Tag: investing

Indices Forecast: #SP500,#DAX,#NASDAQ100 (3 May 2024

On By Financial Consultant _Forex_Gold Xauusd| Fund ManagerIn Indices, INDICESLeave a comment

DAX Forecast: Looks for Base After Pullback

  • The German DAX has rallied just a bit during the early hours on Thursday as it looks like we are trying to recover a bit.
  • The 18,000 euros level is an area that obviously will attract a lot of attention due to the fact that it is a large, round, psychologically significant figure, but it’s also an area where we have seen some noise previously.
  • The market at this point in time continues to see the 50 day EMA underneath as potential support.
  • In this type of environment, I think we continue to see a lot of consolidation as we try to sort out which direction we are going in the longer term.

Trend is Still Positive

The DAX is bullish overall, but I think also this is a situation where if we can break the candlestick from the last couple of days then we could go looking to the 18,500 euro level. Underneath the 50-day EMA there is a lot of support that we’ve seen recently so I’m not interested in shorting this market anytime soon.

That being said, the 17,500 level is an area that I think a lot of people will be paying attention to because if we were to give that up, then the uptrend could be threatened. Keep in mind the DAX is the gateway to Europe for most traders so they will look to it as a place to put money to work initially. In that sense, you can look at the DAX as a harbinger of what happens on the rest of the continent such as trading in the MIB in Italy or the AMX in Amsterdam etc. At this point it looks like we’re trying to beat back some of this negativity, but I think we’ve got some choppy and volatile days ahead

When you get this type of choppy volatility, you are better off using small positions, but given enough time I do think that we continue to see an attempt to rally. If we don’t rally in this market, and start to break down, then the real trade would be to short some of the smaller European indices.

S&P 500 Forecast: Continues to Consolidate (SIGNAL)

  • Potential signal: if we break above the top of the wipeout candlestick from Tuesday, near the 5140 level, I would be a buyer and go looking toward the 5275 level. Underneath, the 5000 level would be my stop loss.
  • Ultimately, this is a market that I do think has a lot of support underneath it, but the 5000 level is an area that I think he is psychologically important as well as potentially structurally supportive as well. In fact, I think it’s an area of support that extends down to the 4925 level.

The 50-Day EMA sits just above, offering a certain amount of resistance. If we were to break above there, then the market is likely to go looking toward the 5125 level. Breaking above that level opens up the possibility of a move toward the 5300 level, but we would need to see some type of momentum in the market. That being said, it’s probably only a matter of time before Wall Street finds a reason to start pushing a bullish narrative again.

Interest Rate Markets and Jobs

Friday is the nonfarm payroll announcement, and that of course will have a major influence on what happens next. Ultimately, which you need to watch is interest rates coming out of the 10 year note in the United States, because that’s the only thing that Wall Street cares about, whether or not it is going to get cheap money. This has absolutely nothing to do with the economy, because as an American I can tell you that things are getting rapidly more expensive. Wall Street is worried about getting cheap money to push around and take advantage of liquidity.

This is a bit ironic, considering we are in the midst of earning season, but quite frankly earnings have nothing to do with what happens with the stock. That’s like assuming that stocks have something to do with the economy. It’s a transmission of liquidity like it has been since the Great Financial Crisis. This is a market that is currently trying to sort out whether or not it has enough liquidity to support it. If it does, it will rise. If it does not, it will fall. At this point, I think the only thing you can count on is a lot of noise.

Nasdaq 100: Sandwiched, Watch US 10-Year Treasury Yield Next

  • Nasdaq 100 has exhibited short-term intraday wild gyrations of 3% to 4% in opposite directions since last week.
  • Today’s data focus will be on US non-farm payrolls and ISM Services PMI for April to offer clues on whether the stagflation risk narrative is still alive.
  • Macro factors such as the movement of the US 10-year Treasury yield are likely to take over the driver’s seat over micro factors (earnings results) in the next two weeks.
  • Key levels on the US 10-year Treasury yield to watch are 4.70% (above, likely to be bearish for Nasdaq 100) and 4.58% (below, bullish bias for Nasdaq 100).

Since our last publication, the Nasdaq 100 has continued to inch lower from its current all-time high level of 18,465 printed on 21 March 2024. It has just ended April with a monthly loss of -4.46%, its worst monthly performance since September 2023 after its prior five consecutive months of positive returns.

So far it has recorded a maximum drawdown of -8% from its current all-time high to the recent 19 April 2024 low of 16,974, and current episodes of minor rebounds in price actions have been rejected by the downward slopping 20 and 50-day moving averages; the hallmark of a potential on-going medium-term corrective decline sequence within its longer-term major uptrend phase.

On a shorter-term intraday basis, wild gyrations between a range of 3% to 4% in opposite directions have been seen on the Nasdaq 100 due to several significant risk events, and data releases that unfolded this week, two of the “Magnificent 7 group of mega-cap US stocks earnings results (Amazon and Apple), US ISM Manufacturing PMI, US Treasury refunding requirements, and the FOMC monetary policy meeting.

These events and data sets offered conflicting signals on the state of the US economy; stagflation risk is still alive but negated by the Fed’s upcoming Quantitative Tightening (QT) taper initiative to kickstart in June where the monthly amount of US Treasuries roll-off in the Fed’s balance sheet will be reduced to US$25 billion from US$60 billion.

Hence, the QT taper initiative has offered a relief to potentially cap any adverse liquidity squeeze in the US financial system that can trigger a spike in short-term and overnight interest rates as a lesser amount of banks’ reverses may be needed to fund the US Treasury general account (TGA) as the amount in the Fed’s overnight reverse repos facility (the primary source of funding for TGA replenishment since September 2023) has dwindled to almost zero (US$428.68 billion as of 2 May 2024) from a peak of US$2.55 trillion in December 2022.

Watch US NFP & ISM Services PMI for more clarity on the state of the US economy

There will be two more key pieces of economic data to digest before we end this hectic and volatile week, US non-farm payrolls for April where there may be a risk of upside surprise as consensus expectations have been lowballed to +181K jobs added after a surprise rosy print of +232K jobs in March. April’s ISM Services PMI on the health of the US services sector will be out later; still in an expansionary mode (above 50 reading) but the pace of expansion has slowed since the start of the year with last month’s March print of 51.1 versus 53.4 seen in January. If April’s number comes in below expectations of 52 and March’s 51.1, the stagflation risk narrative is likely to gain traction again.

US 10-year Treasury yield may dictate Nasdaq 100’s next intermediate moves

A clearance above 4.70% resistance on the US 10-year Treasury yield (inverted) may trigger another potential downleg in the Nasdaq 100 with its key medium-term support zone coming in at 16,560/290 (also the 200-day moving average).

On the flip side, a break below 4.58% near-term support on the US 10-year Treasury yield (inverted) is likely to see a continuation of the rebound on the Nasdaq 100 from the19 April 2024 low to expose the next intermediate resistance at 17,900

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Monthly Forecast : #NASDAQ100 & #SP500 (May 2024)

On By Financial Consultant _Forex_Gold Xauusd| Fund ManagerIn ForexLeave a comment

NASDAQ 100 Monthly Forecast: May 2024

  • The NASDAQ 100 has been all over the place during the month of April, which is not a huge surprise considering that there are a lot of uncertainties around the world.
  • After all, the NASDAQ 100 is an index that is highly sensitive to risk appetite, as it is some of the higher growth companies.
  • Furthermore, the month of April has seen earning season kickoff at the end of it, so that obviously has a major influence on what happens in the NASDAQ 100 as well.

The 17,000 level has proven itself to be important in this market, and therefore I think you need to look at it through the prism of a “floor in the market” that we are dealing with. If the market were to break down below the 17,000 level, then it’s possible that we could drop another 1000 points down to the 16,000 level. While I don’t necessarily have that as a target going forward, I do recognize that it is something important to keep in the back of your mind.

At this point in time, I believe that the 18,500 level is an area that traders will continue to look to as a potential target, as it was significant resistance previously. With that being the case, the market is likely to continue to see a lot of volatility, but I think every time we pull back, it’s very likely that buyers will come in and try to pick up a little bit of value.

One thing is for sure, it seems like the Wall Street traders out there continue to find reasons to buy stocks regardless. That being said, I think every dip will more likely than not capture a certain amount of attention, and therefore I think given enough time we could really start to see this market take off. Over the longer term, I think you continue to see a lot of people jumping into this market, but there may be a lot of pain between now and whenever we find momentum. Longer-term, it would not surprise me at all to see the NASDAQ 100 go looking to the 20,000 level, but it may not happen during the month of May as we are probably going to spend most of her time digesting some of the massive gains that we had seen previously.

S&P 500 Monthly Forecast: May 2024

  • The S&P 500 has been very noisy for the month of April, which should not be a huge surprise considering that we have seen so much in the way of upward momentum.
  • Sooner or later, we had to consolidate, and therefore work off some of the excess froth that had been built up in the markets.
  • I think given enough time, this is a market that will eventually take off to the upside again, and as we are going through earnings season, it does make a certain amount of sense the volatility would be part of the market anyway.

At this point, I have to assume that the S&P 500 remains more or less a “buy on the dips” market, as we have seen so much in the way of upward pressure of the longer term, and therefore a lot of traders will be out there wishing that they had gotten involved that in earlier level. However, they did get a little bit of an opportunity to pick up “cheap contracts” in this market, therefore I think that’s part of what we are seeing happen right now. Underneath, we have the 5000 level that will almost certainly offer a significant amount of support, and then after that we have the 4900 level. Anything below the 4900 level could open up a major correction.

All things being equal, this is a market that will continue to see a lot of volatility during this time of year, but I also believe that we have a situation where plenty of value hunters are willing to get involved. If we can break above the 5300 level, then it’s likely that the S&P 500 will go looking to the 5500 level. Underneath, if we were to break down then the 50-We EMA will be right around the 4700 level, and it could be a bit of support as well. That being said, at the end of the month of April, it looks like the buyers are starting the flexor muscles again, so I think it’s probably only a matter of time before we continue to go higher. Ultimately, I think you have a noisy market, but you still have to look at this through the prism of a market that is still bullish from a long-term perspective.

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#Gold and #WTI #CrudeOil Monthly Forecast: May 2024

On By Financial Consultant _Forex_Gold Xauusd| Fund ManagerIn ForexLeave a comment

Gold Monthly Forecast: May 2024

  • Gold continues to be very noisy as the month of April was very choppy.
  • This does make a certain amount of sense considering that gold shot straight up in the air over the course of the last couple of months, and therefore I think we needed to spend a little bit of time breathing and perhaps even soaking in some of the momentum.

Because of this, I think the month of May will be very difficult. I don’t mean this in the sense that I think the month of May will be necessarily negative, just that the markets could see a little bit in the way of volatility that causes issues. Ultimately, in the short term I do think that anytime we get a significant pullback, there will be plenty of buyers willing to jump in and take advantage of this market. With that being said, gold is a market that has a lot of different things working for it at the same time and therefore I think you have to look at this through the prism of whether or not risk appetite is increasing or falling, as well as many other things.

Looking at this chart, it’s obviously a bullish one, so at this point in time I remain very bullish on gold. That doesn’t mean that we will get a significant pullback, but I would probably keep an eye on this market as one that is a good way to play risk appetite. Furthermore, we also have to pay close attention to the interest rate markets, because they continue to see a lot of higher rates, and that has people a bit concerned. However, if we were to break down below there, then the $2200 level could be an area that I would become even more aggressive at. After all, that just means that gold is much cheaper. As far as buying at these high levels, then I think you have to be a little bit more cautious in the sense that we are a bit overstretched.

I suspect that most of this month will probably be about consolidation, but I also recognize that we will possibly break out to the upside or even downside, but either way the trend will remain the same. In other words, this is a “long only market” at the moment.

WTI Crude Oil Monthly Forecast: May 2024

  • The West Texas Intermediate Crude Oil market has been very noisy during the month of April as we continue to see a lot of tension in the Middle East.

At this point though, it looks like the war is not going to spread any further, and I think a lot of traders are starting to relax a bit due to that. We had initially seen the market jump, but since then we have seen nerves settle a bit as the Iranians chose not to accelerate the war itself. That being said, you need to keep in mind that there is a certain amount of geopolitical risk when it comes to this market, and therefore you have to be very cautious about getting too aggressive.

Underneath, we have the $80 level and I think the $80 level end up being a short-term floor in the market. This is as the $85 level above offers a certain amount of resistance. After that, then we have the $87.50 level offering significant resistance as well. Ultimately, we could go racing toward the $90 level, but I think at this point in time we need to see some type of specific reason. After all, we do have a cyclical trade in the fact that the demand for crude oil tend to pick up this time of year, but at the end of the day, the supply isn’t as bad as it once was feared to be.

That being said, the risks in this market are probably higher to the upside than they are to the downside, as there are so many undeterminable geopolitical issues that could come in and cause chaos in this market. Because of this, I look at pullbacks as a buying opportunity and you probably will get that during the month of May. I’d be especially interested near the $80 level, but it doesn’t necessarily have to be in that area. Quite frankly, the lower we go, the more interested I am in buying in this market. On the other hand, this is a market that I think will continue to see a lot of volatility so be cautious with your position sizing. Longer-term, this is a market that I do think breaks higher and by the end of May it would not surprise me at all to see this market closer to the $87.50 level above.

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BTCUSD #Forexsignal: Threatening Major Bearish Breakdown Below $59,000 (01 May 2024)

On By Financial Consultant _Forex_Gold Xauusd| Fund ManagerIn ForexLeave a comment

Today’s BTC/USD Signals

  • Risk 0.75% per trade.
  • Trades must be entered before 5pm Tokyo time Thursday.

Long Trade Ideas

  • Long entry after a bullish price action reversal on the H1 timeframe following the next touch of $59,544 or $55,425.
  • Place the stop loss $100 below the local swing low.
  • Adjust the stop loss to break even once the trade is $100 in profit by price.
  • Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.

Short Trade Ideas

  • Go short after a bearish price action reversal on the H1 timeframe following the next touch of $60,765 or $61,468, or $62,013.
  • Place the stop loss $100 above the local swing high.
  • Adjust the stop loss to break even once the trade is $100 in profit by price.
  • Remove 50% of the position as profit when the trade is $100 in profit by price and leave the remainder of the position to ride.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

BTC/USD Analysis

I wrote in my previous BTC/USD analysis about three weeks ago that the best opportunity was likely to be a bearish breakdown below the ascending trend line and the horizontal support level at $68,507. This was a good call over the longer term, as the bearish breakdown eventually came, but it did not come that day.

The technical picture has become much more bearish and seems to have reached a crucial point as the price weighs heavy on an area of support confluent with the round number at $69,000. This area has acted as support over recent week, holding several times, but seems ripe for a breakdown.

There are no support levels below until about $55,000 so the price has quite a lot of room to fall.

This bearishness is part of a longer-term pattern of a topping out above $70,000. The price chart below is dominated by a descending bearish trend line, and new lower resistance levels printed by the price action.

There are fundamental and sentimental reasons which reinforce the bearish technical picture:

  • Risky assets, especially commodities, are selling off, and Bitcoin is no exception.
  • The US Dollar is strong, trading very close to its 6-month high.
  • The Federal Reserve is taking a hawkish approach, which tends to boost the US Dollar against risky assets such as Bitcoin.

So, I will look for a short trade today. The best entry signal will probably be two consecutive lower hourly closes below $59,000. This will be likely to lead to a sharp drop if it happens, hopefully allowing some quick profit for day traders.

Regarding the US Dollar, there will be releases today of the ADP Non-Farm Employment Change forecast at 1:15pm London time, Final Manufacturing PMI at 2:45pm, ISM Manufacturing PMI and JOLTS Job Openings at 3pm, and the Federal Funds Rate and FOMC Statement at 7pm.

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HongKong50 Forecast: Hits Massive Resistance (01 May 2024)

On By Financial Consultant _Forex_Gold Xauusd| Fund ManagerIn ForexLeave a comment
  • The Hong Kong 50, the benchmark index of the Hong Kong Stock Exchange, has ran into a bit of a brick wall over the last 36 hours in the form of HK$18,000.
  • With this being the case, it looks like the market is due for some type of pullback, but it’ll be interesting to see whether or not we can find buyers underneath.
  • This might be a backdoor way to play Chinese equities, as you get the stability of Hong Kong without a lot of the hassles of trading on the mainland.

Technical Analysis

The shooting star from the Monday session hitting the HK$18,000 level suggests that we are overdone and it’s also worth noting that the HK$18,000 level has previously been resistance. That being said it does make a certain amount of sense that we would see a pullback at this point, and we could reach down toward the 200-Day EMA. The HK$17,250 level features that indicator, so that might be where we end up. Any type of bounce in that area should be thought of as a potential buying opportunity, but I would need to see that on the daily candlestick.

On the other hand, if we were to break down below the 200-Day EMA, then it’s likely that we could go down to the HK$16,600, which is an area that we have seen a lot of noise previously and of course also features the 50-Day EMA. However, you can also make the argument that we break above the HK$18,000 level, we could really start to take off to the upside, reaching toward the HK$19,250 region.

In general, you need to see this as a market that is a way to play China, but it is also a way to play the overall Asian region. It’s also worth noting that it is highly sensitive to the global markets, and of course risk appetite. So even if you don’t trade this index itself, you can use it as a proxy for how people feel about investing in Asia, which in its sense is also the same way they feel about anything that’s not based in the United States.

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