Comments Off on Looking To Get Rich Quick?

Looking To Get Rich Quick?

I would like to share with you a simple fact that seems to have been missed by everyone who chase their dream of becoming successful;

Have you noticed that there are many movies and books about successful people and how they struggled, failed and struggled some more before eventually finding success … but there are no movies or books about people who became successful overnight or got rich quick?

So why do so many still chase that get-rich-quick dream when it obviously does not exist?

This is a reality of life – true, lasting success does not come easily and those who have it had to work for it. Nothing comes easy.

If you want to know where this is leading, click here for the shortcut version:
Pattern Trader Tutorial Introductory Session

Otherwise read on …

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

ONE HARDWORKING WINNER AGAINST TEN IGNORANT DREAMERS

In the movie, “In Pursuit Of Happyness”, Will Smith’s character, Chris Gardner struggled in life as a medical machine salesman looking for and dreaming of that “next big thing“. Cutting the story short, Gardner becomes a trader on Wall Street after a lot of reality checks, struggles, sacrifices, trials and failures. The sacrifices were not his own alone but that of his family and more famously, his son who kept his faith in his father’s pursuit for happiness.

We know today that he is a successful and well-known figure on Wall Street. It did not happen overnight. He did not get rich quick. He also certainly did not attend a three-day workshop to learn how to trade.

If there was one element missing from this rags-to-riches story, it would be how Gardner still had to continue to work his ass off as a trader before he made his first million. He had learnt what the professionals did and how they did it. It also took a lot of hard work, patience and practice.

Still want to read on?

Otherwise take the shortcut now:
Pattern Trader Tutorial Introductory Session

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

A WINNER IN A SEA OF LOSERS

It is a well-documented fact that in the world of Trading, there is a small percentage of winners and a disparagingly disproportionate percentage of losers. It is also common to hear about many small time traders losing thousands of dollars to a few winners who make hundreds of thousands and even millions of dollars.

The obvious truth is that there are a small number of traders making lots of money from a huge pool of traders losing their capital.

Why the imbalance and why is it so unfair?

In actuality, it is fair because those who are successful at it have done all it takes and more to get to that level. They are a dedicated and disciplined bunch of people who have the values that most people dislike; they are Patient, they Work Hard and they Practice their craft. It takes a very special person to have those qualities and to live out those values every day. It demands Discipline, Dedication and Determination that most people do not possess.

Most people would prefer to have easy money without having to work for it, wait for it or practice to get it. They lack the determination to learn how to do it. They are never dedicated enough to earn it and will not have the discipline to keep it.

This is typical of life. The few who are rich are those who have worked for it, experienced failures and earned it the hard way. The many who are poor, work for the rich to make them richer. The same can be said of the market. Those who learned it and earned it the hard way will always make losers of those who are ignorant and foolish enough to believe that the market is easy money.

The losers are the ones who believe that the market can get them rich quickly. They treat the market as if it is a system to be beaten. They also use the market to gamble their hard-earned money away. In short, they do not take the market seriously and do not respect the market as a serious, highly qualified and professional financial business.

If it were that easy, then why would Wall Street Traders need to go through years of university education and more years in mentorship before they become the best in the world?

If it were so easy, why do we keep hearing so much about so many people wiping out their accounts in the market instead of hearing more about those who have become enormously successful?

The success stories are far and few between but the woeful stories are plenty and common.

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

If you are serious about your finances and your future, if you want to set the right examples for your family and if you are keen on leaving a powerful legacy behind for your loved ones to build on, you should seriously consider attending the Pattern Trader Tutorial Introductory Session.

PTTadBannerGold

Click here now to make a huge difference in your life:
Pattern Trader Tutorial Introductory Session

Share
Comments Off on Weekly Market Update – 18 January 2018 BMO

Weekly Market Update – 18 January 2018 BMO

Screen Shot 2017-06-28 at 3.00.52 PM

Screen Shot 2018-01-13 at 3.40.30 PM

Week in Review: Rally Keeps on Rolling

Equities kept the new year rally rolling this week with the Dow Jones Industrial Average, the Nasdaq Composite, and the S&P 500 adding between 1.6% and 2.0%. All three major U.S. indices finished Friday at record highs and now hold year-to-date gains between 4.2% and 5.2%.

The fourth quarter earnings season unofficially began on Friday with reports from financial heavyweights JPMorgan Chase (JPM) and Wells Fargo (WFC). Both companies beat earnings expectations, but came up short on revenues. PNC (PNC) and BlackRock (BLK) also reported, beating both earnings and revenue estimates.

The financial sector rallied 0.9% on Friday following the earnings releases, settling the week with a gain of 2.9%. A curve-steepening sell off in the Treasury market, which increased the 2yr-10yr spread by three basis points to 55 basis points, was a boon to the financial group.

Treasuries sold off due to several factors, including the Bank of Japan’s decision to trim its daily purchases of Japanese government bonds, minutes from the European Central Bank’s last policy meeting that revealed the ECB could begin preparing investors for the end of its bond-buying program early this year, and a Bloomberg report that China may slow or halt its purchases of U.S. Treasuries–however, Chinese officials later denied the report.

In addition, the core Consumer Price Index increased more than expected in December (+0.3% actual vs +0.2% Briefing.com consensus), which also contributed to the Treasury sell off.

The yield on the benchmark 10-yr Treasury note settled the week higher by seven basis points at 2.55%, but traded as high as 2.60%–its best level since March 2017. The 2-yr yield, meanwhile, advanced four basis points to 2.00%.

Outside of financials, the consumer discretionary (+3.1%), industrials (+3.2%), and energy (+3.2%) sectors had strong performances this week. Energy benefited from another increase in the price of crude oil, which climbed 4.5% to $64.21 per barrel, touching its highest level since December 2014.

In the industrial sector, transports showed particular strength, pushing the Dow Jones Transportation Average higher by 4.2%. The DJTA finished Friday at a record high.

On the downside, the lightly-weighted utilities (-2.1%), telecom services (-2.1%), and real estate (-3.5%) sectors struggled, extending their year-to-date losses; the three groups have lost between 3.4% and 5.3% since the start of 2018.

The top-weighted technology sector (+0.9%) underperformed with chipmakers showing relative weakness following a solid start to the year; the PHLX Semiconductor Index lost 0.3%. Facebook(FB) tumbled 4.5% on Friday amid concerns that changes to its news feed will cause users to spend less time on the site.

(Excerpts from Briefing.com)

Dollar: Index Nears 2017 Low

The US Dollar Index was down 0.8% at 91.08, dropping into the neighborhood of last year’s low that was notched in September. The Index is on track to register its third consecutive decline after retreating throughout the session. The Index spiked off its low in response to a hotter than expected core CPI for December (actual 0.3%; consensus 0.2%), but that bounce was retraced in short order, followed by an afternoon slide to a fresh session low. The Index, which is down 0.9% for the week, has recorded four consecutive weekly losses, having surrendered 3.0% during that span.

Bonds: 2-yr Yield Hits 2.00%

U.S. Treasuries ended the week on a mostly lower note with shorter durations showing relative weakness. Treasuries slumped to session lows shortly after the cash open, responding to a hotter than expected core CPI for December (actual 0.3%; consensus 0.2%) and in-line December Retail Sales (actual 0.4%). However, the morning dive was followed by a swift rebound in the long bond, which reclaimed its loss over the next two hours and climbed to a fresh session high in afternoon action. The 10-yr note recovered a large portion of its loss after morning selling drove its yield to 2.594%, just shy of Wednesday’s high at 2.595%. Up front, the 2-yr note underperformed throughout the day with its yield climbing above the 2.00% mark for the first time since late 2008. Yield curve steepening from the early portion of the week was mostly undone as the 2s10s spread finished the week at 55 bps, up three basis points since last Friday while the 2s30s spread ended the week unchanged at 85 bps.

For the week, the yield curve steepened. However, the  10s30s spread closed to 30bps from 33bps the previous week. The 5s10s spread stays unchanged at 20bps.

Crude: WTI surges higher for the week

Crude

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased on Wednesday by 4.9 mln barrels from the previous week. At 419.5 mln barrels, U.S. crude oil inventories are in the middle of the average range for this time of year. Total motor gasoline inventories increased by 4.1 mln barrels last week, and are near the top of the average range. Blending components inventories increased last week while finished gasoline inventories were down slightly. Distillate fuel inventories increased by 4.3 mln barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories decreased by 6.3 mln barrels last week, but are in the middle of the average range. Total commercial petroleum inventories decreased by 5.5 mln barrels last week.

Baker Hughes total U.S. rig count increased by 15 to 939 following last week’s decline of 5

Metals: Gold continues seasonal rally, Silver corrects, Copper consolidates

World Agricultural Supply and Demand Estimates Report (WASDE)

Agriculture: Grains correct for the week

THE WEEK AHEAD

The coming shortened week is second week of Q4 Earnings Season and January Expiration week.

Tuesday 16 to 19 January (Week 03)

The third week of 2018 (wk03) is very bullish over the last five years and moderately bearish across the 10 and 15 year time-frames on the SPY and DIA according to our seasonal models.

Screen Shot 2018-01-14 at 3.01.07 PM

The 2018 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 03;

Screen Shot 2018-01-14 at 3.00.54 PM

Key Economic Dates

In the US, the most important releases will be the preliminary reading of Michigan consumer sentiment, industrial production and housing data. Investors will also be waiting for: China Q4 GDP growth, retail trade, industrial output and fixed asset investment; UK consumer prices; Australia employment; the Eurozone inflation; and Japan machinery orders.

Mon 15 January

Tue 16 January

Wed 17 January

Thu 18 January

Fri 19 January

Earnings Calendar for Week of January 16

Monday (January 15)

Tuesday (January 16)

Wednesday (January 17)

Thursday (January 18)

Friday (January 19)

SUMMARY

The first five days of January have finished up, implying that 2018 is likely to look promising for the bulls. If early indications of earnings are anything to go by, we could be looking at more upside in the weeks to come.

JPMorgan Chase (JPM), Wells Fargo (WFC), PNC (PNC), and BlackRock (BLK) kicked off the fourth quarter earnings season on a mostly positive note as all four reported better-than-expected earnings. However, their revenue results were mixed; JPMorgan and Wells Fargo missed estimates, while PNC and BlackRock beat expectations. The financial sector stayed in line with the broader market for most of the day and then rallied in the final minutes to settle higher by 0.9%;

Another week and another round of questions about how much higher this market can climb before it falls apart. The US economy is well capable of more growth and expansion but its market is brimming with bubbles. Something’s got to give.

Happy Hunting!

Screen Shot 2017-10-01 at 1.38.39 PM

Connect with me at LinkedIn

 

Share
Comments Off on Weekly Market Update – 08 January 2018 BMO

Weekly Market Update – 08 January 2018 BMO

Screen Shot 2017-06-28 at 3.00.52 PM

Week in Review: Bang! Off to the Races

The stock market began 2018 with a bang, advancing to new record highs in each of this week’s four trading sessions. The Nasdaq Composite jumped 3.4% to 7136.56, the S&P 500 climbed 2.6% to 2743.15, and the Dow Jones Industrial Average rose 2.3% to 25295.87. Markets were closed on Monday in observance of New Year’s Day.

This week’s rally followed an impressive 2017 campaign for Wall Street, during which the S&P 500 surged nearly 20%, and defused the belief that the new lower tax rates, which took effect on Monday, would invite some profit taking at the start of the new year.

Cyclical sectors, which typically do well when the outlook for the economy is favorable, set the pace this week with the technology (+4.2%), materials (+4.0%), and energy (+3.9%) groups being the top performers.

Energy shares benefited from an increase in the price of crude oil, which touched a three-year high amid anti-government protests in Iran–although the protests weren’t expected to have an impact on the country’s oil production. Oil prices were also supported by the Department of Energy’s weekly inventory report, which showed that U.S. crude stockpiles declined by 7.4 million barrels last week. West Texas Intermediate crude futures gave back some gains on Friday but still ended with a weekly gain of 1.7% at a price of $61.47 per barrel.

Meanwhile, in the top-weighted technology sector, chipmakers had a solid week, bouncing back from some profit taking at the end of 2017; the Philadelphia Semiconductor Index ended the week higher by 5.8%. Intel (INTC) struggled, however, following reports that its chips contain security flaws. INTC shares finished the week lower by 3.1%.

The minutes from the December FOMC meeting were released on Wednesday, showing that most FOMC members backed a continued path of gradual rate hikes. Some members even saw the possibility for more aggressive tightening due to the new tax code, which Fed officials expect will boost consumer and capital spending.

Investors also received the Employment Situation Report for December, which bucked the longstanding trend of above-consensus headline growth and lagging wage growth. Nonfarm payrolls increased less than expected (148,000 actual vs 188,000 consensus), but the November reading was revised to 252,000 from 228,000. Average hourly earnings came in as expected, showing a month-over-month increase of 0.3%.

With the labor market believed to be approaching full employment, disappointing headline readings could become more commonplace. This would be indicative of employers struggling to find workers with the right skillset, which in turn should translate into upward pressure on wages.

The market dialed up its rate-hike expectations following this week’s economic data. The CME FedWatch Tool points to the March FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 68.1%, up from 51.7% last week.

(Excerpts from Briefing.com)

Reviewing Friday’s economic data, which included the Employment Situation Report for December, the December ISM Services Index, November Factory Orders, and the November Trade Balance:

Dollar: Dollar Index Fights for Green Finish

The U.S. Dollar Index is up 0.1% at 91.96, looking to remain above its flat line after pulling back from its morning high. The greenback rallied in early-morning action, but surrendered that entire gain immediately after the release of the December Employment Situation Report, which missed headline expectations (actual 148,000; consensus 188,000), but showed in-line average hourly earnings growth (+0.3%). The dollar swiftly recovered its post-NFP loss, but could not sustain that rebound, sliding back toward its flat line in the early afternoon.

Bonds: First Week of 2018 Ends on Lower Note

U.S. Treasuries ended Friday in the red with the long end showing relative weakness. The Treasury complex saw some impulse buying in the wake of the December Employment Situation Report, which was headlined by below-consensus payroll growth (actual 148,000; consensus 188,000), but showed in-line average hourly earnings growth (+0.3%)—a figure that will be watched very closely due to the belief among policymakers that the labor market is at or near full employment. The post-NFP advance was reversed in short order, and 5s, 10s, and 30s slid to new lows after the second batch of economic data showed better than expected Factory Orders in November (actual 1.3%; consensus 1.4%) and an upward revision to the October figure. The 10-yr note and the 30-yr bond spent the afternoon session near their morning lows while the 5-yr note ticked to a fresh low in the early afternoon. The yield curve compared to Thursday, but for the week, the 2s10s spread and the 2s30s spread tightened by a basis point apiece to 52 bps and 86 bps, respectively.

The yield curve flattening trend persisted with the shorter maturities’s yields rising faster against the longer maturities. The 5s10s spread is now 19bps.

Crude: WTI tops $62p/b in the new year

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 7.4 million barrels from the previous week. At 424.5 million barrels, U.S. crude oil inventories are in the middle of the average range for this time of year. Total motor gasoline inventories increased by 4.8 million barrels last week, and are above the upper half of the average range.

Metals: Precious continues strength on seasonal run, Copper corrects

Agriculture: Corn continues to consolidate, Wheat and Soy continue to strengthen

THE WEEK AHEAD

The coming week is the start of Q4 Earnings Season. Friday is the eve of a three-day weekend ahead of Martin Luther King Jr. Day on Monday, January 15 – Markets will be closed

Tuesday 08 to 12 January (Week 02)

The second week of 2018 (wk02) is moderately bearish across all time-frames on the SPY and DIA.

The 2018 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 02;

Key Economic Dates

In the US, the most important releases will be inflation rate, retail trade, producer prices, consumer credit and government budget. Investors will also be waiting for: China trade balance, consumer and producer prices; UK foreign trade and industrial production; ECB meeting minutes; the Eurozone business survey, retail trade, industrial production and unemployment.

Mon 08 January

Tue 09 January

Wed 10 January

Thu 11 January

Fri 12 January

Earnings Calendar for Week of January 8

Monday (January 8)

Tuesday (January 9)

Wednesday (January 10)

Thursday (January 11)

Friday (January 12)

SUMMARY

With the first day of January up and looking like the first five day are likely to be up, 2018 is starting to look promising. For now, I remain bullish on equities and most commodities but only in the short term. I wouldn’t dare commit anything long term yet or buy into any investment/property ideas now. The big-money long-term stuff will have to wait because I don’t like buying highs.

Before I wrap up, here’s an interesting observation … take a look at these two charts and see if you find them familiar. Hint: They’re both very recent.

Comp1

They both share the same pattern that looks like a reversed version of the Stalled Pattern. Whatever you call it, its definitely Parabolic. Have you figured out which securities you’re staring at?

Comp2

The one on the left was Bitcoin in the first week of December as it broke record gains. The one on the right is the Dow Jones as of Friday’s close. The Dow Jones made a record 220 points in its first four days of the new year.

For the week, the Dow rose 2.3%, the S&P 500 gained 2.6%, while the Nasdaq is up 3.4%. The Dow notched the biggest weekly gain since the period ended Dec. 1, 2017, the S&P 500 recorded its best weekly rise since Nov. 11, 2016, and the Nasdaq logged its best climb over the same period since Dec. 9., 2016.

The small-cap focused Russell 2000 index (RUT; +0.28%) and the Dow Jones Transportation Average (DJT; +0.53%) also closed at all-time highs.

So for a hint of what might follow, let’s recap where Bitcoin went after that amazing run …

Bit3

I am not saying that the same will happen to the DOW in the coming weeks (and I hope it stays bullish) but there is no denying that history tends to repeat itself very reliably in the market. Plus, if our Seasonal Models are any indication, it is likely that the DOW will look like this in a month’s time.

We’ll check back on this in a month and see where it took us. I think, if anything, this takes the boredom out of trading. Heh!

And don’t forget to join me this Wednesday at 7pm if you’re interested in knowing how REAL TRADERS do their business.

Click here to get the details and register for the three-hour Introductory Session.

Happy Hunting!

Screen Shot 2017-10-01 at 1.38.39 PM

Connect with me at LinkedIn

Share
Comments Off on Happy New Year!!

Happy New Year!!

Happy New Year

Share
Comments Off on Weekly Market Update – 02 January 2018 BMO

Weekly Market Update – 02 January 2018 BMO

This is going to be a really lengthy read …
so sit back, get comfortable and get ready to be informed!

Screen Shot 2017-06-28 at 3.00.52 PM

Screen Shot 2017-12-30 at 1.03.18 PM

Week in Review: Finishing 2017 with a Whimper

After four days and 26 total hours of trading, the S&P 500 settled the holiday-shortened week down 0.4% — and only because of a sell-off in the last 30 minutes of trading on Friday.

Screen Shot 2017-12-30 at 9.56.47 AM

The remarkable thing is that there was a 19-point variance between the high and low for the week, both of which were logged on Friday.  In other words, it was an extremely range-bound market that lacked conviction on the part of buyers and sellers — until the last 30 minutes on Friday.

That lack of conviction was plain to see in the volume totals at the NYSE, which were among the lightest all year.

It was no surprise as this is a popular vacation week, and with the stock market having done so well already in 2017, many participants undoubtedly felt comfortable following pursuits that didn’t include buying or selling stocks.

It is fair to say they didn’t miss much.

The corporate news was very limited. The headline item for the week in that respect included Apple (AAPL), which declined 3.3% and closed just below its 50-day simple moving average during a week when many other stocks didn’t move much.

Apple’s difficulties stemmed from press reports on Tuesday which highlighted some analysts’ concerns about iPhone X demand possibly being weaker than expected in the company’s fiscal first quarter. Separately, Apple had some PR issues to deal with, which subsequently led to an apology from the company pertaining to the battery performance of its older iPhone models.

It would be remiss not to add that AAPL had a great 2017, increasing 46%, so it isn’t unreasonable to think it might have been subjected to some profit taking at year end anyway. The aforementioned headlines, though, helped in that regard.

The livelier trading action took place outside the stock market.

Bitcoin was the picture of volatility; the 10-yr Treasury yield came in eight basis points to 2.41%; oil prices increased 3.1% to $60.27 per barrel, marking their highest close since 2015; gold prices jumped 2.4% to $1309.20/troy oz.; and the U.S. Dollar Index slumped 1.1% to 92.30.

Economic data was limited and on the mixed side, yet the Chicago Purchasing Managers Index for December created some fanfare on Thursday with its best print (67.6) since March 2011, led by a three-and-a-half year high for the New Orders Index and a 34-year high for the Production Index.

Within the stock market, the lightly-weighted real estate sector topped the list of winners with a 1.3% gain for the week. Price returns for the remaining ten sectors ranged from -1.0% (information technology) to 0.3% (utilities).

As a reminder, the stock and bond markets will be closed on Monday for the New Year’s Day holiday and will re-open on Tuesday.

(Excerpts from Briefing.com)

Mega-cap tech posts massive year

Mega-cap technology stocks had an incredible year. Facebook (FB +55% year-to-date), Amazon (AMZN +58%), Apple (AAPL +47%), Netflix (NFLX +56%), Microsoft (MSFT +38%) and Alphabet (GOOGL +33%) all outperformed the Nasdaq 100 (QQQ +32%) and the S&P 500 (SPY +20%).

The strength in these stocks can be justified by the dominant market positions in their respective fields. It seems that fundamental drivers for these stocks will largely remain intact next year amid the secular growth in mobile, video, cloud computing and artificial intelligence. Still, it seems unrealistic to expect a repeat performance in these stocks next year.

Dollar: Dollar Index Ends 2017 on Lower Note

The U.S. Dollar Index declined 0.5% at 92.18, extending its losses for a 4th session to trade at the lowest level since mid-September on Friday. So far this year, the greenback lost more than 9 percent and is on track to book its first decline in 5 years and the biggest since 2003.

 The index gave up 1.2% this week. The bulk of today’s selling took place in overnight action as the euro—and other majors—continued capitalizing on the dollar’s weakness. The single currency has climbed above the 1.2000 mark for the first time since September 20, showing little concern for political storm clouds gathering over Italy.

Bonds: 2017 Ends on Higher Note

U.S. Treasuries ended the week—and the year—on a broadly higher note. The final trading day of 2017 was expected to be very quiet, and it did not disappoint. After starting the cash session near their flat lines, Treasuries commenced a slow ascent that continued until the close. This week’s buying helped 10s and 30s erase the bulk of their losses from last week while the rebound in 2s and 5s was more modest.

That dynamic helped undo nearly all of the yield curve steepening that took place during the week leading up to Christmas. The 2s10s spread compressed seven basis points to 53 bps this week while the 2s30s spread contracted eight basis points to 86 bps. For the year, the 2s10s spread narrowed 72 bps while the 2s30s spread compressed 100 bps. The bulk of the move took part at the front of the curve as the Federal Reserve hiked rates and signaled intentions for remaining on the rate-hike path in 2018. The bond market will be closed on Monday.

The yield curve flattening trend continued with the longer maturities falling faster against the shorter maturities. The 5s10s spread is now only 20bps.

Crude: WTI closes 2017 above $60p/b

Baker Hughes total U.S. rig count decreased by 2 to 929 following last week’s increase of 1

Screen Shot 2017-12-30 at 8.42.57 AM

Metals: Precious strengthen on seasonal run, Copper closes at 4-year high

Agriculture: Corn consolidates, Wheat and Soy strengthen

Commodity Year in Review

How have commodities performed this year? Using the Thomson Reuters/Core Commodity CRB Commodity Index (aka the CRB Index), the short answer is not so great.

The CRB Index is up just 0.6% for the year, yet that limited gain belies some big gains for some commodities. On a related note, a big move in copper prices and oil prices at the end of the year has at least helped the CRB Index close 2017 with a flourish.

The CRB is made up of 19 commodities. Here is the performance of each one YTD:

Looking ahead, the World Bank is forecasting that commodity prices are likely to rise in 2018. From here, let’s focus on some key commodities.

HG

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

JANUARY PREVIEW

January 2018 has 21 trading sessions and two holidays. January is usually a bullish month and is famous for its January Barometer prophecy – “As goes January, so goes the year”. This implies that if January closes with a gain, so should the rest of the year. But if January closes with a loss, we’re in for a tough year (although last year wasn’t). The January Barometer has an amazing 90% accuracy since 1950. Exceptions were broadly due to government or central bank interventions such as stimulus and bail outs in bearish years.

Also watch for the “First Five Days” indicator that is as reliable as the January Barometer – if the first five sessions of the year finishes with a gain, the year is often bullish. If they lose, the year has a more than 50% chance of being bearish.

January is the last month in the “Best Three Consecutive Months” in a trading year – November, December and January – that has seen the DOW make gains 16 of the last 23 years. However, 2014, 2015 and 2016 has seen January go down viciously while 2017’s January was flat/unchanged.

JANUARY TRIVIA

THE WEEK AHEAD

Reminder: U.S. markets will be closed Monday, January 1st in observance of New Years Day. 

Tuesday 02 to 05 January (Week 01)

The first week of 2018 (wk01) is bearish across all time-frames on the SPY and DIA.

Seas

The 2018 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 01;

Screen Shot 2017-12-30 at 11.20.55 AM

Key Economic Dates

The shortened week ahead is light on economic data with the most significant events being the Fed Beige Book Meeting on Wednesday and the US Non-Farm Employment Change and Unemployment Rate on Friday.

Mon 01 January

Tue 02 January

Wed 03 January

Thu 04 January

Fri 05 January

2017 IN RETROSPECT …

It has been a fabulous year in the markets. By bullish standards, this was a year to crow about;

2017 by the Numbers

From an economic standpoint, most of it was good, which drove the outperformance of the cyclical sectors:

At the start of 2017, I mentioned that rising Interest Rates would push the US market higher … and it did. Now at 1.50%, there is still has room for more hikes. The Federal Reserve, and other major central banks, will play a key role in the market’s behavior in 2018.  The Federal Reserve will have anew boss, Jerome Powell who will take over from Janet Yellen in February as Fed Chairman. Powell is broadly expected to continue Yellen’s rate hike and tightening program. Should that happen, the market will continue to rise, albeit in a volatile fashion … so watch out for those volatile corrections – I am expecting quite a few especially in the first half of 2018.

The Yield Curve will be my #1 concern as spread continue to tighten with the shorter maturities’ yields rising against the longer maturities.

Screen Shot 2017-12-30 at 12.16.25 PM

The yield on the 10-yr note dropped seven basis points in 2017 to 2.41%, which led to the narrowest spread between the 2-yr note and the 10-yr note (53 basis points) since October 2007. (A flattening spread is often viewed as a harbinger of slower economic growth.)

I will also be watching the spread between the 10yr yield and the Fed Funds Rate. For now, it’s pointing to more upside, albeit in parabolic fashion – thus my worry about severe/volatile swings in Q1 and Q2 of 2018.

I will also closely be watching Japan’s new-found renaissance.

NKK

It has been a stellar year for the Land Of The Rising Sun. Even the Yen held out against the Dollar. I suspect that Japan will be the story for 2018 as it rediscovers its potential to be a world beater again.

Stock-2018-01-adobe-640x360

SUMMARY

As we bring in the new year, let’s remember a few interesting statistics;

On a personal note, I am looking forward to the coming year as my expansion plans slowly manifests. I will be slowing on my Tutorial intakes to make time for other ventures and growth plans. But rest assured, my penchant and passion for teaching is still burning bright and I will be taking that flame to the next level in 2018. There are three batches planned for 2018 with an average of 20 new students per batch. A fourth batch will depend on demand coming from my expansion plans. We are also introducing new support classes for our graduates to look forward to in their continuing journey to improve and grow in the financial markets.

If you’re interested in a serious financial education, one that has outlasted almost all other financial workshops over the last 12 years, join me on Wednesday 10 January at 7pm to find out how a complete and holistic finance and economics program has helped so many graduates over the last one dozen years.

Register here: Pattern Trader Introductory Session, 10 January 2018.

It is going to be an exciting year ahead and I am anxious to get it started. So to all my readers, I wish you all a truly profitable 2018 and may the markets be merciful to you if you’re not!

Happy Hunting!

Screen Shot 2017-10-01 at 1.38.39 PM

Connect with me at LinkedIn

Share
Comments Off on Weekly Market Update – 18 December 2017 BMO

Weekly Market Update – 18 December 2017 BMO

Screen Shot 2017-06-28 at 3.00.52 PM

Screen Shot 2017-12-16 at 1.21.10 PM

Central Banks Take Center Stage

U.S. stocks climbed to new record highs this week as investors digested policy directives from several of the world’s most influential central banks and grew increasingly optimistic about the GOP’s chances of passing its promised tax overhaul.

The S&P 500 added 0.9%, the Dow advanced 1.3%, and the Nasdaq jumped 1.4%. All three major indices settled Friday’s session at fresh record highs. The Russell 2000 outperformed on Friday but the small-cap index closed -0.5% lower for the week.

The Federal Open Market Committee voted to raise the fed funds target range by 25 basis points to 1.25%-1.50% on Wednesday, as expected. Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari–the FOMC’s two most dovish members–dissented, saying they preferred to keep the target range unchanged.

In addition, the Fed’s so-called “dot plot” revealed that the median FOMC member still anticipates three rate hikes in 2018 and two in 2019. Both figures were unchanged from the projections released in September, even though the central bank acknowledged that overall inflation and core inflation have declined this year and are running below 2.0%.

U.S. Treasuries rallied in a curve-flattening trade on Wednesday following the decision, while the U.S. Dollar Index moved sharply lower. The 2yr-10yr spread ended the week at 52 basis points, which is six basis points below last week’s closing level. The U.S. Dollar Index finished the week higher by 0.1% at 93.94.

The flattening of the yield curve weighed on lenders, sending the S&P 500’s financial sector lower by 0.1%.

Elsewhere, the European Central Bank decided to leave its key policy rate unchanged, as expected, and reiterated that it will reduce its monthly asset purchases to EUR30 billion (from EUR60 billion) starting in January and continuing through September 2018–or beyond, if necessary.

The Bank of England also met this week, voting to leave its key rate at 0.50% and its asset purchase program at GBP435 billion, as expected.

In Washington, House and Senate Republicans reportedly reached an agreement on a final version of their tax reform bill on Wednesday, but Senator Marco Rubio (R-FL) pushed for some last-minute changes, saying on Thursday that he would vote against the measure unless it further expands the child tax credit for lower-income households.

GOP leadership worked to appease Mr. Rubio and earned his support, as well as the support of Senator Bob Corker (R-TN), on Friday. With the two Senators on board, it appears that the Republicans have enough support to pass their tax reform bill, but a final vote won’t take place until early next week.

On Wall Street, telecom shares within the S&P 500 jumped 4.0% this week, underpinned by the prospect of tax reform and the Federal Communications Commission’s decision to roll back the “net neutrality” rules put in place by the Obama administration back in 2015. The rules required broadband providers to treat all internet traffic equally.

In corporate news, Walt Disney (DIS) agreed to purchase select assets from 21st Century Fox (FOXA), including its film division and much of its TV operations, for $52.4 billion in stock. The two companies added 6.8% and 5.1%, respectively, helping the consumer discretionary sector (+1.1%) finish ahead of the broader market.

(Excerpts from Briefing.com)

Tax Relief in the Making

There’s little mystery behind today’s broad-based rally effort.  It has been forged on a sense of relief that the tax bill looks ready to make its way out of the conference committee with Senator Rubio’s backing.Senator Rubio caused a bit of a stir on Thursday when he said he would vote ‘No’ on a compromise bill that did not expand the refundability of the child tax credit.  That concern, reportedly, has been addressed and now Mr. Rubio is said to be in favor of backing the compromise bill.

The bill’s passage isn’t guaranteed until the vote in the House and Senate chambers guarantees its passing, yet there is no mistaking in today’s action that optimism is high that the bill is headed that way and eventually to the president’s desk for signing before Christmas.The Russell 2000, which was the sore spot yesterday on Mr. Rubio’s protestations, is the sweet spot today — up 1.9% and leading all major indices — as investors price in the expected benefits for domestic small-cap companies, which pay higher effective tax rates and will presumably benefit greatly from the cut in the corporate tax rate.

Another indicator pointing to the notion that it should be clear sailing ahead in the near term for the tax bill — and the stock market — is the CBOE Volatility Index.  It is down 10.8% to 9.36, as market participants are denouncing the need for hedging stock portfolios against downside risk.

That could of course spell big problems if the tax bill gets voted down, yet that seems to be far from the stock market’s base-case scenario, which is rooted in a best-case scenario of it passing and being signed into law before Christmas.

Dollar: Dollar Index Reclaims 50-Day Moving Average Again

The U.S. Dollar Index was up 0.5% at 93.96, returning above its 50-day moving average (93.80) after finding resistance near that level during Friday’s session. The dollar saw some overnight selling, but began staging a rebound during the European session, continuing its push into morning action. The morning rebound accelerated after the release of an in-line Empire Manufacturing report for December (18.0). The final thrust to a session high took place even though the November Industrial Production report (actual: 0.2%; consensus: 0.3%) missed expectations. Thanks to today’s rebound, the Index is on track for its third consecutive weekly advance, looking to eke out a slim gain of 0.1%.

Bonds: Long Bond Climbs Again

U.S. Treasuries ended the week on a mixed note, as shorter-dated maturities registered modest losses while the long bond continued its show of relative strength. A wave of selling developed in the wake of an in-line December Empire Manufacturing report (actual: 18.0) and continued through the release of below-consensus Industrial Production for November (actual: 0.2%; consensus: 0.3%). The 2-yr note and the 5-yr note saw some light intraday buying, but couldn’t climb too far above their morning lows. Meanwhile, the 10-yr note erased the bulk of its morning decline and the long bond powered to a fresh high after reclaiming its entire post-data loss. Reports from Washington suggested that the tax bill is back on track for passage after Senator Marco Rubio’s support was regained. That said, the Treasury market has questions about the plan’s ability to boost economic growth, evidenced by the decline in the 30-yr yield over the past three months. The yield curve flattening trend continued with the 2s10s spread compressing to 52 bps from last Friday’s 58 bps. The 2s30s spread contracted to 85 bps from 97 bps one week ago.

Commodities: Crude consolidates below $58p/b, Metals bounce back on seasonal run

Baker Hughes total U.S. rig count decreased by 1 to 930 following last week’s increase of 2.

Agriculture: Wheat consolidates, Corn and Soy continues weakness

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

THE NEXT TWO WEEKS AHEAD

Week 51 is the third trading week for December and the penultimate trading week of the year. Week 52 is the last trading week for 2017 and has only four sessions as Monday is Christmas Day.

Monday 18 December to 29 December (Week 51 and 52)

The fifty-first week of 2017 (wk51) is very bullish across all time-frames on the SPY and DIA.

Screen Shot 2017-12-17 at 5.13.39 PM

The fifty-second week of 2017 (wk52) is unreliably bullish over the 15 year average, volatile over 10 years and very bearish in the last 5 years on the SPY and DIA

Screen Shot 2017-12-17 at 5.13.52 PM

The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 51;

Screen Shot 2017-12-17 at 5.13.00 PM

The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 52;

Screen Shot 2017-12-17 at 5.13.27 PM

Key Economic Dates

In the coming week, the most important US releases will be the final GDP growth for Q3, personal spending, housing data and durable goods. Investors will also be waiting for: UK final GDP growth and CBI factory orders; Japan interest rate decision and trade balance; Eurozone inflation and Germany business and consumer morale. There is no significant economic data in the final week of the year.

Mon 18 December

Tue 19 December

Wed 20 December

Thu 21 December

Fri 22 December

Mon 25 December

Tue 26 December

Wed 27 December

Thu 28 December

Fri 29 December

SUMMARY

Yields are continuing to hint at 2018 weakness as the curve continued to flatten by pivoting on the belly go the curve.

CurveYTD

Even though the yields are under-par, one must consider the Central Bank’s role is the bond trade having an effect on the overall yields along the 2, 5, 10 and 30 year maturities. It would seem that given the trillions that poured into the bond market, the “new norm” on rates would be lower than in the past when the average high on yields were 4% to 5% on the 30 year.  Thus, this flattening can be construed as a pivot on the longer maturities, as was the case in December 2007/January 2008. When looking at a three-year timeframe, the pivot on the longer maturities is even more obvious.

Curve4yr

January is going to be a critical month seeing how most Inverted Yield Curves in the past have historically favoured January or Q1.

Bitcoin made a Rising Wedge with a record high 17,985 this week.

17806Wedge

This has propelled Bitcoin into the #1 biggest bubble in history.

MW-GA134_convoy_20171213123002_NS

*UPDATE at 22:00 on 17 Dec: Bitcoin makes record high 19,844.

19844

Bring on 2018!

That’s it! Just like that, a whole trading year is gone and we start a whole new cycle again in two weeks’ time. It has been a heck of a year.

My first year in independence has really opened my eyes to opportunities I never saw before and opened doors I never knew I could open. It has made me realise a bigger potential that I could not have imagined in the ten years before. It has given me a direction and purpose that didn’t exist before. I am grateful for the opportunities that have opened up for me and the promise of brighter things to come in 2018 and 2019.

With one week to go till Christmas, I’d like to take this opportunity to wish everyone a great Christmas week ahead and thank all my readers for the support and contributions that make 2017 a truly memorable year for me!

Happy Hunting!

Screen Shot 2017-10-01 at 1.38.39 PM

Connect with me at LinkedIn

 

Share
Comments Off on Weekly Market Update – 10 December 2017 BMO

Weekly Market Update – 10 December 2017 BMO

Screen Shot 2017-06-28 at 3.00.52 PM

Screen Shot 2017-12-09 at 1.38.31 PM

Waiting on Washington

Equities ticked higher this week as investors geared up for an end-of-year showdown in Washington.

The S&P 500 and the Dow Jones Industrial Average both advanced 0.4%, closing Friday’s session at fresh record highs, while the tech-heavy Nasdaq underperformed, losing 0.1%. Small caps struggled this week, pushing the Russell 2000 lower by 1.0%.

Investor sentiment was upbeat at Monday’s opening bell after the U.S. Senate passed its version of a tax reform bill over the weekend, allowing the GOP to enter the final stretch of its quest to rewrite the tax code. House and Senate Republicans are hoping to reach an agreement on a final bill and pass said bill in their respective chambers before December 22.

In addition to the GOP’s self-imposed tax reform deadline, December 22 is the new end date for government funding after Congress agreed to a two-week stopgap spending bill on Thursday evening. The risk of a government shutdown was on investors’ minds throughout the week, helping to keep the bulls in check.

With the legislative agenda for the rest of the year virtually set, investors appeared to be in wait-and-see mode for much of the week, taking some profits and readjusting their portfolios. However, the Employment Situation Report for November, which was released on Friday, helped equities finish the week on a positive note.

The Employment Situation Report for November showed a larger-than-expected increase in nonfarm payrolls (228K actual vs 190K consensus) and a smaller-than-expected rise in average hourly earnings (+0.2% actual vs +0.3% consensus).

In other words, job growth has remained strong while wages–which are positively correlated with inflation–have remained relatively subdued. This combination has proven to be highly beneficial for the stock market as it points to steady economic growth but leaves out the inflationary concerns that typically accompany said growth.

Corporate news was pretty light this week, but it’s worth noting that CVS Health (CVS) acquired health insurer Aetna (AET) for $207 per share in cash and stock. That price represents a premium of about 29% to where Aetna shares were trading before the Wall Street Journal reported that the companies were in talks in October.

The S&P 500’s eleven sectors finished the week mixed, with seven settling in the green and four closing in the red. The financial sector was the top performer, adding 1.5%, followed closely by the industrial group (+1.4%). Within the industrial space, transports showed particular strength, pushing the Dow Jones Transportation Average higher by 2.1%.

On the downside, the energy sector lost 0.7% amid a decrease in the price of crude oil; West Texas Intermediate crude futures declined 1.8% to $57.30 per barrel. The utilities space (-1.0%) also struggled as energy providers like Edison (EIX) faced outages due to wild fires in Southern California; EIX shares lost 11.1% for the week.

A positive vibe from overseas equity markets on Friday also contributed to the upbeat sentiment on Wall Street. Stocks in the Asia-Pacific region finished Friday broadly higher as investors rallied around China’s better-than-expected November trade surplus (+$40.21 billion actual vs +$35.00 billion expected). Japan’s Nikkei added 1.4%, finishing flat for the week.

Elsewhere, the Euro Stoxx 50 settled with a gain of 0.6% after the UK and the European Union reached an agreement on Brexit divorce terms. Britain will pay as much as GBP39 billion to complete the separation and there will be no hard border between Ireland and Northern Ireland. Talks will now turn to future trade relations.

In addition, Congress’ decision to pass a two-week stopgap spending bill, which delayed an impending government shutdown, helped underpin Friday’s advance.

Looking ahead, the Fed is widely expected to announce a rate hike of 25 basis points next week, which would bring the fed funds target range to 1.25%-1.50%.

(Excerpts from Briefing.com)

Employment Situation Report

Dollar: 50-Day Moving Average Reclaimed

Bonds: True-to-Trend Jobs Report Elicits Muted Response

Commodities: Crude closes below $58p/b, Metals continue weakness

Baker Hughes total U.S. rig count increased by 2 to 931 following last week’s increase of 6.

Agriculture: Grains retreat

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

THE WEEK AHEAD

Week 50 is the second trading week for December and expiration week (Triple Witching) for December contracts.

Monday 11 December to 15 December (Week 50)

The fiftieth week of 2017 (wk50) is bullish over the 5 year average and bearish over the 10 year average on our seasonal models on the SPY and DIA. The 15 year average is bullish on the DIA and bearish on the SPY

Screen Shot 2017-12-09 at 6.45.52 PM

The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 50;

Screen Shot 2017-12-09 at 6.45.19 PM

Key Economic Dates

Next week, the most important event will be the Fed monetary policy decision. The ECB and the BoE will also provide an update on their monetary policy. Other key data include: US inflation rate, retail trade, industrial output and PMIs; UK inflation and unemployment; PMIs for the Eurozone, Germany and France; and China factory output and retail sales.

Mon 11 December

Tue 12 December

Wed 13 December

Thu 14 December

Fri 15 December

SUMMARY

Bitcoin has been the rage for the last two weeks. This week, the cryptocurrency broke all sorts of records by making the most gains in the quickest time. Barely breaking above 15000 on Wednesday by gaining 1000 points in a day, Bitcoin went on to get above 16000 in four hours on Thursday and then broke to 17,612 (+23%) that evening.

17230

This has become the second most vertical chart in financial history, after Tulip Mania.

MW-FZ607_tulips_20171205113202_NS

In the age of the “Everything Bubble” bubble, this one stands out as the most impressive … and the scariest of them all. And oh … the price fell straight back down below 15,000 and is languishing at 14,100 over the weekend.

14866

Friday AMC

14160

Sunday morning

The nature of the bubbled economy also brings out the scams, cheats and failures as liquidity dries up and financial products falter, as cash-flows slow and credit gets tight, and as costs rise and profits falter.

img_6260web_2CP_8617ST_20170905_MRSIXNEW_3395637livery-tagg_20161216_003721

Even having a huge and luxurious office next to SGX, your own painted livery on an international airline and having ministers and news networks associated to the business does not assure investors that the worst won’t happen. It was very upsetting to drive past the building to see a huge “FOR RENT” sign right on the door of the once behemoth institution.

This is why I have always advocated that everyone should take the effort to learn the business before investing in something you don’t understand or something a sale-person sold you. No matter how good, real and convincing the package looks, if you don’t know anything and everything about it, don’t buy it.

Screen Shot 2017-12-09 at 7.08.30 PM

http://www.tnp.sg/news/business/investors-file-police-reports-over-fintech-firm-sixcapital

BONUS!

Here’s an excerpt of our Annual Christmas Gathering regarding the yield curve and a certain pattern that has preceded every major economic and market downturn. Enjoy!

Happy Hunting!

Screen Shot 2017-12-03 at 5.51.52 PM

Find out more about the Pattern Trader Tutorial! CLICK HERE!

Screen Shot 2017-10-01 at 1.38.39 PM

Connect with me at LinkedIn

Share
Comments Off on Pattern Trader Tutorial Preview

Pattern Trader Tutorial Preview

Pattern Trader™ Tutorial & Tools

PTT86 1st day

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

It 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 significantly, the Tutorial has outlived almost all its peers 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.

The knowledge gained from the Tutorial will stand the graduate in good stead both online and offline.

Register for the next Preview to find out how a complete and holistic finance and economics education can benefit you in more ways than just trading and investing. It is everything you need to know to be smarter and wiser about your money.

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. 

FCMY04 copyThis 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.

Spend a mind-blowing session with Conrad Alvin Lim, Macrotrader, as he shares ideas on how traders like himself turn macroeconomics into trading and investing opportunities for the short term and long term. He 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.

Register for the next Preview to find out why only the serious and realistic financiers have benefitted from this complete and holistic approach. It is for this reason that the Pattern Trader™ Tutorial has been the preferred choice amongst professional traders, remisiers and dealers for over ten years.

PTTadBannerGold

Tutorial Details: PTT93, Mar 02 to 04, 09 to 11, 2018

Date & Time:
13 Dec 2017, Wednesday,
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)

For further queries, please email support@patterntrader.com

Share
Comments Off on Pattern Trader™ Introductory Session

Pattern Trader™ Introductory Session

Screen Shot 2017-12-03 at 5.51.52 PM

“I have tried so many trading strategies & they are all burning a big hole in my pocket! I’m so FRUSTRATED!”

If this sounds like you, you need to attend this 3-hour session by this veteran trader & teacher, Conrad Alvin Lim.

Trading is a BRUTAL business – people literally die in this business. And if you want to be a trader, you *must* be prepared to work hard and study it as a real business. Trading is a real business and you must first learn to trade well to be able to trade profitably, instead of relying on formulas and “plug & play” strategies.

Learn the truth! Register NOW: http://tinyurl.com/pttpreviewv2

The Pattern Trader™ Tutorial’s mission has been to ensure that no one ever has go through those painful lessons that most novices have to endure. You must attend the Pattern Trader Introductory Session, to find out:-

When you know all these and more, you will be in better control of your finances and be a better trader.

Register NOW: http://tinyurl.com/pttpreviewv2

With more than 12 years in this business, more than 2000 traders have learnt to plan their trades the right way and find an approach that suits their personality & lifestyle.

“Conrad has more than 12 years’ experience in trading and investing. He has been very generous to share his vast knowledge and experience with his students. I got inspired by my friend’s (from the same cohort) trading results and was inspired to continue learning to improve my trading journey.” ~ Nelson Ho

Therefore, before you throw your hard-earned money away, you must listen to the Introductory Session to find out what you need to know to survive the financial markets.

Register NOW for the 3-hour session here at http://tinyurl.com/pttpreviewv2

It promises to be an engaging & informative session with no gimmicks and no hard-selling! See you there!

Screen Shot 2017-12-03 at 5.54.34 PM

Share
Comments Off on Weekly Market Update – 04 December 2017 BMO

Weekly Market Update – 04 December 2017 BMO

Screen Shot 2017-06-28 at 3.00.52 PM

Screen Shot 2017-12-02 at 2.39.55 PM

Bullish Ahead of Senate Tax Vote

U.S. equities advanced this week, fueled by the prospect of a tax overhaul.

The Dow led the charge, moving higher by 2.9%, followed from a distance by the S&P 500 and the Russell 2000, which added 1.5% and 1.2%, respectively. Meanwhile, the tech-heavy Nasdaq declined 0.6% as technology stocks fell to some profit taking following a big year-to-date run.

Investors kept an eye on Washington throughout the week, awaiting the Senate’s vote on its version of a tax reform bill. Things appeared to be progressing nicely as the bill made its way through the Senate Budget Committee on Tuesday and Senator John McCain (R-AZ) voiced his support for the measure on Thursday.

However, the effort hit a bump in the road on Thursday evening when the Senate parliamentarian ruled that a revenue trigger within the bill–which would have raised taxes in the future if economic growth failed to make up for lost tax revenue–is not allowed under Senate rules.

The trigger was a key provision for several GOP Senators who are concerned about the tax overhaul’s potential impact on the national debt.

Senate Majority Leader Mitch McConnell (R-KY) suggested on Friday afternoon that a compromise to appease the aforementioned debt concerns had been reached, saying that the GOP has enough votes to pass the bill. However, an official vote has yet to take place.

The Senate’s promising progress on tax reform largely fueled this week’s rally, but equities also received support from Jerome Powell’s Fed Chair confirmation hearing, which took place on Tuesday. Mr. Powell’s comments were largely in line with the Fed’s current policy rhetoric, but he did sound a little more lax in the area of regulation.

There were a few developments that worked against the bulls this week, perhaps the most notable of which was former National Security Advisor Michael Flynn’s plea deal with Special Counsel Robert Mueller’s team–which is investigating Russia’s alleged interference in the 2016 U.S. presidential election.

Mr. Flynn pleaded guilty to lying to the FBI about his contacts with a Russian ambassador to the United States and agreed to cooperate with Mr. Mueller’s investigation. An ABC report indicated that Mr. Flynn is willing to answer questions about President Donald Trump, which reignited fears about a potential impeachment.

Also, North Korea launched a ballistic missile on Tuesday that landed in the Sea of Japan–specifically in Japan’s exclusive economic zone.

Nine of eleven sectors finished the week in positive territory. The top-performing groups were telecom services (+6.7%), financials (+5.2%), industrials (+2.9%), and energy (+2.7%), while the weakest sectors were information technology (-2.0%) and real estate (-0.5%).

The energy sector rallied after OPEC and non-OPEC nations, including Russia, agreed on Thursday to extend their production cut agreement by another nine months, as expected. Meanwhile, West Texas Intermediate crude futures finished in the red for just the second time in eight weeks, dropping 1.0% to $58.36 per barrel.

Within the industrial sector, transports showed particular strength, pushing the Dow Jones Transportation Average higher by 5.9%.

Following this week’s events, the CME FedWatch Tool still places the chances of a December rate hike at 100.0%.

(Excerpts from Briefing.com)

Dollar: Index Trims Weekly Gain

Bonds: Treasuries Climb; Spreads Tighten

Commodities: Crude Consolidates above $58p/b, Metals retreat

Baker Hughes total U.S. rig count increased by 8 to 923.

Agriculture: Corn and Wheat continues to rise, Soy consolidates

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

THE WEEK AHEAD

Week 49 is the first trading week for December and the start of the month of the trading year. December 2017 has 20 trading sessions and one public holiday (Christmas, Monday 25 December).

Monday 04 December to 08 December (Week 49)

The forty-ninth week of 2017 (wk49) is flat-to-bearish over 10 and 15 year averages and very bearish over the five year average on our seasonal models on the SPY and DIA.

Screen Shot 2017-12-02 at 3.33.48 PM

The 2017 Stock Trader’s Almanac’s averages for the benchmark indices (based on 21 years) for week 49;

Screen Shot 2017-12-02 at 3.33.35 PM

Key Economic Dates

The coming week will see the November jobs report in the US as the most important event. Elsewhere, China inflation and trade; Australia and South Africa GDP growth and interest rate decisions for India, Australia, Canada and Brazil will also be in the spotlight.

Mon 04 December

Tue 05 December

Wed 06 December

Thu 07 December

Fri 08 December

SUMMARY

Yields have closed to its tightest in ten years with the spreads between the 2/5, 5/10 and 10/30 at 4obps or less. The 5/10 is only 24bps and it won’t take much to flatten and invert from here.

Yields

The last two weeks have seen the benchmarks perform very much against its historical performance and in a most divergent manner. The last time I remember the benchmarks behaving so erratically was in August/September 2007 and January/February 2012.

If history is indeed repeating itself, then keep your eyes on the Yield Curve and the VIX.

VIX

And don’t get caught out if and when the fireworks begin.

Happy Hunting!

Screen Shot 2017-12-03 at 5.51.52 PM

Find out more about the Pattern Trader Tutorial! CLICK HERE!

Screen Shot 2017-10-01 at 1.38.39 PM

Connect with me at LinkedIn

Share