Monday, October 29, 2018

The indicator that Wall Street will follow this week

The SPX index, the most representative and important of the NYSE, has been sinking more than 9% this October, losing near all YTD gains. The Nasdaq is also a loser, having its worst month since 2008. Some ideas and reasons for this sell-off, I outlined in this previous post. Now, this week, Wall Street' traders eyes will be on a specific technical indicator. It is the 10-month simple moving average or "SMA10".

The 10-month SMA indicator is equivalent to the well-known and widely used 200-day SMA, given that 10 months of sessions equals almost 200 trading days. The great advantage of the monthly is that it gives a cleaner signal and reading, free of so many false signals of breakouts, pullbacks and whipsaws that are usually presented in a daily candle chart. It is not infallible, but the 10-month SMA helps filtering out all the 'noise'. It's well known that banks and financiers use it and make their investments in the stock market based on their signal.

This indicator is for be used in indices trending up or downward, and its strategy is quite simple, almost elementary: buy (or hold your position) when the candle closes above itEach monthly candle of the chart begins with the opening of the first day of the month and is completed with the closing of the last monthly session, in this case this Wednesday 31. The key is to know if the current sell-off continues and the SPX closes below its SMA10 at the end of that day. Only 3 sessions remain and today SPX is near 100 points below it (2,658.69 vs 2,754.07). 

If happens, it is almost certain (there are no fixed rules in the trading world, only historical data) that the market will enter a correction, instability phase, so it's better to stay out of it. Exit all long-term positions, until price cross it upwards. See in the chat below the accurate sign that this indicator gave during the last crisis of 2001 and 2008. It avoid many headaches and shattered portfolios applying this very simple strategy.


It is not an infallible index (there is none) but it is reliable enough to avoid catastrophes in a portfolio. The EMA10 pointed out the two last major Wall Street crises and the best moment of return.

As a corollary, say that this indicator is applicable if you want to go long in any stock or etf. It is enough to see the entry/exit signal that it gives to proceed.

Finally, an alternative idea for trading in November (assuming the SPX below the SMA10), is through the volatility, which moves in opposition to it, doing it through the VXX etf, or with the triple speed 3X UVXY, for lovers of higher risk-reward. My usual strategy this volatile days is first buy hedge through VXX calls, waiting for the rise in volatility before the sell-off arrives, and at that moment finance the purchase of SPY puts.


The current crisis in emerging markets was also signaled by the indicator. 
Since May, its EEM index closed the month below its SMA10.
Read more »

Friday, October 26, 2018

Stocks to Watch for Week Oct 29th - Nov 2th.

Twitter TWTR: usually its uptrends are short but strong. Its daily chart confirmed MACD bull divergence today, when its EMA13 (black line) slope turn up. Long.

AMD in free fall since dissapointing earnings. Friday down 8% and testing
 the key support SMA200, for first time in six months. My swing trade if no rebounds: short.

Square SQ testing short-term downtrend channel in its 10-min chart. 
Take care: today it has been made a huge 400k insider selling. In my radar for Monday.

The Russell 2000 RUT recovering today from lows. Near to break its week 
downtrend channel. Depending on markets behavior, IWM likely is a long.

VMWare VMW testing its SMA200, and well oversold.
Waiting next MACD bull crossover. If happens, is the sign for a long entry.
Read more »

Tuesday, October 23, 2018

Watchlist Update: October 23th, 2018

Brief comments and ideas of stocks that belong to my Watchlist. Let see some tech stocks today.

Advance Micro Devices AMD, $25.04

- Its next earning report (Oct 24th) need to be convincent for investors. Nvidia NVDA is again turning strong in the cryptocurrency and gaming markets and Wall Street is reacting to this, giving down AMD price to the important 38.2% level of Fibonacci and with its first MACD bear crossover since April.
- Is increasing its volatility to levels of 90%, making this stock better for daytrading or swing trades. A bit dangerous for invest long.
- I'm neutral this week until Q3 earning.

Dropbox DBX, $23.49

- My favorite file-sharing application since it appeared 10 years ago. What makes it special is its ease of use, intuitive and elegant, that served as a model to its giant competitors: Google Drive, Microsoft OneDrive and Apple iCloud. What keeps her alive in the face of these monsters, is its accumulated prestige over the years and its focus exclusively on file-sharing.
- After your recent IPO this 2018 at $ 29, today you are near your minimums at $ 22.
- Already issued its two first reports and were very successful: growth 27% YoY, Cash Flow> $100M. Its November earnings will be key because its guidance and operating margin has been raised, both good signs for investors.
- Technically, I keep an alert at all time low, waiting for its Q3 earnings, for my first buy in this stock.

Paypal PYPL, $87.23

- Its very important the data of 9 million additional active accounts for the last quarter. This generate nice growth numbers in revenues, income and earnings.
- Its Venmo social payment application gets stronger every day, and its new "smart payment button" is a good innovation for the platform and very useful for its costumers, despite Square SQ and the success of its "Cash App" this year. Venmo, in the future, probably becomes the most profitable payment solution for the company, making PYPL a buy in the long term. I'm holding  my position, open after last earnings.
Today, despite the early sell off of the market, PYPL maintains its strength (+2%) and can break its weekly resistance at $86.25. I see this stock, at the end of the year, towards its recent all time high at $93.70.

VMWare VMW, $144.96

- Now, as all the technology sector XLK, is in a profit-taking period.
- With great numbers in revenues, EPS and cloud license sales, VMW is a buy in the long term. Guidance for 2019 also show growth rates. Its usual price corrections comes when Dell, its parent, post unclear news of merger between both companies. Be careful with this detail, using a tight stop loss.
- Technically, its chart is testing the key moving average 200, completely oversold. I'm looking for a rebound after today markets sell off and a bull crossover in the MACD, for enter long.


AMD, weekly chart: touching important Fibonacci level, now in "value zone". One of the most popular and trade stock in Wall Street.
DBX, daily chart: showing its performance since IPO. I have it on my radar because I basically trust in the quality of its products.
PYPL,10-min chart: near to break week resistance. Its Venmo application is the future of this company, and the reason to hold my position.
VMW, daily chart, testing key support at SMA200. Great cloud service company, trade carefully because of Dell partnership.

Read more »

Wednesday, October 17, 2018

Uber and the future of the Unicorns

The IPO (initial public offering) of Uber Technologies, even without a defined date, promises to be the most attractive next year (valuation $120B), as they were Snapchat SNAP,(2017), Alibaba BABA (2014) or Linkedin LNKD (2011). And it is that the famous application for private transport, already present in almost 600 cities around the world, is extremely popular, required, valuable and, therefore, full of demands (mainly of nonconformist users and other formal taxi services) and competition in many countries (Lyft, Curb, Didi, among other apps), all copying the same principle. Even Google GOOG, is developing its product, relying on its acquisition of the popular Waze, and its upcoming developments of autonomous driving, something that Uber has also focused its latest efforts.




The shocking news in 2017 in this unicorn (start-up with a billionaire valuation) perhaps the most renowned start-up of its genre, was the departure of its CEO, founder, Travis Kalanick, forced to resign by the shareholders, in a case that recalled Steve Jobs and Apple. This time, the reason was accusations of sexual harassment and discrimination in the company, and it is understood that Uber shareholders want an early change of image of the company. In my opinion it seems a somewhat drastic and yes, it has caused a stir because close to its 1,400 employees demand their return in an operational position (still belongs to the board and with weight in it).


But, delving into the subject, what is the real future of these companies called unicorn? It is known that these billion-dollar start-ups grew from 2013 to fall in number last year to increase the scandals around them. In addition, the convenience of staying in the private market far from market regulations, and seeing the poor performance of Snapchat SNAP in Wall Street, makes many of its CEOs hesitate to take the crucial step towards IPOs.

Our collaboration with Toptal allows us to publish this detailed analysis of Toby Clarence-Smith on this subjectIt's introduction:


Between 2013 and 2015, the number of Unicorns (private technology companies valued at more than $ 1 trillion) exploded from 16 to 140, marking an incredible growth in valuations and positive sentiments towards the risky financing industry.

 But after a tumultuous 2016, in which scandals, sales of parts of its capital, more comments from cautious investors emerged and many have questioned the validity of the sector's valuations. With this fall, 2017 seems to be the year of decisions for the Unicorn Club.


An analysis of the trends and the factors that possibly trace the course of the coming year show that expectations that seem to be more realistic may be unfounded. In fact, prospects for private technology companies have a great chance of improving.

The number of unicorns decreased in 2016, but their valuation continues to rise.
Read more »

Friday, October 12, 2018

Sell Off: factors behind the correction

As all market sell off as the present, the analysts begin to look for explanations to it. Which main force is behind it, and if this trend will continue. Yesterday SPX dropped 3.3% and today 2.06%, causing it to break the important SMA200 level that for months had become invincible and caused successive rebounds when it price reached it. The Nasdaq COMP had its worst session in 2 years, dropping 4.1%. And VIX volatility skyrocketed to levels of $ 25, which did not have in months. There are some factors that have accumulated over time, and that have led to this expected correction. I throw some ideas about it.


SPX today below the three main moving averages and the Ichimoku cloud. This time it did not bounce on the SMA200, as he was doing for months, a clearly bearish signal.


Trump and the dollar: short and long term

It is not new the complicated relationship that Trump usually has with the FED, simply in these days it is reaching its highest peaks. His phrases generally scare Wall Street and this time they did more than ever. His statement 'the FED is going crazy' try to influence them, because he believes that the interest rate is going up very fast. With inflation already at 2% Trump may be right to want less Rate Hikes, despite the fact that the FED ensures that there are three years of growth for the US economy. 

On the other hand "I want to pay the debt" says always Trump. He is also right. It is impressive that with the two Obama governments the Federal Debt size near doubled, reaching its current total of $ 21 trillion. Although in the short term the debt allows economic growth, in the long term, while it grows with interest, it can become unmanageable. The Debt/GDP ratio grows and debt holders can request payments at larger interest rates. By decreasing the attractiveness of Treasury Bonds, it would further increase its interest rate, slowing down the economy.

For me it is clear that Trump needs a low dollar in the short term to stimulate strong exports to China and thus appease the effect of tariffs. And in the long term to alleviate the debt and not become unpayable in the future.

It is impressive that with the two Obama governments the Federal Debt size near doubled.


TNX Benchmark above 3%

The yield of the 10-year Treasury Bond TNX, has far surpassed the important resistance of 3%, confirming the break of the downward channel of many years and approaching the psychological 3.25% level. This could seem the main cause of this sell off, since it is known that the market is sensitive to these increases. However, TNX has been correcting for two days (today it closed at 3.13%, help by low CPI inflation data) and despite this, the market succumbed again today. There does not seem to be justification for the sell off, on the contrary, it may be that the bonds are already acting as a refuge, in addition to gold. Incredibly, one of the causes of panic on Wall Street, the rise of TNX, became a safe haven in just a couple of sessions, because today the bonds went up. My forecast is that, after this sell off, this yield will continue its rise to 3.5% in order to give steep to the yield curve that is flattening in excess, not consistent with a strong growth economy where no recession is seen in sight.

TNX in bull field since the break of the downtrend channel a year ago, confirmed with the MACD reinforcement. After this sell off, its path to higher yields is free.



Stock Buyback "Blackout"

Another apparent cause for the current sell off is the "blackout" of stock buybacks, that is, the impediment to companies from repurchasing their shares two weeks before the end of the quarter. However this is not official: some companies have it planned and they do it legally. With companies as the largest buyers of stocks, it is very difficult for the SPX to go down so that millions of sales will occur. The corporate buyback reinforces the price and reduces the number of shares available, making it more prone to increases.


While I consider the stock buyback the main reason why the US Stock Market rises while the rest of the world fall, I do not think it is a reason for the present sell off, because this did not happen in the previous blackouts of this year. Maybe if, the repurchases have reached their top, with a record of $ 680B only in the first half of the year, projected to  $842B until the end of the year. Artificial growth that at some point will end.

Companies record repurchases of its own share is the main factor
that keep the US Stock market in all time highs.


Technical correction

We are in the expected technical correction? I think it's the most likely. The technological sector XLK has been requiring it for a while. Its completely overbought and it seems to be a profit taking what is happening. And this carry the rest of indices and sectors. Tomorrow friday, all traders eyes are in the SPX chart recent break at the SMA200 average support. If it does not bounce firmly in the next days, you can expect a greater fall, of unpredictable end. If bounces, probably we would have the usually Christmas mini-rally next months.

Read more »

Monday, October 8, 2018

Trader Notes: InterMarkets Analysis. Part 1

Basics.


Surely it is known, but I think is a good topic to develop in two or three posts, briefly and colloquially, how I always try to do, the 'InterMarkets Analysis'. How it works, its importance, and the relationship among its instruments (stocks-bonds-currency-commodities), and how to take advantage of it for our trades, now that we are near another decision of the US Federal Reserve (FED) in November.

The Central Bank of each country (the FED in USA) control the interest rate, which has a direct impact on the value of the local currency. If they raise the interest rate, their currency tends to strengthen as investors look for high returns in their country for their short-term investments. If a government lowers the rate, it weakens its currency, since very few investors will be willing to lend their money to a country or its banks with a weak currency. Simple.

- A strong currency has a direct positive impact on stocks and bonds, since they pay more, but in turn generate inflation.
- The opposite occurs when the currency is weak: investors seek profitability in other regions and markets, and in commodities such as gold or oil, which rise in prices due to the increase in demand. In this environment, the yield of the bonds, which always accompanies the interest rate, falls and the price of bonds rises, due to the inverse relationship between the two. All these basic relations occur in an inflationary environment, in deflation some intermarket relations become inverse.

Include in one chart the four instruments (commodities, stocks, bonds, 
and currency) is the best way to understand the InterMarket Analysis.

How Central Banks work


I think the best way to explain it is with a real example: the Real Estate crisis of 2007 in the US. That time, during the crisis, the FED initiated a policy of economic stimulus, gradually lowering the interest rate to zero levels in order to 'warm the economy', and at the same time issuing currency to buy assets from banks (bonds issued by them) and generate liquidity in the market for low rate loans (this is called Quantitative Easing or QE). This generated the slow recovery of the economy and markets, and a progressive increase in the prices of commodities and services (i.e inflation), which today must be controlled, because in the short term it generates unemployment. That was the discussion (it's eternal) in the FED, which is the 'least bad' decision that must be taken: either keep invariable the i-rate for a while to take care jobs at the cost of a little inflation (dovish point of view), or on the contrary, prevent the rise in inflation, raising the interest rate above it, at the cost of some unemployment and stable prices (the hawkish).

As an important document for later analysis, here is the FED Funds Rate History since 1970, and its relationship with the Gross Domestic Product (GDP or PBI in spanish, publish quaterly) and Unemployment Data, issue the first day of every month.


The objective of Central Banks is always ensure that the i-rate exceeds the inflation data. During the Real Estate crisis was impossible to do, lowering it to zero levels, so as to heat a shattered economy.

                                                                                      

To be continue...

Read more »

Thursday, October 4, 2018

Stocks to Watch: AK Steel $AKS, Ubiquiti Networks $UBNT


1. AK Steel Holding ($AKS), $4.83.


Background: 
When Trump took office in 2016, one of the industries that seemed to will have the best growth was construction. In those days the confirmation of the execution of the border wall with Mexico favored several stocks and etf of the sector: construction companies, cement companies, machinery, Mexico. Several of them followed in my watchlist, even today: Lennar Corp LEN (one of the largest construction companies in the USA), Caterpillar CAT (the giant of machinery, the Big Cap that advanced the most in 2017) or IShares Mexico EWW (etf that follows the Mexican market). Among the construction materials, the steel stood out. remember it was one of the industries hardest hit after the recession of 2007. The rebound that had since November 2016 with the remembered 'Rally Trump' and its plan 'Rebuiding America', for 3 months, was spectacular, near a 100% rise.

Within the small capitalization companies on Wall Street, there is an attractive one in the steel sector: AK Steel Holding. I follow in my watchlist this company and its peer US Steel Corp X, because their prices tend to move in line. When there is marked divergence between both is when I pay special attention. (This is a nice way to follow a company: comparing it with a very close peer in its industry). This happened in May 2017: after a short technical correction, the price of US Steel continued to grow to 10-year highs until the end of that year, while AKS faltered. So, it stopped being attractive at the expense of its pair, but enter to my radar.

What happened this year, it is already known: in March, the first news of the tariffs that US would apply to imports of steel and aluminum was given. It was the beginning of the Trade War that continues until today. The company prices began to zigzag, sinking in August to $4.00, its 52-week lows.

Fundamentals: 
a) In favor: in the last months there are good news for AK Steel that make us think that the worst is over. The company had three successive upgrades in less than two weeks: Morgan Stanley, Merrill Lynch and Clarksons Platou, all with "buy" and targets between $ 5 and 6, justifying all of them in the rise in steel prices due to strong demand this 2018 and projected for 2019. If we add to this a repurchase of the shares by its own CEO Roger Newport, undoubtedly, these are good signs.

b) Against: the high debt of the company. Accumulated after many years of red numbers (that were in general for the entire steel industry) its debt is so huge for a small cap (AKS Market Cap $1,500M), and now also expanded with a recent and risky issuance of shares. In addition, a risky CapEx investment (capital expenditures) for $ 153M for improvements to its steel mills. While this shows the confidence of its directors in the future of the company, this high leverage will be, for some years, its main concern. 

Technicals:
As I always say, when the fundamental analysis is aligned with the technical, it's when you can have a good point to enter long. After reaching the "psychological" support of $4.00, the stock had an excellent September (almost 11% up). The stock went through the "value zone", the best time to invest according to the theory of Alexander Elder, between the exponential averages 13 and 26. In addition to this, appears a bull crossover in its MACD near the zero line. AKS still maintains a high short interest (26.3%) that makes it attractive in bouncing weeks.

Idea:
I believe AKS is a buy in the long term. The price of steel has already assimilated the Trade War and can begin to improve despite the latest news such as the probable increase in salaries in the sector. The best long entry point is when the price return to the value zone, which probably occur in the next few days as the market is in correction due to the aggressive increase of the 10-year bond TNX, in 7-year highs, that affects all Wall Street industrial sectors.

Support at $ 4 is powerful because its multiyear. AKS is 4 weeks rising and
today the stock is testing the SMA200 (not show in his weekly chart).


2. Ubiquiti Networks ($UBNT), $91.87


Background:
One of my favorite stocks in the last 6 years since I 'discovered' it, is Ubiquiti Networks. I remember I bought stocks in 2012, a few months after its IPO, when trades at $ 28 and had a heavy pullback to $9 the following year and despite that I kept my shares, because I trusted the quality of their products and the skills of their CEO Robert Pera, ex-genius of Apple and today jealous guardian of the constant growth and profitability of his company. UBNT specializes in products and solutions for networks, internet, wifi and radio, based on high technology and affordable price, its infallible formula until today. Its technologies, such as UniFi or AirFiber, have international recognition and are capable of bringing the Internet and radio to almost anywhere in the world with great technical support behind them.

Ubiquiti is characterized by its volatile evolution since it go public. Despite accusations of falsification and class actions, in its early years (even it was considered "a fraud" by the popular short seller Citron Research in September 2017), it has the ability to overcome all these avatars until it arrived a week ago to its all time highs, and even make its first payment of regular dividends ($0.25 per share) in its last earning, replacing a aggressive stock repurchase plan that Pera had been carrying for a couple of years when its price was low. Both good signs that can mean next months of growth and a consolidation as a serious company, in case there were doubts.

Fundamentals:
Today Ubiquiti is already a Mid Cap ($6,800M), with good accounting numbers: cash flow and rising sales every year, low short-term debt, profit margin higher than its peers like Finisar Corp. FNSR or Palo Alto Network PANWFinally, its EPS earnings growth is superior to the industry. No problems here.


Technicals:
Despite the good fundamentals, from my own experience I suggest taking extreme care in trading this stock: their pullbacks are very extreme when they occur (for news such as the aforementioned or technical corrections). This due to its low float of 74M that exposes it to these abrupt movements. Therefore, it still has a high short interest of 32%. A careful use of tight stop loss and exit strategies should be mandatory in your trade.

Idea:
Ubiquiti is a company to invest (not trade) in the long term. This days has been correcting strongly since its all time high ($ 101.33), testing the lower band of Bohlinger and the SMA50. I suggest waiting to see how it faces both supports to think then about going long. If you are prudent with this stock you can expect many satisfactions.

Ubiquiti is still above the 3 main moving averages, and the Ichimoku Cloud. The correction from its highs is strong so its scope must be well evaluated before entering long.
Read more »

Tuesday, October 2, 2018

Update of post "Trump Notes, November 2016"

This post will try to make a memory and evaluation of my post 'Trump Notes' published on November 14th, 2016, just after Trump's victory in the US elections. How were the analysts with their 2016 predictions about various commodities, currencies and markets today, almost two years from that date? I think it's an interesting exercise. Inflation, Steel, Technology, US Dollar, British Pound, Emerging Markets, China, Crude Oil, all of them update at a glance.

After each item, and in italics, I include a today and brief Update about what is written in each one. Take into account that the charts shown are those of that date of 2016, I did not update them.

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1. Inflation


The week on Wall Street will continue to be marked by the news that comes from Trump and his environment, his first political-economic statements, the names of his next work team and the compliance or not of his campaign proposals (the global ones, which are the unique that we are interested as traders). There are sectors and commodities that are benefiting from the lack of definition of these days, which should be followed to take advantage of this speculative 'Rally Trump' as it is being called.


There is a strong feeling that inflation will rise (and strong) with Trump. If go the reconstruction of the country that Trump advocates, with heavy spending and domestic consumption, it is expected that inflation will rise and the Fed (which will be the destination of Yellen?) will not be so much trouble in raising the interest rate regularly. The reflection today is in the indices that measure the performance of the US treasury bonds, TYX (bonds) and TNX (notes), closely linked to inflation, which since the post-election Wednesday, are rising, while the etf that follows bonds price TLT comes strong downward. For higher risk-reward, follow the triple-rate etf TMV, which follows in bear mode the 20-year treasury bond.

Historically the stock market does not bother inflation while it is below 5%, ie there is ample space, according to this article by the renowned trader Eddy Elfenbein.

Upward inflation seems a safe bet with Trump. TMV, bear bond etf, continues to rise, 
although it entered into overbought territory. I expect a slight pullback to enter long there.

Update October 2018: 
It was expected and happened like that: strong growth that brought inflation and success Rate Hikes to be above it. And also as a result, the 10-year TNX treasury bonds is already breaking resistance for 7 years, now at 3.25% becoming the main factor today to forecast the future of the main indices of Wall Street. 
About Yellen, yes we missing her, because every time Powell gives his speech, Wall Street rumbles and falls.

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2. Steel


The promised spending of infrastructure can lead this market to a demand that was not seen since the crisis of 2008. Although details of it are missing, this subsector can benefit like few others, and Morgan Stanley already saw it today. the target of US Steel Corp X from $ 19 to $ 46 and AK Steel Holding AKS from $ 5 to $ 11, today both up 7%. Two stocks to invest in the long term, with relative safety of success.

The companies in the steel sector have a long way to recover from the crisis of 2008. 
More than to make swing trading, they are for invest in the long term.


Update October 2018 :
Already commented in the post "Stocks to Watch: AKS", finally what characterized this industry was its explosive growth in the first months after the elections, to then correct and be dependent on the Trade War and tariffs. In spite of everything, a good 2019 is expected for steel.

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3. Technology  


This sector expected a Hillary victory, because it is known that Trump does not sympathize much with its business model, in addition to not interested in related topics such as climate change ('Chinese invention to slow down American industry') or renewable energy. He also argues that China manipulates its currency to favor its exports, an issue that directly affects the giants of the FANG sector such as Google GOOG (-8% these days), Apple AAPL (-8%) or Netflix NFLX (-10%) that operate on a large scale with the Chinese market. Therefore the index that groups them, the Nasdaq, has suffered like no other, the same as the XLK technology sector. We will see how Trump's handling of trade agreements and a probable strengthening of the dollar impact on this sector. Other sub-sectors such as cybersecurity, internet and even space exploration take on relevance because Trump and his environment are still not clearly known about it. We will see how the powerful Silicon Valley reacts, obviously they will not stay with their arms crossed ... there is an attractive duel of power there. There must be a rebound soon, and then, with the low VIX volatility, put some options (puts) in this sector always depending on the news that comes out of the Trump environment.


The technologies fighting today against the SMA100 average. 
In oversold field indicates probable bounce.


Update October 2018 
It is verified that, finally, the technologies did not interest if Hillary won: his growth was unstoppable until today, with small corrections. Practically, it is the sector that pulls the entire market with it. There is talk of growth without sustenance, protectionism, excessive buy-back of shares, bubble. The fact is that XLK continues as the fastest growing sector in the Trump era.

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4. Dollar 


Comes very strong against all world currencies, reaching maximum levels since 2003. All this due to the affluent post-Trump environment plus the latest statements by Fischer, the 2nd of the FED, which almost discounted the Rate Hike in December and probably more regularly in the future. This will make money flow to the banks that will offer better rates since 2008, something that will make the savers reappear. Follow the future /DX, which is approaching its maximum in 14 years, or the bullish ETF UUP, although this is less volatile, which makes it 'boring'. The option to go against the dollar is gold /GC. A strong dollar tends to damage the demand for gold, since the metal has its price in the currency of the United States and becomes more expensive for foreign investors when the dollar rises.

Update October 2018 
Irregular behavior of the dollar. All 2017 it remained under great pressure, as it was expressed Trump's intention to keep it weak in the short term as a government strategy, to favor exports and weaken imports. Totally different this 2018 with the /DX strengthening towards the long term with the beginning of the Trade War and the tax reform, as was the initial express wish of Mnuchin. Definitely successful Trump's strategy with the dollar, complicating all its global peers and emerging markets.

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5. British Pound


The "sterling" has been reinforced since days before the elections, while the companies of the FTSE100 index that report in dollars (stronger than the pound today) are coming down. The Trump's victory reinforced this rise, in the idea that a wave of populism and uncertainty in Europe can benefit the UK post-Brexit, in addition to a probable commercial treaty with the USA. Keep in mind that the European Union is recognizing the fall of the TTIP Transatlantic Trade and Investment Alliance acclaimed by Obama after Trump's election. If you review previous posts you will see that the etf of the FXB sterling is one of my favorites for these next months, with a lot of potential ahead.


Ample road to go awaits the pound to recover levels of 10 years ago. 
It is reinforced and the evolution of Brexit will be decisive.

Update October 2018 :
Its behavior was opposite to the dollar: a very good 2017 and a weak 2018, by the influence of the North American currency. On the domestic front, the strong divisions in the English government continue: on the one hand the conservatives, adherents to the hard Brexit, as well as having an economic cost, and the liberals who want to maintain the maximum relations with Europe. In between, Theresa May dealing with both and at the same time negotiating a favorable pact with the EU, which if not given could mean a collapse for the pound. Uncertain panorama today.

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6. Emerging Markets


Complicated panorama consequence of the intention of Trump to review the free trade agreements in force and apply tariffs to certain imports, just in moments that the dollar /DX is rising and could help these exporting economies. These markets hope to increase US domestic consumption, and in this inflationary environment, the demand for commodities will increase and with it the improvement for them. For two days the etf that follows them, EEM, is in strong decline, -2% at this moment, breaking the important level SMA200 and oversold. As seen in the chart, can bounce depending on the news.

The direction that the various sectors of the NYSE will take will depend on Trump's announcements.

Update
 October 2018:
From be one of the best markets in 2017, this year comes complicated by the rise of the dollar and Trade War, as analyzed in a recent post. Some emerging countries are coming into crisis, others suffering their stock exchanges, in this evil 2018, which seems the beginning of a crisis. The panorama is still uncertain, next political and macroeconomic decisions will be decisive.

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7. China


Its Shanghai Composite index fall slightly with the news, but has already recovered, remaining in the 3,000 lateral range as almost all year, in oversold territory, low volatility, and index with upward projection. Its economy continues buoyant, not at 2012 levels, but even with its industrial production at 6%, full employment and ideal inflation at 2%. Trump has been very energetic in relation to his trade with China, even declaring that he plans to impose a rate of up to 45% on his imports of goods. The effect on internet giants like Alibaba BABA or Baidu BIDU could be devastating. To expect definitions here, already in the presidential chair things should be seen differently, I suppose ...

After falling last year from the 5,000 level, the SSE keeps 
hovering around 3,000 without taking off yet.

Update 
 October 2018
The Chinese stock market remains in the same range commented there, which has been more than 2 years. China is the main protagonist of the Trade War, Trump continues to point its weapons (25% tariffs) against them, that respond with the same caliber. A war that has no winners and many losers, and yet there are in permanent dispute since early 2018. A risky move by the Chinese was to intentionally back the yuan (10% over the dollar), which allows its exporters to have a weak currency and thus compensate for the loss of competitiveness due to the application of Trade War tariffs. And by the way, it hurts US exports to his country. Crazy...

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8. Crude Oil /CL


It remains outside the electoral issue, it continues in its free fall since it was learned that, probably, at the next meeting of OPEC no agreement will be reached on output cut, because even this is increasing, as the EIA revealed yesterday. On the other hand, there is a Trump's plan to reactivate the oil reserves of his country valued at $ 50B. The future /CL is trading at $ 43.4, with all November in oversold territory. This commodity only need to wait for OPEC decisions to stop their price drop, and see if Trump applies its internal reactivation plan.


The Crude's ichimoku shows it from today under the cloud, a clear bear signal that would only recover depending on OPEC. Mc Clellan indicator below confirms the same trend.

Update October 2018 
Great protagonist of the markets, to reach minimum of $ 26 at the beginning of 2016, today around $ 70 and several analysts say that its rise is not over yet. Many factors determined it, the main one being OPEC production cuts agreements that created deficits and boosted demand. Also influenced by the US economic sanctions against Iran. Today, with the dollar, they are the main engines of growth and inflation in the US economy.

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