Friday, January 13, 2017

Wall Street want a less mediatic Trump

As I glimpsed yesterday, Trump's first press conference brought a pretty bearish tone to the market. It was a speech full of indefinitions, vagueness and phrases, without giving details, for example, of its fiscal policy and taxes. This translates, in today's opening, into a strong sell off: SPX at -0.80%, all sectors in red, treasury bonds up and dollar /DX down (-0.77%), losing in front of all his world pairs. The worst day of the market since October, until now. We will see tomorrow, Friday, if the earnings of the big banks (JPMorgan JPM, Wells Fargo WFC and Bank of America BAC), confirm the Trump rally.

It is foreseeable that, at the beginning, the position will be great for Trump. Because of this the tone of his speech will have to change: stop being as media and exaggerated as in the campaign and take the profile that his position requires. When you officially take office, you will be required to make specific and unambiguous definitions. Hopefully change your style because I perceive a great disappointment on Wall Street, translated today in the results.

Trump twit sinks Health sector

Of the little concrete thing that said yesterday Trump, the health sector XLV, that came improving, was the most beaten when criticizing strongly to the pharmaceutical sector IBB ('drug-makers are getting away with murder'), reason why I think it is prudent to avoid this sector until having more precise definitions. Read more here.

It´s not the first time that a Trump twit stir the markets. Health sector, the new victim.

Technology sector in high levels that seem dot-com years

A couple of notes for the mid term: The technology sector XLK is coming, slowly but surely, to the high levels it had in the dot-com years. It took 17 years to do it, and unlike those years, this time with very solid foundations and companies like the FAANG (Facebook, Apple, Amazon, Netflix and Google) leading. Attentive to that level of resistance, which this year can be broken.

The technology sector, 20 years after the dot-com bubble, now near those record highs.

The popular Bitcoin

Bitcoin, the digital currency, increasingly sounds on Wall Street. It had a meteoric rise in its 'value', but also a lot of distrust and disbelief, since it was created in 2009. Banks today are taking it more and more seriously, and there are already funds interested in creating etfs for trading on the NYSE, as you can read here. For the moment you can follow its evolution with the NYXBT index. To take into account for this 2017, with risk management.

Be careful with the bitcoin and the bubble its creating.
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Tuesday, January 10, 2017

Commodities: prospects for January

MACD bear divergence on S&P500

The MACD indicator generally gives good results in indices such as the SPX. As you can see there is a clear bear divergence these days, similar to the one that occurred in mid-2016, which starts the usual technical corrections. Remember, it is fatal to do trading based on a single technical data. This technical detail, you have to read it in combination with the news, in this case the first press conference of Trump, tomorrow, and what his secretary Tillerson (former Exxon XOM CEO) announces, events that I presume will have a bearish corrector effect in some sectors of the market, more than others.

To my taste, the most interesting moves to trade this week will be in the commodities, which I detail below.

The /ES July-August bear divergence triggered the pullback of September. 
A similar figure has been repeating these days.

Health sector in strong recovery

The Health sector XLV has been recovering, with 6 sessions in a row, after being the least favored initially with Trump's triumph. His opposition to Obamacare, the universal health program promoted by Obama, hit this sector hard, as you can read here

This week the Annual Healthcare Conference is being held in San Francisco, the largest of the year, where the Biotech subsector (followed by the IBB index) will be the main protagonist. Finished it, we will see the conclusions and the main favored stocks.

Main economic events of the week in the US, basic for good trading on Wall Street.

Commodities Update: Gas, Gold, Crude Oil, Copper

- Speculative movements of natural gas /NG, make it rise today 6% after several days of falls (of the order of 20%) in the news of a winter not as cold as predicted in December, leading to lower gas consumption. However, nothing guarantees that this increase will continue, it is simply an obvious technical correction. Safer is to wait for the results of inventories, this Thursday, and see the weather as it responds in these weeks. If you want more risk, the very volatile triple-rate etf UGAZ and DGAZ, bullish and bearish, take advantage of the momentum of the commodity.

 - The gold /GC is recovering, reaching its highest point of the month, this before the certain weakness of the dollar after its meteoric boost post-Trump. At the moment it is an ideal commodity only to speculate in the short term, just with the first Trump actions and the evolution of the SPX will be confirmed if the gold will have a good 2017. The etf 3X NUGT and DUST for the more seasoned.

- Crude oil /CL returns to its usual uncertainty, with doubts about breach of the stipulated cuts, both by OPEC and non-OPEC countries, added to the proven increase in reserves in the US and its fracking, outside these treaties, trying to take advantage of the situation, as I mentioned earlier. Today falls again 2% after the rise of last week. I'm waiting tomorrow the inventory data to decide to trade here.

Crude, gas and gold: in daily charts of the last 5 months to notice their different tendencies.

- Copper /HG, the main material for construction, had a breakout, breaking resistances, after the election of Trump and his offer to 'rebuild America', to then enter in December in technical correction. Today he seems to find a solid support in 38.2% of his Fibonacci, already for several days, and with his MACD changing to positive. In addition, today was the news of increased inflation in China, its main market, signal of secure demand.  The JJC etf follows it quite well, and is a good trading alternative for this month.

The 38.2% of its Fibonacci seems good technical support. 
Copper today up 3.4%, its highest monthly rise.

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Thursday, January 5, 2017

T-Bonds on its best day in 6 months

"Buy the election, sell the inauguration"

I support my impression, in the sense that I estimate the rally on Wall Street will continue even a few days more, until close to the assumption to the command of Trump and then come a necessary correction. Morgan Stanley sums it up in an elegant phrase  'Buy the election, sell the inauguration'.

T-Bonds on its best day in 6 months

Yield of 30-year US Treasury bonds TYX today reached 2.96 less than the psychological 3%, its minimum in 5 weeks. Something similar with the 10-year notes, which fell sharply today, standing at 2.36%, all motivated by the poor ADP employment data plus the drop in crude oil prices yesterday, lower inflation and higher bond prices. This has led the yield curve to adopt the flat form, the ideal strategy to buy long-term bonds, or to sell short-term bonds.
The Yield Curve: the short-term bonds depends on the Fed and its RateHikes, the long-term inflation. Today the curve is flattening (Bull Flattener) after the strong Bear Steepener post Trump.

Best commodities behavior in 2016

This chart is for future reference: the assets (stocks, commodities, indices) that performed best in 2016.

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