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Forex Calm After the Storm? Volatility and Coming Holidays

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Forex Calm After the Storm? Volatility and Coming Holidays

The weakness of the USD was anticipated last week, this as the Federal Reserve essentially admitted its aggressive interest rate hikes policy has come to an end. While Fed Chairman Jerome Powell tried to sound neutral, most financial institutions reacted to the FOMC Statement and the Fed’s Press Conference last Wednesday with a rather demonstrative amount of USD selling, largely showing they were prepared to react.

The EUR, GBP and JPY all gained, and many other currencies added value against the greenback too. Gold flourished upwards and even WTI Crude Oil came off its lows. However, after producing strong gains late Wednesday and into Thursday, gold and major Forex pairs did reverse slightly lower on Friday as the USD gained some footing.

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Gold Five Day Chart as of 17th December 2023

Risk appetite likely has enough positive behavioral sentiment influence to continue its desire for dynamic buying on U.S indices. The Dow Jones Industrials will start Monday at record heights, the S&P 500 and Nasdaq Composite are approaching one year highs.

Yes, potential headwinds can develop, so day traders should not bet blindly on bullish gyrations to mount without reversals being expected too. As the GBP and EUR gave back some of their gains on Friday, financial institutions may have been reacting to the notion price velocity higher had been too robust in the near-term. Speculators received another reminder that one way trends tend to meet with reversals that can still cause harm.

Risk adverse traders who have their eyes on global affairs should monitor the situation in the Red and Arabian Seas. Houthi extremists continue to fire at international ships sailing in the areas, and this may generate a reaction at some point from allied navies which are supposed to protect vessels and commerce. If the U.S Navy reacts to the Houthis in a strong manner this could deliver a cold short-term shiver into markets.

Speculators also need to understand this is the last ‘full’ week of trading before the Christmas and New Year holidays, which can cause a massive decline in volumes. This Thursday’s trading will begin to decrease from norms, and Friday’s price action will likely be affected by offices around the world starting to shutter as employees disappear for extended vacations. Day traders who want to participate in Forex, commodities, and equities via CFDs should be prepared for the emergence of quiet markets the end of this week with occasional volatility disrupting technical charts.

However, this Monday and Tuesday will pose questions regarding possible reactions to the weaker USD which has emerged, and U.S equity indices showing signs of speculative zeal. U.S Treasury yields continued to trend lower last week, and U.S bonds should be watched early to see if market participants continue their optimistic paces, or show signs of becoming more passive as the holidays approach. Traders with strong convictions regarding directions may feel inclined to remain active throughout this week and cannot be blamed, but some caution should be practiced.

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EUR/USD Five Day Chart as of 17th December 2023

Monday, 18th of December, Germany ifo Business Climate – the reading is expected to show a slight improvement over the last month. EUR/USD traders may believe they should react to the results from this report, but the EUR is likely to stay within a USD centric mode driven by existing outlooks. The ability of the EUR/USD to hit the 1.10000 level late last week confirmed positive mid-term bullish outlook. The reversal lower on Friday may ignite speculative buying positions early this week, but day-traders may want to be conservative.

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USD/JPY One Month Chart as of 17th December 2023

Tuesday, 19th of December, Bank of Japan Monetary Policy Statement and Press Conference – the BoJ is not expected to raise their interest rates quite yet. However the end of the BoJ’s negative monetary policy may be coming to an end in 2024. The BoJ bet on the notion that inflation would come down eventually, even it maintained a negative interest rate policy – this seems to have been proven correct. The USD/JPY has reacted the past month with a rather incremental decline. Perhaps Japanese financial institutions have been positioning for a stronger JPY over the mid-term. The USD/JPY trajectory lower remains intriguing for speculators.

Wednesday, 20th of December, U.K Consumer Price Index – the BoE sounded more dovish than many folks expected they would this past Thursday. Inflation numbers coming this week should be watched. The British economy remains lackluster, but sounds about ‘weaker’ inflation have been heard. The data from the CPI is expected to be slightly lower than the previous month. The GBP/USD could react to this report. The British Pound has delivered upwards momentum since late October. Traders should be careful regarding potential short-term reactions from the GBP/USD, and understand Forex volumes may start to decrease on Thursday and Friday which could affect results.

Thursday, 21st of December, U.S Final Gross Domestic Product – growth in the U.S has been better than most anticipated. While many analysts are still predicting a slowdown, the GDP number is expected to show a 5.2% gain. The inflation report via the GDP Price Index is anticipated to be 3.6%. While the broad markets typically would react to these statistics in a strong fashion, trading might be somewhat muted as financial institutions begin to focus more on the coming holidays.

Friday, 22nd of December, Canada GDP – a slight gain of 0.2% is expected regarding the growth statistics. Markets will be quiet and while the USD/CAD could see a momentary increase in trading, behavioral sentiment from earlier this week will likely have had a bigger effect.

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AMT Top Ten Miscellaneous Views for the 15th of December

by with No Comment AMT MarketsAssetsFeatured Highlights

AMT Top Ten Miscellaneous Views for the 15th of December

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10. Book: Doctor Zhivago by Boris Pasternak.

9. Music: Moanin’ – Charles Mingus Big Band 93 Nostalgia in Times Square. Fantastic jazz.

8. Cryptocurrencies: Game of double dare continues as BTC/USD trades near 42,600.00. ETH/USD resides around 2,250.00. USDT remains at 1.00 and BNB/USD (yes, from the much criticized Binance operation) hovers near 250.00. Be careful out there, folks.

7. Argentina: Newly elected President Javier Milei has begun to enact economic reforms as the nation’s citizens and businesses hunger for better days. Will the Argentine Peso begin to stabilize?

6. South Africa: As the nation celebrates a public holiday for its Rugby World Cup victory today, it should be asked if the people are ready to vote for a political change in 2024? Or have things not gotten bad enough yet?

5. Central Banks: Federal Reserve ‘officially’ turned to a neutral/ almost soft monetary policy stance on Wednesday, the BoE and ECB followed Fed’s dance steps yesterday. GBP and EUR have gained and look intent to flirt with July 2023 values.

4. U.S Treasuries: Yields continue to erode and are near values seen half a year ago, with further decreases seemingly ready to occur mid-term.

3. Commodities: Gold is producing near-term speculative upwards muscle. Copper traders appear to be eyeing higher values.

2. JPY: Price velocity has propelled the USD/JPY to fresh lows, this as the currency pair gains speculative interest and behavioral sentiment shifts.

1. All Time Value: Dow Jones Industrials has achieved record heights. Nasdaq Composite and S&P 500 indices at one year highs as investors show risk appetite.

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AMT Top Ten Miscellaneous Nibbles for the 1st of December

by with No Comment AMT MarketsAssetsFeatured Highlights

AMT Top Ten Miscellaneous Nibbles for the 1st of December

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10. Book: Kissinger: 1923 – 1968: The Idealist by Neill Ferguson

9. Music: Clifford Brown and Max Roach Quintet playing Joy Spring.

8. Bitcoin: Curious stubborn trend higher as ETF fever appears to be creating bets on perceived ‘forced’ upwards momentum. BTC/USD now above 38,000.00.

7. Charlie Munger: Passed away earlier this week. Extremely well regarded as a man and helped create the Berskshire Hathaway colossus.

6. Crude Oil: Cash price of WTI Crude Oil remains stable and hovering above mid-term support after OPEC and associates announced voluntary production reductions yesterday.

5. Data: While U.S GDP numbers came in with solid growth statistics on Wednesday, yesterday’s U.S Core Personal Consumption Expenditures results came in below last month’s data showing inflation is eroding.

4. Gold: The precious metal remains above 2000.00 USD in a rather strong fashion, short-term speculation has been vigorous. Caution is advised for day traders.

3. Jerome Powell: The Federal Reserve Chairman will be speaking in Atlanta later today and his comments while participating in a ’roundtable’ discussion could affect behavioral sentiment going into the weekend.

2. USD: Outlooks via tier 1 financial institutions and larger players keeping the ‘greenback’ weaker and near mid-term support against other major currencies, price velocity should be watched.

1. U.S Indices: Dow Jones Industrials touching highs not seen since January 2022. S&P 500 and Nasdaq Composite within sight of July 2023 apex levels, and if penetrated upwards would also bring these indices to heights of late 2021 and early 2022, this as risk appetite demonstrates backbone.

You can find more AMT Top Ten Miscellaneous lists in the AngryMetaTraders archive

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Risks Ahead and Turkey as the USD Gets Speculative Attention

by with No Comment AMT MarketsAssetsFeatured Highlights

Risks Ahead and Turkey as the USD Gets Speculative Attention

The USD stumbled last week as inflation numbers via the Consumer Price Index and Producer Price Index both came in slightly below expectations. Yes, inflation is still dangerous in the U.S, but an erosion of momentum has certainly been hoped for by financial institutions, and they clearly took advantage of the CPI and PPI reports and helped a selloff of the USD build momentum.

The Federal Reserve is now highly anticipated to begin lowering the noise of its aggressive rhetoric, and actually start to sound more neutral when December’s FOMC Statement is delivered. Yes, this is speculative and things can change, but financial institutions like speculators position their assets based on outlooks.

Equity markets in the U.S also showed that there is growing risk appetite which wants to be part of the moves higher in the major indices. The NASDAQ 100, the Dow Industrials 30 and S&P 500 have all sustained upwards movement and are at three month highs with additional upwards targets clearly in sight. However, before day traders try to hop onto the higher trajectory they should remember the speculative timeframes of institutional investors are different than their own. Fear of missing out could feed into buying momentum, but caution is needed.

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GBP/USD Six Month Chart as of 20th November 2023

The GBP and JPY look to be intriguing opportunities for traders with a capacity to hold positions over the mid-term. Having struggled since July of this year, financial institutions are likely looking at these two currencies as having been oversold. Many other major currencies are all rather speculatively attractive at this time, but again, day traders should not wager blindly and keep realistic targets for their short-term wagers.

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USD/JPY Six Month Chart as of 20th November 2023

The U.S will celebrate its Thanksgiving holiday this Thursday. Volumes across the broad markets will begin to drop significantly on late Wednesday, and full trading will not return until Monday or Tuesday of next week until the U.S turkey meals have been digested. Meaning that while risk appetite has certainly begun to creep in the broad markets again, forecasts this week should be treated carefully. Day traders should watch momentum today and tomorrow, if the USD remains weak going into Wednesday, this could signal further weakness in the USD is anticipated. Yet, the dangers of near-terrm reversals exists and speculators should not get over confident.

U.S Treasury yields remain near their five day lows. The price of gold is range trading below its highs made late last week, this as the USD has shown weakness and risk adverse global concerns have also become more calm. Trading results later this week should be viewed suspiciously, price velocity when unbalanced positions are executed often leads to spikes during the Thanksgiving holiday, like the Christmas holiday which will follow in a little more than a month.

Monday, 20th of November, Germany PPI – the inflation data has already been published and the Producer Price Index came in at minus -0.1%, which was below the estimate. Global economic data the remaider of today will be rather light, and behavioral sentiment being generated from U.S markets should be watched.

Tuesday, 21st of November, U.S FOMC Meeting Minutes – this report which will be published late on Tuesday for many global traders, may provide evidence to previous thoughts regarding the outlook for the U.S economy regarding inflations impact on monetary policy. Meaning that if there are signs that FOMC members were already talking about the notion that inflation was eroding last month and was expected to continue to decline further – this could feed into weaker USD outlooks mid-term.

Wednesday, 22nd of November, E.U ECB Financial Stability Review – this report will have limited impact because Forex will remain USD centric. The EUR, like the GBP and JPY, is showing signs of a recovery based on the notion of having been oversold. Traders should be cautious about the EUR/USD later this weeek because of the U.S holiday and expect volatility.

Wednesday, 22nd of November, U.S Core Durable Goods Orders, and Revised Consumer Sentiment via University of Michigan – both these reports may fall on a U.S marketplace that is preparing to escape for the long holiday weekend. Last week’s weaker than anticipated Retail Sales numbers will combine nicely with the Consumer Sentiment reading, but again its affect may be muted. If the Core Durable Goods Orders number meets expectations or comes in with a slightly less than expected statistic, this could help continue to create weaker USD outlooks.

Thursday, 23rd of November, U.K and E.U Flash Manufacturing and Services PMI – the reports from Great Britain and the European Union are expected to show stable results, but also that purchasing managers remain unimpressed by the prospect of future demand over the mid-term in Europe.

Friday, 24th of November, Germany Business Climate via ‘ifo’ – this report is expected to be better than last month’s outcome. If the result is stronger than expected this could help the EUR/USD going into the weekend.

Friday, 24th of November, U.S Flash Manufacturing and Services PMI – both reports are expected to be slightly weaker than the last month’s numbers. U.S trading will be limited before going into the weekend. Yes, many markets will be open but volumes will be sparse. This could set the table for a reaction early next week if financial institutions believe they can take advantage of Forex, equity and commodity markets that became unbalanced during the Thanksgiving holiday celebrations.

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To Risk or Not to Risk that is the Speculative Question

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

To Risk or Not to Risk that is the Speculative Question

Last week U.S equity indices demonstrated a rise in value. The highs achieved in the Dow Jones Industrial Average, the NASDAQ Composite and the S&P 500 by the end of last week only touched values seen in the middle of October. And while their ratios remain below the highs of early August and falling values seen in September, the move upwards was certainly welcome by financial institutions and day traders who hold optimistic viewpoints.

U.S Treasury yields declined last week. While incremental decreases were made through Thursday, the U.S Non-Farm Employment Change and Average Hourly Earnings reports both coming in below expectations on Friday, created a stronger dose of lower yields. The 5, 7, 10 and 30 year U.S Treasuries are now trading near mid-September values. The 2 and 3 year notes are moving around early September numbers.

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Gold One Year Chart as of the 5th November 2023

The USD grew weaker in slight movements against many major currencies last week, but upon the weaker jobs numbers found increased selling price velocity. Gold however remains suspiciously strong, which brings up the notion that risk adverse ‘insurance’ is still being held closely by investors who remain nervous.

The Middle East crisis is ongoing in Israel against Hamas and to a limited extent Hezbullah, but financial institutions have seemingly been able to digest the news and remain tranquil and vigilant. Another sign of calm coming into the global financial markets is the price of WTI Crude Oil which finished the week under 81.00 USD per barrel.

Economic data will be relatively light this coming week, and behavioral sentiment appears to be the potential larger factor until Friday regarding impetus for day traders and financial houses. Certainly loud global developing news could suddenly erupt and cause nervous investors to falter, but last week’s trading results showed signs of improving risk appetite.

The U.S Federal Reserve met expectations last Wednesday and didn’t raise the cost of borrowing. The mid-term seems to indicate interest rates will remain high, but that the U.S central bank will not raise the Federal Funds Rate anytime soon. The lower than expected inflation report via the Average Hourly Earnings before going into the weekend helped highlight this thinking, although it remains a consideration that is still speculative.

Officials from the major central banks including the BoJ, BoE and Fed will be speaking this week and could cause turbulence with their rhetoric. However, no major surprises will likely come from their mouths. Although the Bank of Japan may rattle the prospects of intervention to keep USD/JPY traders on their toes.

Monday, the 6th of November, Germany Factory Orders – the result is expected to be negative and highlight the nation remains within recessionary conditions. The Sentix Investor Confidence reading will also be released slightly afterwards for the European Union and a worse number than last month’s outcome is anticipated. But the EUR/USD is likely to remain mostly USD centric, even though these reports could cause momentary fluctuations.

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AUD/USD Six Month Chart as of the 5th November 2023

Tuesday, the 7th of November, Australia Cash Rate – the Reserve Bank of Australia is expected to raise its interest rate by 0.25% to 4.35%. Will the RBA take a gamble and not raise the interest rate due to other major central banks holding their rates in place, or will the increase go ahead to fight stubborn inflation while trying inspire some confidence in the AUD? A hike seems to be the direction the RBA will decide upon, having said that, the Australian central bank have surprised financial institutions before.

Wednesday, the 8th of November, U.S 10-year Bond Auction – the results from this sale and the yields that develop within U.S Treasuries will have an affect on Forex. Lower yields than anticipated could signal a weaker USD. However, risk adverse elements will need to be calm for the bond auction to produce tranquil results.

Thursday, the 9th of November, China CPI and PPI – the data from these inflation reports will be watched closely. Chinese economic numbers has shown some signs of stabilization the past few weeks, both of these publications are expected to have negative outcomes. Concerns about the financial pressures domestic consumers are facing regarding housing market values in China and the way in which they spend due to lackluster prospects are concerning. The USD/CNY will be affected in the wake of these statistics, and the USD/SGD could see momentary volatility too if the results prove to be a surprise.

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GBP/USD One Month Chart as of the 5th of November 2023

Friday, the 10th of November, U.K Gross Domestic Product – last month’s number came in with an unexpected positive gain of 0.2%, this GDP report is anticipated to show no change. The GBP/USD jumped in value on Friday and financial institutions will be geared towards behavioral sentiment most of this week, but the British GDP data could cause a reaction before going into the weekend.

Friday, the 10th of November, U.S Preliminary Consumer Sentiment via the University of Michigan – the reading is expected to be slightly below last month’s outcome. U.S consumers remain a strong point of light for the U.S Federal Reserve. American consumers have remained spenders, although they have seemingly curtailed purchases of large ticket items such as cars and big appliances. If this data comes in weaker than expected it could propel more selling of the USD. A stronger number than anticipated could spook financial institutions and cause a slight surge in buying of the USD.

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Anxious Results and Outlooks as Traders Brace for Week Ahead

by with No Comment AMT MarketsAssetsFeatured Highlights

Anxious Results and Outlooks as Traders Brace for Week Ahead

Speculators with visions of taking advantage of day trading perspectives often look for correlations within asset classes to help gain an outlook on another trading vehicle they may be considering. The problem with this like many things for day traders is that sudden gyrations in asset classes technically are often affected by positioning from large players who do not care what the ‘minnows’ are doing. Institutional trading is frequently done with long-term considerations.

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S&P500 Index Future Three Months Chart as of 11th Sept. 2023

The Forex market has seen the USD grow stronger since the middle of July against most major currencies. At the same time charts via U.S Treasuries clearly demonstrate yields increasing. This is not a coincidence. Market behavior remains anxious as financial institutions look to lock in a certain amount of ‘guaranteed’ returns. Recent economic data has been lackluster from the U.S and this week important inflation numbers are certain to influence existing sentiment.

A side note for day traders who like to study economic data, ‘revisions’ via published data is starting to set off concerns among traders. Revisions to previous statistics reported are becoming a talking point among investors who believe the numbers they are looking at from many countries, including the U.S, need to be given a certain degree of skepticism. The Wall Street Journal published an article about this a couple of weeks ago.

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WTI Crude Oil Three Months Chart as 11th Sept. 2023

In the coming days the price of Crude Oil may make headlines as the commodity enters this week near values last seen in November of 2022. The high price of Crude Oil will spark vocal warnings about potential inflation dangers. Speculative elements within the energy sector will be active and hope to take advantage of its trend. A sustained move above 90.00 USD per barrel would be intriguing.

Some analysts might try to correlate higher energy prices to increased demand from global manufacturing sectors, but this could be questionable considering many spheres are suffering from recessionary pressures. But again, the real facts and dynamics behind a potential sustained climb of Crude Oil prices are complex.

Smaller traders need to understand the news they are reading today was known by ‘insiders’ many days before and they have already acted on their knowledge to take advantage of prices.

The cuts in production from Saudi Arabia and other producers has sparked speculative influence, and perhaps the narrative that outlook for more Crude Oil demand could build if the U.S continues to demonstrate a ‘soft landing’. The chatter and explanations for changes to price are almost limitless and day traders need to be aware they will not be privy certain information.

This leaves the door open for day traders to consider trying to understand market behavior within the financial world. The answer for short-term speculators who are wagering on price direction is not a simple interpretation of technical charts, they should also consider fundamental knowledge of the asset mixed with an understanding of current market dynamics as sentiment shifts among institutional players.

In other news to look out for this week, traders who are active in the cryptocurrency space should continue to monitor the support levels that Bitcoin and Binance Coin are traversing. Incremental drops in value continue to be seen and a sustained reversal higher has been difficult to attain.

Monday, 11th of September, China New Loans – the amount of borrowing from businesses and consumers within China will provide insights regarding the strength (or weakness) of the domestic economy.

Tuesday, 12th of September, U.K Claimant Count Change and Average Earnings Index – the jobs numbers from the U.K will provide the GBP/USD with a bit of additional impetus. The U.K economy is in the spotlight and critics have become loud as many point to Brexit problems, which they claim are causing complications. However, within a global economy that is under pressure the fact that conditions in Britain are difficult doesn’t take a lot of time to find other correlations.

Tuesday, 12th of September, Germany Economic Sentiment via ZEW – the reading is expected to show a negative outlook again from the responses of institutional investors based in Germany. A result of minus -15.0 is the forecast. The report could shake the EUR/USD a bit momentarily.

Wednesday, 13th of September, U.K GDP – growth numbers will certainly get plenty of attention for Britain. The anticipated number is minus -0.2%. If the result is worse than the recessionary estimate it could spark more negative sentiment.

Wednesday, 13th of September, U.S Consumer Price Index reports – inflation statistics will be studied carefully and impact Forex immediately if the published results do not meet expectations. The Federal Reserve, institutional investors and the broad financial markets will react to the CPI data.

Thursday, E.U European Central Bank Main Refinancing Rate – the ECB is not expected to make any changes to borrowing rates. The European Central Bank is also anticipated to warn that economic conditions remain challenging and they are monitoring inflation and growth. Anything more than these words via the ECB Monetary Policy Statement and Press Conference could spark some EUR/USD price action.

Thursday, 14th of September, U.S Producer Price Index – like Wednesday’s inflation numbers, the PPI statistics will affect market sentiment regarding outlook and interpretations regarding the potential responses from the Federal Reserve.

Thursday, 14th of September, U.S Retail Sales – this data will give traders insights regarding the spending habits of U.S consumers, which is a key barometer for equity traders regarding consumer driven stocks, and also because an increase would underscore solid economic sentiment from the public.

Friday, 15th of September, China Industrial Production and Retail Sales – these two reports will provide additional insights about the Asian giant. Global investors continue to be concerned about the direction of the Chinese economy. Slight gains are forecast for both publications.

Friday, 15th of September, U.S University of Michigan Consumer Sentiment – the preliminary report is expected to have a reading of 69.2 which would be below the previous reading.

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Absurd Friday Forex Results? Suspicions as the Week Begins

by with No Comment AMT MarketsAssetsFeatured Highlights

Absurd Friday Forex Results? Suspicions as the Week Begins

This coming week may be an opportunity where speculators can test their conspiracy thinking, perceptions of technical and fundamentals in unison. Experienced traders who typically have a high degree of skepticism about markets (particularly when results don’t go in the direction they expected) may question late last week’s results.

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EUR/USD 5 Day Chart as of 3rd of Sept. 2023

Without trumpets or too much hyperbole, was Friday before going into the weekend a ‘false flag’, this as the USD gained strength against many other major currencies. A lack of volume because of the Labor Day holiday coming in the U.S and Canada tomorrow may have affected the Forex landscape. While trading is largely done by computer programs in financial institutions, day traders should understand last Friday worked as a get away day to enjoy a long holiday weekend in North America.

Meaning financial executives largely escaped their offices because they have seniority and the ability to disappear while their ‘underlings mind the store’. Essentially senior management often tells the staff that has to stay behind, “monitor and not touch the system”. This could have left the door open for what appears to be a strange reaction in Forex upon what was in fact weaker data on Friday from the U.S via the Average Hourly Earnings which came in slightly below expectations, and less than stellar U.S GDP results on Wednesday the 30th of August.

Yes, also this past Friday the Non-Farm Employment Change numbers were fractionally better this month than anticipated, but the prior month’s results were actually revised downward. And yet the USD remained strong. Is this because senior analysts, chief traders and risk management officers were absent on Friday?

Tomorrow the same folks will remain largely away from the markets too, meaning results should also be viewed with suspicion. Which sets the table for an intriguing Tuesday and Wednesday for all the major and minor currency pairs teamed against the USD. Gold and equity markets will need to be monitored closely too.

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Gold Cash Price Five Day Chart as of 3rd Sept. 2023

Some potential clues are that the price of gold stumbled slightly on Friday as the weekend approached, but this happened as the EUR/USD sank to a low for the week, and the GBP/USD came under renewed pressure. But again this happened in rather questionable circumstances. Important support levels technically may get tested tomorrow, but trading volumes should be examined. Gold in many respects held onto gains made earlier in the week.

Yes, there are reasons to be nervous in financial institutions, due to higher short-term U.S Treasury yields, concerns about the China economy, mortgage rate worries in the U.S and elsewhere, fears about credit availability for small U.S businesses. However, these troubles have not caused a massive meltdown in the most primal of trading venues yet – major stock indices.

September is a notoriously volatile month for equities and speculators who use CFDs to participate in the stock markets globally need to be careful. Correct, some well known ‘traders’ are talking about a coming selloff in the markets, but so far we have not seen a major decline in the NASDAQ, S&P 500 or Dow Jones 30 indices. Day traders should not and cannot underestimate the potential for volatility to occur suddenly. Successful speculative bets via limited funds often means having to practice patience and risk management.

Thus, as the week begins early this Monday, day traders should be careful. Please note that a lack of big trading volumes because of the absence of U.S and Canadian financial institutions will make tomorrow’s results questionable. Opening the door for the potential of reversals on Tuesday, which might be abrupt as a ‘re-balancing’ of sorts takes place as folks returning to their offices seek equilibrium perhaps with their adjusted outlooks.

Simply put the U.S Federal Reserve the past two weeks has seen the same lackluster U.S data as all global traders, and the U.S central bank is in no position to raise interest rates over the mid-term. It would be useful if the Fed voiced their insights regarding the weaker than expected U.S Gross Domestic Product results last week, and the lower than expected Average Hourly Earnings report seen before the weekend. However, do not count on the Federal Reserve to do the right thing.

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Nervous Contradictory Trading Winds for Behavioral Sentiment

by with No Comment AMT MarketsAssetsFeatured Highlights

Nervous Contradictory Trading Winds for Behavioral Sentiment

Behavioral sentiment in the broad financial markets is nervous, and mixed results in the major asset classes are likely causing retail traders to feel uneasy. Most day traders try to perceive which direction they should lean based on price momentum while looking for fast profits. The current state of the broad markets are making decisions difficult for retail traders.

A healthy dose of nervousness at this moment might be a good thing for speculators and keep them conservative. Swirling results in Forex and commodities are causing plenty of problems for traders who instinctively like to pursue buying positions because of the human tendency to be optimistic.

Federal Reserve Causing Headaches for Smaller Banks and Forex

Forex markets have been choppy since the beginning of February 2023, when the U.S Federal Reserve surprised many people with continued aggressive rhetoric. The U.S central bank has backed up its ‘tough’ talk as it ‘fights’ inflation with more interest rate hikes. Clarity regarding a potential June hike from the Fed remains problematic with no certain answer yet. For the moment there seems to be a belief there will be a genuine pause, which may be fueling better returns for U.S equity indices, but there are no guarantees. Behavioral sentiment remains fragile.

The detrimental effect from higher interest rates on mid and small size banks in the U.S remains harmful. Mid and smaller corporate banks continue to struggle with the increased Federal Funds Rate. Bad business decisions within these banks have made it difficult to make profits in an environment when money is no longer ‘free’, this as many of their depositors look for better returns.

A six month chart of the EUR/USD below shows how the EUR started to climb in the fall of 2022, but then began to run into headwinds when financial institutions started to reconsider the seriousness of U.S Federal Reserve policy earlier this year. Analysis regarding the timing of the Federal Funds Rate forecast to actually start becoming dovish has proven problematic.

While the EUR/USD still maintains plenty of its gains, the current price of the the currency pair is below early February highs. The EUR/USD was trading near 0.95700 in late September of 2022, and the price as of today near 1.07800 is a vast improvement for the EUR. However, the choppiness of the Forex market the past few months has not been easy for day traders who have suffered from sudden reversals frequently in many of the major currency pairs.

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EUR/USD Six Month Chart as of 19th May 2023

The KRE regional bank index below shows the dramatic drop in value of the mid and small size banks in the U.S the past year, and the sector certainly still has financial concerns and shadows which are causing pressure on their corporate share values. Stubborn inflation remains and the desire of the U.S Federal Reserve to attack rising costs with higher interest rates remains a serious concern.

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KRE Regional Banking Index One Year Chart as of 19th May 2023

Stock Markets Suddenly at One Year Highs as Investors Seem to Return

Is the S&P 500 a harbinger of things to come or are investors in the index being too optimistic? Day traders likely stay away from the S&P 500 many times because they are mostly trading the index via CFD’s and this can prove expensive regarding transactions, they are not long-term investors – meaning they do not like to make bets that take awhile to materialize. The results from the past year and a half in the stock markets have made speculators nervous regarding bets on equities.

However, institutions and long-term investors buy and hold the S&P with a vision towards the future; they also reap the rewards of its dividends. The ability of the S&P to be trading at nearly one year highs is curious. The improvement in equity values in the indices may be a sign that ‘smart money’ continues to invest in the stock market for the long-term, even during what is perceived as a fragile period of behavioral sentiment. Financial institutions may also be betting on the U.S Federal Reserve having to become more dovish regarding interest rate policy in June and looking forward.

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S&P 500 Index One Year Chart as of 19th May 2023

Results on the NASDAQ 100 may be surprising to many and the index is trading at one year highs, and though like the S&P it is still under all-time highs from late 2021 and early 2022, investors have shown a taste for investing in the ‘hi-tech’ index again. While this may contradict the behavioral sentiment of Forex and the results in the mid and small size banking sector, the NASDAQ 100 does point out money is still being invested and might be an indication that day traders need to be more patient, more optimistic about the coming months and year.

While a recession might be looming, large companies have started to lay off workers and scale back on bonuses in an effort to fight against reduced profits. The narrative from the media may be negative in many cases, but many long-term investors tend to look at more conservative fiscal policy in companies as a good practice and a sign they should invest.

Perhaps the market is going through a needed case of the jitters and the U.S indices are showing that brighter days are ahead, even if there are storm clouds that still must be dealt with regarding inflation and possible recession.The long-term horizon tends to always be more optimistic. Day traders may not be able to take advantage of quick hitting trades, but what about changing perspective and looking for more patient results by being more conservative as a speculator? Or maybe investors in the stock market are wrong and another violent selling surge will return into equities, but what if it doesn’t.

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NASDAQ 100 Index Five Year Chart as of 19th May 2023

There is a fear among mid-size brokers that trading volumes in many sectors are dropping. Showing cautious investor sentiment on the retail front – which may be a healthy reaction in many respects because it is hard to read momentum right now. Day traders tend to get killed by the daily gyrations of Forex and equities in choppy markets because they are using too much leverage. However, historically when retail traders have turned cautious, this is when institutional trading houses have tended to do remarkably well. Investment houses can take on more risks in markets that are perceived as nervous and fragile, because they have a longer time horizon and more cash to absorb momentary losses.

Commodity prices are also intriguing because after hitting highs nearly one year ago in May and June of 2022, the ratios of many broad commodity indices have come down and values are traversing near late 2021 levels. Which brings us to the consideration that global demand for physical resources are limited because corporations are not making large purchases of commodities, this as they wait on better manufacturing demand for their products. This may appear contradictory and create nervous behavioral sentiment for traders, but cautious business practices are a way to make sure there is enough money for the future when conditions turn optimistic again.

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Escalation of Rhetoric doesn’t create Calm Investors

by with No Comment Federal Reserve, Interest RatesMajor Global Equity IndicesWorld

Escalation of Rhetoric doesn't create Calm Investors

Putin and U.S Federal Reserve will Stir U.S Markets Today

An escalation of rhetoric via Russian President Vladimir Putin regarding his nation’s war with Ukraine took place this morning via a televised address to the Russian people. Putin has said Russia will call upon those with previous military training, and use a ‘limited’ call up of potential new troops. A claim of nearly 300,000 additional soldiers to be readied has been made by senior Russian officials shortly after Putin’s speech.

Making matters more intense, Putin said all military options are possible while Russia protects its sovereign territory. The land he was speaking about however, is not recognized Russian territory, it is Ukrainian soil. Putin’s ‘talk’ to Russia has firmly put him in a position which shows that results from the Ukrainian war have not had favorable results and that he is showing signs of frustration. An anxious Vladimir Putin is not about to calm down what are already nervous global markets.

China Urges a De-escalation in Ukraine while not naming Russia

China has already reacted to Putin’s speech by urging all sides active in the Ukrainian conflict to de-escalate the situation. China has its own economic worries presently and certainly doesn’t need another bad ingredient thrown into its midst as it deals with weaker demand for export products and a shaky real estate market as the global economy reacts to inflation and recessionary concerns.

International traders will hardly hear what China had to say today, not because it isn’t important, but because their attention will be on Putin and the U.S Federal Reserve. However, it is important to point out China did not condemn Russia, instead it asked that all sides involved in the Ukrainian sphere to lessen the dangers. China and its relationship with Russia remains an important aspect of global politics.

The U.S Federal Reserve will raise Interest Rates Today

The U.S Fed will raise its interest rate by 0.75% today according to most financial houses which have already acted accordingly within Forex per interpreted price action. The USD has made new long term highs within the USD/ZAR and the USD/CAD. The EUR is below par as of this writing against the USD, and the JPY and GBP also continue to struggle near long term lows versus the USD.

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USD/CAD One Month Chart

U.S equity indices which have been struggling are not showing a massive promise of a reversal upwards which will alleviate losses seen this year. Investors need to remain patient if they are invested in indices such as the S&P 500. Day traders looking to profit from the volatility ripping through the markets will continue to be challenged by choppy conditions, difficult perceptions of short term technical charts and a lack of positive behavioral sentiment among the larger players in the marketplace who actually drive the markets most of the time.

  • USD remains stronger against many major and emerging market currencies, day traders need to be very careful if they pursue Forex positions in the short term.

  • U.S equity indices traded lower yesterday, and if the Federal Reserve falters and doesn’t offer solid clarity regarding interest rates today, this could create more nervousness.

Optimism is not being heard far and wide. While it is always interesting to be a contrarian and sometimes the correct avenue to engage thinking, the notion that upwards trajectories will suddenly occur may be wishful thinking in the near and mid term. Many asset classes are under stress.

Today’s upcoming pronouncements from the Fed will be important for institutional investors as they try to gauge the U.S central bank’s outlook until early 2023. If the Fed gives clues they will remain hawkish into the winter and a Funds rate around 4.50 to 5.00%is a possibility, this could shake investors and cause more capitulation – meaning a stronger selloff via equity indices could ensue. Short term traders will need to be prepared for violent conditions if they are day traders of stocks or CFDs. The inverted U.S bond yields remains a sign investors are seeking short and mid-term safety via interest rates to preserve money.

The fact that most traders are typically buyers first, not sellers first makes trading in bear markets difficult. Psychologically humans want to be optimistic. Today’s speech by Vladimir Putin while it doesn’t change the conditions on the ground in the Ukraine immediately, will shake the confidence of some financial houses which may have become accustomed to a ‘polite war’ they could ‘forget’ about and make believe would not get loud again. Nervous behavior is likely to be seen later today as early risers in the States awake to the news of Putin’s speech and react.

In short global markets will be dynamic today and tomorrow, as financial houses position their portfolios according to their foresight regarding developments the next few months. Day traders are urged to be cautious, and the prospect of sitting on the sidelines and watching ‘the show’ may prove to be a solid choice.