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Showing posts from May, 2019

Market Pulse through some of its Main Indicators

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1. SP500 Index SPX, 2826.06
May, is always a difficult month for the stock market, and as I said in the previous post 'Sell in May and Go Away', the explanation of its recent fall is in the swings of the TradeWar, there is no more. It seems Wall Street discounted from January to May a "great" agreement between the US and China with the impressive rise of the SP500 (also thanks to stock buybacks, of course!) and now notice it will not be like that. Today, in moments of maximum tension, with the recent case of Huawei, the market seems to have opened its eyes not only to the complexity of this trade agreement but to assess the already many contradictory results in the US economy (for example, the recent very low ISM). Therefore, it's logical to presume that this correction should continue in next days or weeks. Current Trump's desperate last statements or tweets to bring the market up are notorious. He has done it before, let's see if he does it these days.…

A View to InterMarkets Analysis. Part 1

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Basics.

A good topic to develop in two or three posts, briefly and colloquially, as I always try to do, is 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 …

Sell in May and Go Away? Depends on Trade War.

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Market Pulse.
"Sell in May and Go Away" says the popular phrase, which is also a well-known adage in Wall Street. Last week the stock market closes in a moment of grace: the SP500 SPX in all-time highs and great numbers in economic events, especially the recent Employment data with great jobs numbers, with a 50-year record unemployment rate and flat average hourly earnings. That's the perfect combination for bull investors: the U.S. economy is strong and with growth without inflation. Also Wall Street is closing an amazing Q1 Earning Season. The only divergences are some market overbought signals (not critical yet) and the recent Powell speech, that Wall Street disliked, especially when he told that only a "persistently" low inflation would make the FED consider a rate cut.

Finally, the Trade War is a separate chapter in this story: could finish (or not) with an agreement in the next weeks, nobody knows, probably neither Trump. As I always said, its resolutio…