top executives will be leaving the company. JPMorgan lowered its target price for the company to $20 from $22, which weighed on GE shares as well.

AT&T (T) was another notable laggard this week after announcing that its video subscribers declined for the third quarter in a row; the wireless giant finished with a loss of 7.5%.

On a positive note, the world’s largest retailer–Wal-Mart (WMT)–jumped 9.7% this week after announcing a new return service that will allow its customers to return items they purchased online or in the store in under 30 seconds. Wal-Mart’s brick-and-mortar locations potentially give the company an advantage over internet-based names like Amazon (AMZN) in the area of returns.

Wal-Mart’s positive performance helped the S&P 500’s consumer staples sector (+1.5%) settle alongside the technology (+1.3%), utilities (+1.3%), and real estate (+1.8%) groups at the top of the sector standings. On the flip side, the telecom services sector was by far the weakest performer–thanks mostly to AT&T–finishing with a loss of 4.6%.

Stocks finished near the bottom of their narrow trading ranges on Friday, but still managed to eke out a narrow victory. The Nasdaq (+0.2%) finished at a new record high while S&P 500 (+0.1%) and the Dow (+0.1%) settled just a tick below their record marks. Small caps underperformed, sending the Russell 2000 lower by 0.2%. For the week, the S&P 500 added 0.1%.

(Excerpts from Briefing.com)

Reviewing Friday’s big batch of economic data, which included the Consumer Price Index for September, Retail Sales for September, the preliminary October reading for the University of Michigan Consumer Sentiment Index, and Business Inventories for August:

Currencies: Dollar Edges Higher

The U.S. Dollar Index was little changed on Friday at 93.07, surrendering 0.8% for the week after recording four consecutive weekly gains. The greenback held a modest gain in Friday’s pre-market action, but dropped from a session high to a low after the release of cooler than expected September CPI (actual: +0.5%; consensus: 0.6%) and core CPI (actual: +0.1%; consensus 0.2%). The index spent the rest of the morning in a climb off its session low, pausing near the unchanged level.

Bonds Yields: Rebound Extended

U.S. Treasuries ended an abbreviated week on a higher note, with longer-dated issues recording their fourth consecutive advance. This week’s rally helped the Treasury complex snap its four-week losing streak. The market saw slim losses in early morning action, but surged in response to a cooler than expected September CPI report. The 10-yr note charged above its 200-day moving average and continued climbing into the close. The long bond also climbed into the late afternoon while 2s and 5s settled near their post-CPI highs. The yield curve flattened for the second consecutive day with the 2s10s spread contracting to 78 bps from 82 bps on Thursday. The 2s30s spread compressed to 131 from Thursday’s 135 bps.

The yield curve fell across the board with the longer maturities falling the most, once again tightening the spreads to flatten the curve.

Commodities: Silver, Copper strengthens for another week, Gold bounces, Crude gets a bounce

Crude closed the week above $50/barrel after a brief drop the previous week. Baker Hughes total U.S. rig count decreased by 8 to 928 following last week’s decrease of 4Gold closed above $1300 and Silver rebounded above $17. 

Agriculture: Corn recovers, Wheat continues to slide, Soy strengthens more. 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

THE WEEK AHEAD

Week 42 is October Expiration Week. It is also the second week of earnings season with no less than a third of the DOW components announcing their results.

Monday 16 to Friday 20 October (Week 42)

The forty-second week of 2017 (wk42) is  bearish over the last 15 years and extremely bullish over the last 5 years for the DIA and SPY. On the 10 year average, the DIA is very bullish while the SPY is unreliably bearish.

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The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 42;

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Key Economic Dates

In the US, housing data will take center stage with existing home sales, building permits and housing starts likely showing the impact from recent hurricanes. In China, the focus will be on China’s National Party Congress and GDP growth, inflation, industrial production and retail trade figures. Investors will also be waiting for: UK retail sales, inflation, unemployment and wages; Eurozone inflation and trade balance; and Australia employment data.

Mon 16 October

Tue 17 October

Wed 18 October

Thu 19 October

Friday 20 October

Earnings Calendar for the week of October 16th

SUMMARY

It was good to see my spiritual home’s index finally topping 21,000 for the first time since 1996.

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It was also good to know that Singapore’s economy is looking better even if unemployment is stuck at 2.2% for the last three quarters, the highest levels since 2010. The economy expanded 4.6 percent year-on-year in the third quarter of 2017, up from 2.9 percent in the prior quarter and stronger than market expectations of a 3.8 percent expansion, led by a sharp acceleration in manufacturing. On a quarterly basis, the advanced estimate showed that the GDP grew an annualized 6.3 percent in Q3, sharply surpassing the 2.4 percent growth of the previous quarter and the 3.2 percent expansion expected by consensus.

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Now we get into the hot and heavy part of earnings season and I am expecting things to get exciting. This is going to indicate if we’re ready for that long awaited correction yet or whether we’re going to the moon.

Happy Hunting!

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Weekly Market Update – 09 October 2017 BMO

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Positive Week Ends on a Down Note

Stocks ended the week on a down note, giving back a small portion of their weekly gains. Losses were modest, however, with the S&P 500 (-0.1%) and the Dow (unch) settling just a tick below their unchanged marks. The tech-heavy Nasdaq (+0.1%) eked out a small victory, settling at yet another record high. For the week, the S&P 500 added 1.2%.

Stocks started October on the front foot, climbing to new record highs once again, despite the devastating shooting in Las Vegas on Sunday evening, which claimed the lives of more than 50 people and injured over 500 others. The major indices all settled the week in the green with the Dow, the Nasdaq, and the S&P 500 adding 1.7%, 1.5%, and 1.2%, respectively.

This week’s bullish bias had its roots in last week’s run to record highs, which was sparked by the release of the GOP’s latest tax reform outline. The House kept the ball rolling this week by passing a budget that slashes government spending in anticipation of decreased tax revenue. The GOP still has a long way to go, but the market liked the progress.

Excited by the idea of a tax overhaul, the S&P 500’s financial sector climbed 1.9% this week to finish comfortably ahead of the broader market. The financial sector has added 10.6% since closing at a three month low on September 7 and now trades just a tick behind the benchmark index for the year.

Automakers were strong this week after reporting largely solid U.S. sales figures for the month of September, which were helped by the replacement of vehicles lost to Hurricane Harvey and Hurricane Irma. General Motors (GM) showed particular strength, climbing 11.3%, after reporting a year-over-year increase of 12.0%.

Netflix (NFLX) also had a good showing, hitting a fresh all-time high, after UBS raised its target price to $225 from $190 and following news that the company will raise the price of its standard and premium video-streaming services. NFLX shares settled with a gain of 9.2%.

Equities did end the week on a down note, however, following a noisy Employment Situation Report for September. The market took the report with a grain of salt since it was tainted by the impacts of Hurricane Harvey and Hurricane Irma, but it didn’t do much to alleviate rate-hike concerns nonetheless, showing an increase of 0.5% in average hourly earnings.

As a reminder, average hourly earnings growth, which is positively correlated with inflation, has been tepid in recent months, putting the Fed’s rate-hike forecast into question. However, following Friday’s jobs report, the market now strongly believes the U.S. central bank will hike rates one more time this year, thereby achieving its goal of three rate hikes in 2017.

The fed funds futures market places the chances of a December rate hike at 93.1%, up from last week’s 77.9%.

It’s also worth pointing out that the CBOE Volatility Index (VIX) settled at an all-time low (9.19) on Thursday, signaling the market’s belief that volatility will remain subdued in the short term. The previous record low (9.31) was recorded nearly 24 years ago in December 1993.

Reviewing Friday’s September Employment Situation Report:

(Excerpts from Briefing.com)

Currencies: Dollar Edges Higher

The U.S. Dollar Index is down 0.1% at 93.87 after surrendering its Friday morning gain. The index is on track to gain 0.9% for the week after being up 1.3% for the week at its highest point of the day. The greenback rallied after the Employment Situation report for September (actual: -33K; consensus: 75K) showed a 0.5% increase in average hourly earnings, lifting the year-over-year growth rate to 2.9%, the highest level seen since the financial crisis.

Bonds Yields: 10-yr Yield Gains

U.S. Treasuries ended the week with modest losses after spiking off their morning lows. The trading day began with some light selling, which accelerated after the release of the Employment Situation report for September. The report missed headline expectations, showing a decrease of 33,000 in nonfarm payrolls (consensus: 75K), but average hourly earnings increased 0.5% (consensus: 0.2%), lifting the year-over-year growth rate to 2.9%, the highest level seen since the financial crisis. The spike in the wage growth rate solidified expectations for a rate hike in December, weighing on Treasuries. The post-data selling pressured the 10-yr note beneath its low from July, lifting the benchmark yield to a session high of 2.402%. However, buyers not only absorbed the offer, but then forced some weak-handed sellers to cover their positions, dropping the 10-yr yield back below its July high (2.396%). The high-volume reversal took place inside a 90-minute window, giving way to some late-morning/early-afternoon selling.

The yield curve rose across the board with the 2-yr maturities gaining the most.

Commodities: Crude gets pummelled to end the week lower

Crude retreated below $50/barrel after four weeks of gains. Baker Hughes total U.S. rig count decreased by 4 to 936 following last week’s increase of 5. Gold fell further and Silver rebounded while  Copper turned upwards to break a four week losing streak. 

Agriculture: Corn and Wheat resume their slides, Soy strengthens. 

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THE WEEK AHEAD

Week 41 is the start of Q3 Earnings Season beginning with the announcement of JPM’s and C’s numbers on Thursday. Friday will see WFC and BAC putting their results forward. It’s going to be a highly anticipated week for Financials.

Monday 09 to Friday 13 October (Week 41)

The forty-first week of 2017 (wk41) is Bullish over 10 and 15 years and bearish over the last 5 years for the DIA and SPY.

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The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 41;

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Key Economic Dates

In the US, the most important events will be the release of FOMC minutes, inflation and retail sales and the preliminary reading of Michigan Consumer Sentiment. Elsewhere, key data include UK industrial production, construction and trade; Australia business and consumer confidence; and China Caixin services PMI and trade.

Mon 09 October

Tue 10 October

Wed 11 October

Thu 12 October

Fri 13 October

SUMMARY

In spite of the shocker from the employment report, the market held its ground on Friday with some resilience. I wonder if the coming week (41) won’t see an after effect. I am likely to stay away from the bullish trade till the end of the week and watch for the earnings from the Financial Big Boys before deciding if I want to reverse the bear for a bull because week 42 is historically the most bullish week of October.

Happy Hunting!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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for the last Pattern Trader Tutorial for 2017.
(The next one won’t be till April 2018)

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Support Matters More Than Learning Fancy Tricks

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Comments Off on Weekly Market Update – 02 October 2017 BMO

Weekly Market Update – 02 October 2017 BMO

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Wall Street Ends Q3 at Record Highs As Reflation Trade Returns

Enticed by the idea of a tax overhaul, investors pushed equities higher once again this week, sending the S&P 500 (+0.7%), the Nasdaq (+1.1%), and the small-cap Russell 2000 (+2.8%) to new record highs. The Dow lagged this week, but still managed to eke out a modest gain (+0.3%). The S&P 500 finished the third quarter with a gain of 4.0%.

Technology stocks weighed on the broader market on Monday as investors engaged in a sector rotation trade that left the S&P 500’s technology sector lower by 1.4%. Technology names were weak from the jump, but selling accelerated following comments from North Korea’s foreign minister, who said that President Trump effectively declared war against North Korea in his U.N. speech last week and, therefore, Pyongyang has the right to take countermeasures against the U.S.–including shooting down U.S. strategic bombers, even if they’re not in North Korean airspace.

Investors turned their attention to Fed Chair Janet Yellen on Tuesday as she gave a speech entitled “Inflation, Uncertainty, and Monetary Policy” at the NABE’s annual meeting. Ms. Yellen defended a gradual path of rate hikes despite continued uncertainty in the area of inflation, but her comments didn’t move the financial markets; equities finished the session flat.

Things turned around for the equity market on Wednesday as investors cheered the GOP’s tax reform outline, sending equities into positive territory for the week. Some of the most notable highlights of the plan include cutting the corporate tax rate to 20% from 35%, doubling the standard deduction, and reducing the number of tax brackets to three from seven. The plan calls for trimming the highest tax rate to 35.0% from 39.6%, but Congress will have the option to add a fourth bracket for the very top earners.

Details on how the government will make up for the immediate loss in tax revenue were limited. This topic will likely be an area of contention for the GOP going forward as many conservatives are opposed to the idea of driving up the federal deficit, which would probably be necessary to fund the tax overhaul–at least in the short term.

Market-moving headlines were scarce on Thursday, but that didn’t prevent the S&P 500 from ticking up and registering a new record close. Roku (ROKU) opened for trading on the Nasdaq exchange on Thursday and had a solid first day, settling 67.9% above its IPO price of $14.00 per share.

Investors pushed stocks higher once again on Friday after the core PCE Price Index–the Fed’s preferred gauge for inflation–for August came in below expectations, showing a month-over-month increase of 0.1% (Briefing.com consensus +0.2%). On a year-over-year basis, the core PCE Price Index is up 1.3%, down from 1.4% in the prior reading, and still a ways below the Fed’s target of 2.0%.

Still, the fed funds futures market projects that the next rate hike will occur at the December FOMC meeting with an implied probability of 77.9%, up from 72.8% last week. In Washington, President Trump said he plans to make a decision on who will become the next Fed Chair sometime in the next 2-3 weeks. Reports indicate that current Fed Chair Janet Yellen and former Fed Governor Kevin Warsh are the front runners for the appointment.

Equities ended the week, and the quarter, on a positive note, sending the S&P 500 (+0.4%) higher for the fourth session in a row. The benchmark index finished at a new record high, as did the Nasdaq (+0.7%) and the Russell 2000 (+0.1%), while the Dow (+0.1%) settled about eight points short of its record mark. For the week, the S&P 500 added 0.7%.

(Excerpts from Briefing.com)

Currencies: Dollar Edges Higher

The U.S. Dollar Index is up 0.1% at 93.13, looking to end the week higher by 1.1%. The Index is all but sure to secure its third consecutive weekly advance, returning into the middle of its range from August. The final session of the week was very quiet as the greenback showed modest overnight strength, but dipped to a session low after today’s economic data showed a slowdown in year-over-year core PCE to 1.3% in August from 1.4% in July. The index returned to its overnight high in short order, but could not overtake that level, dipping to its flat line, where it has hovered during afternoon action. The S&P 500 is up 0.3%, looking to end the third quarter with a gain of 3.8%.

Bonds Yields: 10-yr Yield Rests on 200-Day Average

U.S. Treasuries ended their third consecutive down week on a mostly lower note. The long bond posted a modest gain while shorter maturities finished in the red with the 10-yr yield settling right on its 200-day moving average of 2.326%. The 2s10s spread remained unchanged at 86 bps, but increased four basis points for the week as the reflation trade was reinvigorated by the outline of the Trump administration’s tax plan and hawkish remarks from Fed Chair Janet Yellen. Ms. Yellen’s speech on Tuesday strengthened expectations for a rate hike in December, but today’s batch of economic data included the core PCE Price Index for August, which continued its steady decline, slowing to 1.3% year-over-year from 1.4% in July. The core PCE Price Index stood at 1.9% in January. 10s, 5s, and 2s climbed to highs in response to the data, but the bid was reversed in short order. The long bond continued inching higher into the close while shorter maturities finished near their lows.

For the first time in months, the yield curve steepened and widened its spreads across the board.

Commodities: Oil continues to gain, Precious continue to fade, Copper unchanged for second week.

Crude continued its strength from the last three weeks to close above $51/barrel. Baker Hughes total U.S. rig count increased by 5 to 940 following last week’s decline of 1. Gold and Silver remain below their critical $1300/oz and $17/oz respectively and Copper remains unchanged below $3.00 for a third week. 

Agriculture: Corn and Wheat continue to consolidate, Soy bounces. 

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THE WEEK AHEAD

Week 40 starts the first trading session of Quarter Four, the final quarter of the year and the end of the worst six months on the DOW and S&P500.

Monday 02 to Friday 06 October (Week 40)

The fortieth week of 2017 (wk40) is rather strange having been bearish with a low rate of reliability (but not bullish) over 10 and 15 years and bullish over the last 5 years.

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The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 40;

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Key Economic Dates

In the US, the most important events will be nonfarm payrolls, wage growth, trade balance, factory orders and ISM PMIs. Elsewhere in the world: Markit PMIs; Japan Tankan business sentiment; Eurozone unemployment and retail trade; and Germany factory orders. Also, Australia and India will decide on monetary policy.

Mon 02 October

Tue 03 October

Wed 04 October

Thu 05 October

Fri 06 October

SUMMARY

Will this October be the correction we’ve been anticipating or become yet another Bear Killer Month? I remain bullish albeit with less optimism as this market reaches higher highs without a correction. There doesn’t seem to be anything to stop the bulls yet.

However, it is when you least expect it that the market makes its unexpected move to catch you with your pants down. I am staying on my guard and keeping things short and sweet and only stick to the high probability trades.

Happy Hunting!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Don’t miss out on our final Introductory Session
for the last Pattern Trader Tutorial for 2017.
(The next one won’t be till April 2018)

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Register here to find out more: http://ptt12octlp.pagedemo.co

 

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September 2017 In Review, October Preview

It’s been a quick and frenetic month for me with hardly a break between engagements. The intensity will continue into October as I am sure the bookings will come harder and faster. This is a wonderful problem to have and I am totally grateful that my efforts are coming to fruition. I am also grateful for the people who have made these connections possible.

If there was only one reason why all this was possible, that reason would have to be NETWORKING.

August and September have been my busiest months of networking for as long as I can remember. Because of this, I finally got back into an old platform that I gave up using a long time ago; LinedIn. (Thanks to the advise of Mike Li Yichuan)

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This has opened up even more doors and the opportunities just keep coming. The secret to anyone’s success will always be attributed largely to networking. For what I do, this is imperative. It is the lifeblood of my business. And it is something I absolutely love doing.

So if you’re reading this and wondering how to get started in improving your business, your awareness and your progress, just start networking and start meeting people. It only takes that first step to get started.

TUTORIAL MATTERS

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Between August 30 to September 04, for six straight days at 9 to 10 hours a day, the Pattern Trader Tutorial delivered its very first and only Straight-Through session in Penang (to a small and exclusive group). This session set all sorts of records for me; it was the smallest batch I have ever run, it was the longest stretch of hours, it was the most intensive but most effective session I have ever done and it was the most satisfying session I have ever done in all my teaching career.

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Then the batch came back between 22 to 24 September to complete the whole program with the Post-Graduate Coaching Tutelage. The graduates were put through their paces to research, strategise and plan their trades as well as pick up a few more pointers on improving their performance and discipline. The learning never ends and these students will be back for more when I return to Penang with greater things for them to learn.

This was so successful that past graduates from Kuala Lumpur took the effort to burn their super-long weekend off to come to Penang to keep their learning curve up.

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From 22 to 24 September, Tutorial Graduates came back to attend the Options Trading Bootcamp conducted by CP Wong. We’ve been running this peripheral workshop for several years now exclusively for PTT Graduates only. This is where the grads take their knowledge and experience with Options to the max by learning everything else including the Options pricing model, Volatility and Implied Volatility, multi-legged strategies, morphs, trade adjustments and synthetics.

Options

Things are about to get super-nuts in the coming weeks as we look to wrap up the final phases of our new website to launch by the end of October. These are exciting times … with much to be done and everything to play for.

To learn more about what we do,
Click here to register for the next
Pattern Trader Introductory Preview.

~~~~~~~~~~

MARKET MATTERS

The Dow Jones Industrial Average broke higher highs all through a month that has historically been notorious for sell-offs – more signs that there’s more to this market’s resilience than meets the eye. Year-to-date, the Dow is higher by 13.37% which is amazing given the benchmark’s 9-month performance in recent years.

Screen Shot 2017-10-01 at 6.47.27 PM

ShillerIn spite of the fears of arguably the biggest bubble in stock market history (the 1999 bubble is still the one to beat), the US economy is showing no signs of any real economic slowdown that would give this market a reason to crash. I still maintain a correction is due but it shouldn’t turn into a catalyst for the next major economic disaster.

The reason I feel that the 1929 bubble is a more significant comparison is because of the nature of the 1999 bubble that was based on truly worthless companies being hyped up by the current trend of that time as well as all the other toxic situations that attributed to it such as the LTCM, World.com, Enron and the Dot.com itself.

Today’s market is a bubble of a different reason – excessive cheap money – that weighs differently from 1999 bubble. It is in many ways similar to the 1929 bubble in that leverage played a major role in that bubble between 1925 and 1929 just as $4Tr of QE has been the major influence in the current one since 2009.

But as I have said, the economic numbers are far too healthy in the US to warrant any sort of economic failure now.

Furthermore, with rates still on the way up and a reduction of at least $2Tr from the balance sheet due from next year onwards (and a hint of gradual rate increases in 2018), I really can’t see the market coming down in a huge catastrophic way yet. If it does, it will take a major capitulation in the economy for which, I can’t see happening in the next six months.

Of course, there is the question of war …

October Preview

October 2017 has 22 trading sessions and one Bond Market trading holiday, Columbus Day on Monday, 9 October (Bond markets will be closed). October is the end of the “Worst Six Months” and begins the “Best Six Months” on the DOW and S&P500.

October is infamous for some of the most notorious stock market crashes in history;

  1. The Panic of 1907 (October 1907)
  2. Black Tuesday, Thursday and Monday (October 1929)
  3. Black Monday (19 October 1987 – DOW down 22.6% in one day))

October of 2008 famously ended the reign of Lehman Brothers and Bear Stearns.

In spite of all its bearish infamy, October has actually ended more bear markets than started them in history. Massive drops in 1987, 1990, 2001 and 2002 promptly and sharply reversed in October to start long-term rallies. If you had been a buyer during Black Monday of 1987 you would have been massively wealthy by the time the Asian Financial Crisis hit in 1997.

October Trivia

Key Economic Dates For October 2017

Sun 01 October

Mon 02 October

Tue 03 October

Wed 04 October

Thu 05 October

Fri 06 October

Mon 09 October

Tue 10 October

Wed 11 October

Thu 12 October

Fri 13 October

Sun 15 October

Mon 16 October

Tue 17 October

Wed 18 October

Thu 19 October

Friday 20 October

Mon 23 October

Tue 24 October

Wed 25 October

Thu 26 October

Fri 27 October

Mon 30 October

Tue 31 October

Wed 01 November

Thu 02 November

Fri 03 November

Commodities

SUMMARY

Life is way to short to be sitting around and waiting for things to happen. There’s so much to savour, so much to live for and the whole world to explore.

It is so silly of us to devote so much of our time and energies slaving for an ungrateful boss for a meagre wage so that we can pay the bills and school the kids. We can do so much more only if we dared to. The only thing  holding us back is our fear of the unknown.

So think of this as you slave your ass off this week;

The danger is real.
The risks are real.
But fear is a choice.

Happy Hunting & Safe Trading!

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Weekly Market Update – 25 September 2017 BMO

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Holding Steady

Friday was another quiet day on Wall Street as the major U.S. indices hovered near their flat lines from start to finish. The S&P 500 (+0.1%) finished just a tick above its unchanged mark, as did the Nasdaq (+0.1%), thanks to a late-afternoon rally that left the benchmark index at its best level of the day. Meanwhile, the Dow (unch) settled with a slim loss and the Russell 2000 (+0.5%) outperformed, settling at a new all-time high.

Equities held steady this week as investors digested the latest FOMC policy directive, which was released on Wednesday afternoon. The major indices ticked up to new record highs in the first half of the week, but faltered a bit on the back nine. The S&P 500 ticked up 0.1% while the Dow (+0.4%) did a little better and the Nasdaq (-0.3%) did a little worse.

The Fed’s latest policy directive came in pretty much as expected. The FOMC unanimously voted to leave the fed funds target range at 1.00%-1.25% and announced that it will start its balance sheet normalization process in October. Meanwhile, the Fed’s so-called “dot plot” was unchanged from the one released in June, showing that the median FOMC member still anticipates an additional rate hike in 2017 and three rate hikes in 2018.

Accordingly, investors upwardly adjusted their rate-hike expectations, evidenced by the fed funds futures market, which now places the chances of a December rate hike at 72.8% – up from 57.8% last week and 31.9% the week before that. Bonds sold off for the second week in a row following the FOMC announcement, sending yields higher across the curve. The 2-yr yield climbed six basis points to 1.44%, hitting its highest level in nearly nine years, while the benchmark 10-yr yield also jumped six basis points to 2.26%.

Within the equity market, the heavily-weighted financial sector (+2.7%) finished near the top of the sector standings, benefiting from the prospect of heightened interest rates and some sector rotation. The financial group has trailed the broader market for much of the year, but has been making a come back over the last two weeks; the sector has added 6.9% since September 7.

The telecom services group (+3.8%) also put together a solid performance this week, trimming its year-to-date loss to 8.5%, amid reports that Sprint (S) and T-Mobile US (TMUS) are nearing a merger deal after more than four months of on-and-off talks. The two companies settled the week with gains of 10.8% and 4.7%, respectively.

On the flip side, the top-weighted technology sector (-0.7%) underperformed, thanks in large part to Apple (AAPL), which dropped 5.0%. There were rumors of softer-than-expected demand for the new iPhone 8, which hit stores on Friday, but this week’s slide was also likely due to some end-of-quarter profit taking following yet another solid three-month stretch for the company. AAPL shares will enter Monday’s session with a quarter-to-date gain of 5.5% and a year-to-date gain of 31.1%.

Countercyclical groups like health care (-1.2%), consumer staples (-2.3%), and utilities (-2.8%) also struggled this week while cyclical groups like materials (+1.0%), industrials (+2.0%), and energy (+2.0%) finished with sizable gains. Meanwhile, the growth-sensitive consumer discretionary and real estate groups lost 0.1% and 2.8%, respectively.

Sector year-to-date performance;

In politics, President Trump made his United Nations debut on Tuesday, taking a hard stance against North Korea. The hermit nation later criticized the president for his comments and threatened to test a hydrogen bomb in the Pacific Ocean.

Meanwhile, a new health-care bill written by Senators Lindsey Graham (R-SC) and Bill Cassidy (R-LA) gained support within the GOP this week, but its passage looks unlikely after Senators Rand Paul (R-KY) and John McCain (R-AZ) voiced their opposition and Senator Susan Collins (R-ME) said she is leaning towards voting ‘no.’ The GOP can only afford to lose two votes in the Senate, assuming Vice President Mike Pence votes in favor of the bill in the event of a tie.

Interesting to note that the Russells made significant gains in a week when the major indices were flat.

(Excerpts from Briefing.com)

Currencies: Dollar Trims Weekly Gain

The U.S. Dollar Index is lower by 0.1% at 92.15, narrowing this week’s gain to 0.3%. All in all, the Friday session proved to be quiet and not particularly volatile. The greenback saw light overnight selling, which boosted the yen, after North Korea threatened to conduct a nuclear test over the Pacific Ocean. The index notched its low around the start of the European session and spent the next few hours inching higher. Investors did not receive any economic data on Friday.

Bonds Yields: Down Week Ends on Higher Note

U.S. Treasuries ended the week on a mostly higher, but generally quiet, note. The Friday affair began with modest gains after the overnight session featured KCNA’s release of a statement that was attributed to North Korea’s Supreme Leader Kim Jong-un. The statement noted that ‘the highest level of countermeasure’ will be considered in response to President Donald Trump’s speech to the United Nations General Assembly. Later in the Asian session, North Korea’s Foreign Minister revealed that his country may conduct a nuclear test over the Pacific. The cash session featured sideways action as Treasuries built on their opening gains through the first hour of action, but returned to their opening levels in the late morning. The 10-yr yield rose six basis points for the week, but that masked flattening in the yield curve. Granted, the 2s10s spread remained unchanged for the week at 82 bps, but the 2s30s spread compressed to 136 bps from last week’s 139 bps and the 5s30s spread contracted to 93 bps from last week’s 97 bps.

Shorter maturity yields continue to strengthen to flatten the curve further.

Commodities: Oil gains, Metals fade

Crude continued its strength from the last two weeks to close above $50/barrel. Baker Hughes total U.S. rig count declined by 1 to 935 following last week’s decline of 8. Gold and Silver fell for another consecutive week, Copper consolidated below $3.00 for a second week. 

Agriculture: Corn continues to consolidate, Soy falls back, Wheat stalls. 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

THE WEEK AHEAD

Week 39 is the most treacherous week of September. It usually starts out bearish, becomes volatile midweek and sells off at the end of the week.

Monday 25 to Friday 29 September (Week 39)

The thirty-ninth week of 2017 (wk39) is bearish for the DIA and SPY across the 5, 10 and 15 year averages.

Screen Shot 2017-09-17 at 9.57.51 AM

The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 39;

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Key Economic Dates

Next week, the most important data for the US include the final estimate for GDP growth, PCE inflation, personal income and spending, durable goods and new home sales. Investors will also be looking for updated UK GDP figures; inflation for the Euro Area, Germany, France and Italy; Japan inflation and unemployment and China PMIs.

Mon 25 September

Tue 26 September

Wed 27 September

Thu 28 September

Fri 29 September

SUMMARY

MarketWatch published a great report with an amazing graphic regarding the current bubble.

MW-FU804_everyt_20170921125201_NS

Click to expand and zoom in

In 2000, we had the dot-com bubble.
In 2007, we had the housing bubble.
In 2017, we have the everything bubble.”

I like how its called, “The Everything Bubble”. It comes as no surprise because historically, whenever the government or central bank threw cheap money at the market, it always resulted in a bubble of sorts. So they threw $4Tr over eight years at the market, act surprised that the market did well and now gawk at this massive asset (everything) bubble and ask, “how did that happen?”.

If and when this bursts, it will be the most massive capitulation of our time. If it doesn’t burst, then it will just delay the inevitable and make the eventuality even more spectacular.

Till then, I remain cautiously bullish.

Happy Hunting!

 

 

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Weekly Market Update – 18 September 2017 BMO

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Movin’ On Up

Stocks rallied to new record highs this week–more than making up for last week’s decline–following Hurricane Irma’s weaker-than-expected Florida landfall and ahead of next week’s FOMC meeting. The Dow led this week’s advance, climbing 2.2%, followed by the S&P 500 (+1.6%), and then the Nasdaq (+1.4%). For the year, the S&P 500 now holds a gain of 11.7%.

The bulk of this week’s gain came right off the bat as investors happily dialed back their estimates on Monday for damages related to Hurricane Irma, which quickly petered out after hitting the Florida Keys on Sunday. Insurers like Travelers (TRV) led the Monday rally, underpinned by the prospect of fewer-than-expected hurricane related claims, but much of their gains were unwound by the end of the week.

Equities followed up their stellar Monday performance with another win on Tuesday, but conviction was much more modest. Apple (AAPL) held its annual product event, in which the company unveiled a trio of iPhones, including the iPhone 8, the iPhone 8 Plus, and the high-end iPhone X–which CEO Tim Cook called “the biggest leap forward since the original iPhone.”

On the whole, Tuesday’s product event provided little new information as many of the details had been leaked beforehand. Apple sold off immediately following the event, with some investors citing concerns related to the iPhone X’s later-than-expected release date (November 3). However, the tech giant bounced back on Friday, extending its massive year-to-date gain to 38.0%.

Following Tuesday’s modest victory–which sent all three major U.S. indices to new record highs–the stock market took a breather, ending the week in a sideways trend. The Nasdaq ticked lower in the latter half of the week, settling just a step below its record high, while the S&P 500 and the Dow ticked up, further extending their record marks.

Investors largely ignored North Korea’s latest missile launch, which flew over northern Japan on Friday morning, continuing the week’s safe-haven sell off. After hitting a 10-month low last week, the yield on the benchmark 10-yr Treasury note climbed 14 basis points this week, settling at 2.20%. Meanwhile, the 2-yr yield climbed 13 basis points to finish at 1.38%.

A hotter-than-expected August CPI reading (+0.4% actual vs +0.3% consensus), which showed a year-over-year increase of 1.9%, prompted an adjustment in rate-hike expectations. According to the CME FedWatch Tool, investors currently place the chances of a December rate hike at 57.8%, up from last week’s 31.0%.

However, the Fed’s massive balance sheet will be the focus of next week’s FOMC meeting as it is widely expected that Fed Chair Janet Yellen will announce the start of a gradual reduction of assets bought in response to the 2008 financial crisis. The two-day FOMC meeting will kick off on Tuesday with the announcement due at 2pm (EST) on Wednesday.

Reviewing Friday’s big batch of economic data, which included August Retail Sales, August Industrial Production & Capacity Utilization, the preliminary reading of the University of Michigan Consumer Sentiment Index for September, the September Empire State Manufacturing Index, and July Business Inventories:

(Excerpts from Briefing.com)

Currencies: Dollar Bounces Despite Weak Data

The U.S. Dollar Index went down Friday 0.3% at 91.89, trimming this week’s gain to 0.6% after being up nearly 1.5% for the week on Thursday.. The greenback slumped in overnight action, hitting its session low right after the release of a disappointing Retail Sales report for August (actual: -0.2%; consensus: 0.1%), which prompted the Federal Reserve Bank of Atlanta to lower its GDPNow forecast for Q3 GDP to 2.2% from 3.0%. The remaining data points were mostly disappointing as well, but the dollar spent the day climbing off its morning low nonetheless. The British pound distinguished itself once again, spiking 1.3% against the dollar amid a seven-basis point increase in the 10-yr gilt yield (1.31%) as the market starts giving more serious consideration to a rate hike being announced as early as November.

Bonds Yields: Market Holds Despite Weak Data

U.S. Treasuries finished a down week on a modestly lower note. In a way, the Friday session resembled Thursday’s affair when the market saw some intraday volatility only to end little changed. Interestingly, a disappointing batch of data invited only a short-lived bid, leaving the 10-yr note near this week’s low while the 2-yr finished the week on its low. The market didn’t see sustained buying interest even though Q3 GDP estimates were lowered in response to weak Retail Sales for August (actual: -0.2%; consensus: 0.1%). The 10-yr yield rose 14 bps for the week and the 2s10s spread ticked up a basis point to 82 bps.

Shorter maturity yields rebounded to flatten the curve.

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Commodities: Commodities end the week up noticeably higher

Crude continued its strength from last week’s retracement. Gold and Silver fall back, Copper continues to weaken to close below $3.00. Overall, commodities, as measured by the Bloomberg Commodity Index, are currently up +0.12% at 85.1949. Baker Hughes total U.S. rig count decreased by 8 to 936 following last week’s increase of 1.

Agriculture: Corn stalls, Soy shows continued strength. Wheat bounces off its low. 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

THE WEEK AHEAD

The week is expected to start in a very bullish fashion and end in an extremely bearish mood leading into the final and most treacherous week of September.

Monday 18 to Friday 22 September (Week 38)

The thirty-eight week of 2017 (wk38) is extremely bearish for the DIA and SPY across the 5, 10 and 15 year averages.

Screen Shot 2017-09-16 at 1.42.29 PM

The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 38;

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Key Economic Dates

The coming week’s most important events will be Fed and Bank of Japan monetary policy decisions. Other key data to be published include US flash PMIs, housing statistics, existing home sales and current account; UK retail trade and CBI factory orders; the Eurozone flash PMIs, consumer sentiment and inflation; and China house prices.

Mon 18 September

Tue 19 September

Wed 20 September

Thu 21 September

Friday 22 September

SUMMARY

A little bird told me to expect a huge amount of dumping between the last week of September and the first two weeks of October. Even if the bird is an unreliable source, the next three weeks are the most notorious weeks in market history. Then come the last two weeks of October which hosts a slew of catastrophic anniversaries like the 1987 and 1929 crashes.

I am not going to discount irrational fear bringing the indices down in the coming weeks. However, I won’t bet my house on it either.

Happy Hunting!

~~~~~~~~~~~~~~~~~~

FOOTNOTE:

Tell a friend about this week’s Preview for the last batch of 2017. The next one won’t be for another three to four months after that.

Details here: TUTORIAL PREVIEW – LAST PTT FOR 2017

Or register here: PATTERN TRADER TUTORIAL INTRODUCTORY SESSION

 

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TUTORIAL PREVIEW – LAST PTT FOR 2017

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We’re having two Preview Sessions for the November Tutorial which will be our last batch for 2017. The next batch thereafter will be after Chinese New Year 2018.

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Click here to register:
PATTERN TRADER TUTORIAL INTRODUCTORY SESSION

~~~~~~~~~~~~~~~~~~~

For more than 12 years, the Tutorial has evolved to become an all-encompassing, complete and holistic educational program in Finance and Economics.

FCMY04 copyIt has been the starting ground for many novice retail traders and has groomed many an institutional trader, financial analysts, bunker traders, dealers, brokers, remisiers and financial graduates from all over the world.

More importantly, the Tutorial has outlived almost all its rivals in continuously supporting and growing its graduates well into its second decade.

The belief is that financial education never ends and is always evolving. To stay the course and maintain this level of dedication takes a lot of Passion, Energy and Stamina, all of which the Pattern Trader™ has proven to have beyond any doubt.

You can read up on the comments by some of our past graduates to know how the Tutorial has benefitted them inmate ways than just trading and investing: Testimonials 2017

~~~~~~~~~~~~~~~~~~~

Synopsis: While a lot of today’s traders depend heavily on technicals and fundamentals, the Macrotrader has always looked at Risk and Liquidity for their edge. Most technical indicators lag and are only able to tell you what has already happened while fundamentals only provide longer term assurance. Meanwhile, the biggest risk factor is ignored – economic risk.

Macrotraders turn risk into opportunities. They use simple financial management techniques to minimise their risks. They hedge.

This workshop will introduce you to the basic concepts of trading on macroeconomics and how Macrotraders like George Soros and John Paulsen are able to take up low risk positions for short to medium term profits in any direction.

Come and experience a mind-blowing session with me as I share ideas on how Macrotraders turn macroeconomics into trading and investing opportunities for the short term and long term. I will show you how to reduce your risk when timing the markets with clever methods, smart techniques and the intelligent use of economic indicators and macroeconomic data. Most importantly, I will show you how you can preserve and grow your capital.

Date & Time: 27 Sep 2017, Wednesday
Time: 07:00PM to 10:00PM (registration starts at 06:30PM)
Venue:
51 Cuppage Road, Acc EduHub
#03-03, Room Vibrant 3,
Singapore 229469
(behind The Centrepoint & next to The Holiday Inn Hotel)

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Click here to register:
PATTERN TRADER TUTORIAL INTRODUCTORY SESSION

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Weekly Market Update – 11 September 2017 BMO

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Still Within Striking Distance

The major U.S. indices all moved lower this week as geopolitical tensions with North Korea, declining confidence in the feasibility of tax reform, and Hurricane Irma–which is expected to hit Florida this weekend–weighed on investor sentiment. The Nasdaq led the retreat, dropping 1.2%, while the Dow and the S&P 500 finished with respective losses of 0.9% and 0.6%.

Even though the equity market settled lower for the week, it remains within striking distance of its all-time high; the S&P 500 finished Friday’s session just 0.8% below its record-high close of 2,480.91. Treasuries rallied this week, sending yields to new lows for the year. The benchmark 10-yr yield dropped 11 basis points to 2.06%, hitting its lowest level since early November.

Similarly, other safe-haven assets–like gold and the Japanese yen–moved higher, jumping 1.6% and 2.3%, respectively. The yellow metal settled at a 13-month high ($1,351.10/ozt) while the dollar/yen pair finished at a ten-month low (107.78). In addition, the CBOE Volatility Index (VIX) spiked 20.2% to 12.18. The financial sector (-2.8%) was pressured by the decline in Treasury yields, but most of the remaining groups finished with losses of no more than 1.1%.

Relative strength in heavyweight names like Home Depot (HD), Exxon Mobil (XOM), and Pfizer (PFE) prevented the stock market from a significant decline, but there were some soft spots in small-cap and high-beta pockets of the market. The small-cap Russell 2000–which is seen as a leading indicator given that small-cap companies largely rely on domestic consumers–underperformed, dropping 1.0%. After pacing the stock market’s post-election rally, the small-cap index now holds a year-to-date gain of just 3.1%, far below the S&P 500’s year-to-date advance of 9.9%.

High-beta chipmakers also struggled, sending the PHLX Semiconductor Index lower by 2.3%. Large-cap names like Qualcomm (QCOM) and NVIDIA (NVDA) showed particular weakness, settling with losses of 4.6% and 4.0%, respectively. Still, for the year, the PHLX Semiconductor Index is higher by 20.6%.

Following this week’s events, the fed funds futures market places the chances of a December rate hike at 31.9%, down from last week’s 43.7%.

The major U.S. indices closed out the abbreviated week on Friday on a mixed note as investors looked ahead to the weekend, which could see Hurricane Irma’s arrival in Florida and another North Korean missile test in celebration of the country’s 69th anniversary. The Dow ticked up 0.1% while the S&P 500 and the Nasdaq settled with losses of 0.2% and 0.6%, respectively. For the week, the S&P 500 lost 0.6%.

Investors will not receive any economic data on Monday.

(Excerpts from Briefing.com)

Currencies: Dollar Index Hits Fresh 2017 Low … Again

The U.S. Dollar Index went down 0.4% at 91.32, having erased roughly half of its earlier loss on Friday. The intraday rebound is a small victory, considering the index lost 1.6% for the week, ending at its lowest level since the start of 2015. The greenback saw broad-based weakness in overnight action, retreating against the yen and commodity currencies while the People’s Bank of China kept the pressure on the dollar by setting the yuan fix higher for the tenth day in a row. Surprisingly, the higher fix was followed by a Reuters report, which revealed that policymakers in China are now worried about yuan’s strength after the recent (PBoC-assisted) push to a high not seen since the end of 2015. The greenback climbed off its low in morning action, maintaining a narrow intraday range. The S&P 500 hovers just below its flat line while the Nasdaq (-0.5%) underperforms.

Bonds Yields: 10-yr Yield Logs Lowest Weekly Close Since November

U.S. Treasuries finished a strong week on a quiet note. An overnight bid pressured yields to yesterday’s lows, putting the cash market on track for a higher start. The higher open was followed by modest selling, which slowed shortly after Treasuries dipped back to their flat lines. The morning retreat gave way to a sideways drift, which continued into the close. The 2-yr note bucked the trend, ending in the green. The 2-yr yield fell nine basis points for the week while the 10-yr yield dropped 10 basis points, ending at its lowest level since the start of November. Hurricane Irma is expected to make landfall over the weekend and a North Korean missile test is expected to take place tomorrow. The U.S. Treasury will auction $56 billion in 3-yr, 10-yr, and 30-yr notes and bonds next week.

Yields fell across the board in a huge flight-to-safety causing spreads to narrow even more this week.

Commodities: Commodities end the week up noticeably higher

Crude broke its five-week losing streak, Gold and Silver continue to strengthen, Copper falls back down. Baker Hughes total U.S. rig count increased by 1 to 944 following last week’s increase of 3

Agriculture: Corn, Soy shows more strength. Wheat drops back down. 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

THE WEEK AHEAD

The week ahead is the most bullish week of quarter three but is usually followed by the most vicious sell-off of the quarter too. Be advised not to get ahead of the market and get too caught up in the run up.

Monday 11 to Friday 15 September (Week 37)

The thirty-seventh week of 2017 (wk37) is extremely bullish for the DIA and SPY across the 5, 10 and 15 year averages.

Screen Shot 2017-09-09 at 1.43.48 PM

The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 37;

Screen Shot 2017-09-09 at 1.43.38 PM

Key Economic Dates

The week is light on key data to move the market in any serious or sustainable fashion. In the US, the most important events will be inflation rate, retail trade, industrial production and the preliminary reading of Michigan consumer sentiment. Elsewhere, the BoE will announce its interest rate decision; the UK will release inflation, unemployment and wage growth; the Eurozone industrial production; China industrial output, retail trade and fixed asset investment.

Mon 11 September

Tue 12 September

Wed 13 September

Thu 14 September

Fri 15 September

SUMMARY

Last week, I mentioned;

In spite of the tensions, given that week 37 is usually incredibly bullish (ahead of the notorious September sell-off), I remain cautiously bullish for now.

I don’t think Irma will make a huge dent in the market. In fact, I think several key and major listing could make gains as a result of Irma. Still, I remain cautiously bullish.

Happy Hunting!

 

 

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